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Georgia tax tidbit: collecting from residents and nonresidents alike

Georgia flag I have relatives from Georgia. I worked for a Member of Congress from the Peach State. I have friends there. So I am well acquainted with the state's fine Southern hospitality.

The Georgia Department of Revenue also is very welcoming -- to all types of income earned by residents and nonresidents alike and from any source.

A full-time Georgia resident owes his or her state taxes on all sources of income regardless of where the income comes from. So if you live in Augusta, Ga., and work in Aiken, S.C., then you owe Georgia taxes.

What if your South Carolina employer takes out taxes for that state? Georgia does allow you credit for income taxes paid to other jurisdictions.

Of course, the credit can't exceed your Georgia income tax. And the state keeps things domestic. No credit is allowed for money made in another country.

What about someone who doesn't live in Georgia but gets paid by a Peach State company or entity? Yep, in most cases the state wants its share of that income, too.

Nonresidents, whether they actually work in Georgia or simply receive income from Georgia sources, must file a Georgia income tax return.

We're not just talking wages here. Other Georgia source income includes such things as winnings from the state's lottery, payouts from flow through entities (S corporations, partnerships, LLC's, trusts and estates) and rent payments you get on that property in Savannah.

So enjoy the graciousness of Georgians, but also make sure you know that when the state tax collector extends his hand, it's probably for more than just a handshake.

Tax trip around the United States: This is part of our series highlighting tax information from the 50 U.S. states and Washington, D.C. You can read other state tax blurbs at our Complete menu of tasty state tax tidbits.

The State Tax Departments page provides links to official state and District of Columbia revenue Web sites so that you can find out more about your home's tax laws and filing requirements.

As we work through the 2010 tax season, a different state will be featured each day as noted in Don't forget your state taxes! Check back to see what tax tidbit we share about your home.

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Thanks for the good point on reciprocal tax agreements between neighboring states. I know that Virginia and Maryland do this. I was aware of Georgia's long tax arm since my husband works for a Georgia company but does so from his home office here in Texas. We end up paying Georgia taxes and since there's no state income tax here in Texas, we have no offsetting taxes ... which really ticks me off! The only consolation is that his state income tax payments to Georgia are a bigger deduction that our Texas sales tax amount. Still, every April I seethe at having to pay the state of Georgia money while our tax home is no-income-tax Texas!

Joe T. Taxpayer

This principle is generally true in most states. As a full-year resident of Kentucky, all my income (regardless of the source) is considered taxable to the Commonwealth of Kentucky. And yep, I can claim a non-refundable credit for Taxes Paid to Other States on my Kentucky state return.

However, one thing that may be different for Kentucky is that we also have reciprocal agreements with certain states. For example, if I was a full-year resident of Ohio and worked in Kentucky, per the reciprocal agreement, my income would not be taxed in Kentucky (and I would actually be due a full refund of any KY withholding done by my employer), but it would be taxable to my state of residence which in this case is Ohio. I'm not sure if Georgia has similar agreements with any of their surrounding states.

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