Having It Both Ways

I've written a lot about states taxing income earned inside their borders by non-residents; what some call the jock-tax because of the many states in which professional athletes earn income.  When an athlete, or anyone else, has their main tax home in a taxable state, their home state normally gives them a credit for the income taxes they have to pay to the other states in order to avoid two state income taxes on the same income.  This obviously doesn't apply to people whose main tax home is in a tax free state, such as Nevada, Texas, Florida or Washington.

While I have never been hesitant to point out how ruthless the tax collectors of the PRC are in squeezing money from every source possible, it seems that Illinois is taking things to an even higher level.  They are making the ridiculous claim that Sammy Sosa is not entitled to an offsetting credit against his Illinois tax for the taxes he has to pay to other states on the same income he reports on his Illinois tax return.  This is completely unfair and I'm glad to see that Sosa is contesting it. 

Illinois is just like all other states, requiring people who don't live there to pay Illinois tax on income earned there.  In fact, I have a number of clients for whom I do prepare Illinois non-resident income tax returns for income that is generated up there.  However, their home states do allow them the offsetting credit for the Illinois tax.  Illinois should be grateful Sammy Sosa hasn't done what many other professional athletes and entertainers have done, establishing their official tax homes in Florida.  After being treated like this, I hope Sosa and his fellow athletes teach Illinois  a lesson and relocate.  That will end up costing Illinois much more than the Other State tax credit they want to deny Sosa.

KMK

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 3/04/2003 01:07:00 PM Send this post: