I live in California but commute to Denver. Which state do I file taxes in?
California. Generally your state of residency will generally tax you on 100% of your income. Theoretically there are situations where this might not be true. For example, you are resident of California and you work as a flight attendant primarily on flights between Denver and Aspen. Let’s say your Colorado flight time is computed at 75%. You will pay income tax on 75% of your income to Colorado provided you pay income tax on 25% of your income to another state. However, this is an extreme example, and most crewmembers do not fly primarily in one state. So typically you pay income tax on your income to your state of residency.
Having said that, beware since over the past few years several states, especially Colorado and California, have been attempting to re-categorize flight crew incomes and sending notices of tax due simply base on their domicile information. The Watson CPA Group has worked closely with payroll departments and State Departments of Revenue to get these issues resolved, and in most cases the state is incorrect and rescinds their tax due notice. Again, we are well versed in these situations, and will ensure your state taxes are completed correctly.
Important Note– it is essential that your airline is quickly informed of any residency changes. If your W-2 at the end of the year has income tax paid to a state that you didn’t reside in, it can be extremely difficult to get that state to return the income tax in favor of another state. Possession is nine 10ths of the law as they say.
Please visit the Flight Crew homepage on our website for the Colorado Department of Revenue’s Memo on this particular topic. Most states are similar to Colorado, but call or email us if you want specific information on your state.