Moonlighting and taxes

[SirGecko]

I have what is probably a really stupid question but I was hoping someone with experience could answer.

I've not engaged in moonlighting in the past but will likely be in a position to start next year. When you pay state taxes on the income, to what state do you pay them? Your state residence for your military income? Current domicile? The state where the moonlighting occurred?

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[Correlate Clinically]

For the most part state taxes are due on non-military income earned in that state (and earned means where you physically are, not the patient in the case of telemedicine). If you travel to another state for moonlighting, there's sometimes a test of how many days you were in the state or a dollar threshold for taxes.

I'd ask a local accountant if it isn't clear. I'm going off my personal experience with the states I've been stationed in. There's probably variation on how different places handle it.

 

[pgg]

I have what is probably a really stupid question but I was hoping someone with experience could answer.

I've not engaged in moonlighting in the past but will likely be in a position to start next year. When you pay state taxes on the income, to what state do you pay them? Your state residence for your military income? Current domicile? The state where the moonlighting occurred?

State taxes are due to the state in which the moonlighting occurred. There are a handful of states with a convoluted process by which you owe that state for ALL income no matter where earned, but then claim a credit on that state's return by providing proof (via a copy of another state return) that you paid taxes in another state.

Every state return I've filed included a line somewhere that specified what portion of your total income was from a source in their state.

Lining up the documents can be a little tricky if you live in state A and work in state B but get paid by a locums agency headquartered in state C.

Your military state of residence for DFAS purposes is irrelevant to how moonlighting income gets taxed.

Remember that if it's 1099 income, the feds will want quarterly estimated payments as you go. If you just wait until April the next year to settle it all out the feds may charge interest. (And 1099 income is liable for 2x the payroll taxes since you're both employee and employer.)

 

[Gonio5]

Alaska, Nevada, Wyoming, South Dakota, New Hampshire (starting in 2025), Tennessee, Texas, and Florida do not have state income tax. Connecticut didn't have any until 1991, with promises that only the rich would be affected but now CT has one of the highest state income tax rates in the country, about the same as NY. Washington only has a new income tax but only on long term capital gains and only in excess of $250,000 for now but it is a fairly high 7%.

Those in the service that join from AK, NV, WY, SD, NH, TN, TX, and FL and serve for several years can save quite a bit of money.

Most countries don't make you pay federal income tax if you move out of the country but the United States is one of the few that does. Not Canada.

How about malpractice insurance? Don't forget to be covered while moonlighting.