Can taxes be avoided?

March 18, 2009 3:45 PM

TaxFilter: Is it possible to reduce the amount of or completely avoid paying the ~$1200 in taxes H&R Block online is telling me I owe the state of Louisiana?

Here is the situation: last year I worked in the UK for four months, for a company based in Jacksonville, Florida. Prior to my stint in the UK, my girlfriend and I had moved from Florida to Louisiana while the company kept me on as a full-time employee. I worked for the company from Louisiana for five weeks (starting in October 2007), then went to the UK and worked there for another five weeks, and then came back for two more weeks for Christmas and New Year's.

This brings us up to 2008. I worked in the UK from January through the end of April. During this time (actually, going back all the way to when I moved to Louisiana), my employer sent paychecks using my new Louisiana address, but filed the state taxes as if they were Florida's. The catch here is that Florida does not have state taxes, whereas Louisiana does.

So when I go to file my taxes this year, H&R Block Online (free and easy, right?) tells me that I owe ~$1200 to Louisiana. Now, I don't have a problem paying the money if there is no other recourse, but I have some questions about this.

First off, should the company in Florida have updated the state tax information after I moved so that appropriate taxes were taken out? And if so, could they be liable for paying the taxes they never did?

Additionally, since I never signed a lease and did not get a Louisiana driver's license until after finishing up in the UK, could I still have been technically considered a Florida resident and not have to pay the Louisiana taxes?

One more bit of background info: the company always paid me in US dollars -- I was never employed by a UK firm. I never got a visa or work permit. There are some pretty tight regulations where you can work in the UK without those documents to which the company closely adhered.

posted by m0nm0n to work & money (3 comments total)

I'm not a tax lawyer, and this is not tax advice; consult a professional before following anything I say here.

Here are the Louisiana Revised Statutes, Chapter 47, Section 31 (bolding mine):

§31. Individuals, corporations and trusts subject to tax

There shall be levied, collected, and paid for each taxable year a tax upon the net income of residents and nonresidents, estates, trusts and corporations, as hereinafter provided.

(1) Resident individuals. ...

Every natural person domiciled in the state, and every other natural person who maintains a permanent place of abode within the state or who spends in the aggregate more than six months of the taxable year within the state, shall be deemed to be a resident of this state for the purpose of determining liability for income taxes under this Chapter.

Also, see this ruling for more information on how Louisiana determines residency. My reading of all this is that even if you could argue that you were not resident in Louisiana for those four months (and that sounds dubious given that you had previously established an abode in the state, it was maintained for you while you were gone, and you didn't have the usual residency documents for the UK), it wouldn't matter; you lived there for longer than six months during the rest of the year.

First off, should the company in Florida have updated the state tax information after I moved so that appropriate taxes were taken out? And if so, could they be liable for paying the taxes they never did?

They probably should have... but wouldn't those taxes have come out of your paycheque anyway? At least this way you got to earn interest on the money for several months.
posted by Johnny Assay at 4:56 PM on March 18

I ONCE went to H&R Block. ONCE. The bastard told me I owe $500 and told me he could take the payment immediately. I told him, "No thank you...I'll file it myself, and here is the payment for your services." I was so pissed at his rushed work that I stole a stapler as I left.

I woke up the next day, did the taxes myself, and found out I get $800 back. I am not an accountant, but I did learn how to read, write and do math when I was in grade school.

I will NEVER go through a mcdonalds version of an accountant again. They have no incentive to do your taxes correctly...only to get you in the door (or file through their website) and charge a fee.

Good luck.
posted by hal_c_on at 11:09 PM on March 18

Speaking professionally, H&R Block is a tax prep mill of limited value. I can't speak to their online product as I have never laid eyes on it, but it is probably not comprehensive and won't be able to handl tricky problems.

Your problem has two components. One, your company may have paid withholding incorrectly. Two, you may owe taxes in more than one jurisdiction, depending on residency rules.

Given the amount involved you would probably do well to have a real CPA look at your situation. That might cost you all the money you might save, though.
posted by dhartung at 11:27 PM on March 18