Tax related issues on H1B

[corntown118]

I have been working in the state of North Carolina from September 2010 till the end of December 2011 at a client's location, my employer's company is based in Illinois. I have observed that when I received my W2 this year, the state taxes deducted were from Illinois and not the client location i.e., North Carolina where I had been working for the whole year.

Also, the same thing happened in 2011 too while filing the returns for the taxes of the year 2010, I had worked in two states in 2010, Jan-July I was working for a client based out of Kansas City and starting September I was working at the client's location in Charlotte, North Carolina. Whenever I move to a new client, my employer does file for a new LCA however he said it was okay to run the payroll and state taxes based on where he is located in instead of where I am working from as I was only a contractor working at the client's location.

I would like to find out if this whole process was incorrect and what I could do to get myself out of trouble if I have already been in a sticky situation, please advise.

[greencard]

Your employer should have registered for employer's taxes in the state where you work and reside and withheld that state's taxes. You should still file your taxes in the state you work and reside and get credit for IL taxes withheld. I am CPA and work with a lot of consulting companies that either don't know the right way of handling this or simply want to avoid the hassle of registering in various states. States are getting more active in sending notices to employers and employees, it might take a while (sometimes a couple of years) but when they do, the penalties and interest add up. Hope this helps. If you need additional help email me at info@om-cpa.com
Thanks

[Amman]

Although it is inconvenient I don't think this is illegal. I'm in a situation as you're. My employer is in one state and I work in another. Usually my CPA take the 100% credit from my employer state and pay back to my state. We are doing this past 11 years and no issues sofar;). Your CPA may charge you more because he has to file multiple states instead of one.

[hyipbond]

corntown118, I think both of them are wright in terms of what they are saying.

I was in the same situation, my employer was in MA and I was in GA. My Employer was paying my state taxes in MA. After I got my W2, I told the CPA and he moved the MA state tax to GA and I got my credit according to GA. Specially desi companies doing body shopping don't register until they see your project is long enough. But better for you, if your employer register their company. I told my company, they took 6 months but they did - its a simple process to them. Keep bugging your employer if desi.... lol.