QUESTION
Do I pay corporate taxes where I am doing business or where I live?
Asked on Dec 19th, 2011 on Taxation - Oregon
More details to this question:
I am a C corporation. I am the only employee/officer of a C corporation. I am a consultant so I just talk on the phone and use the internet. I have to pay corporate taxes in a state where I do business but does that mean I pay taxes where ever I live or am I doing business where the corporation is registered? Right now they are a single location but checking in case I decide to register the corporation in another state.
1 ANSWER
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The corporation will pay taxes in all states in which it does business. Each state has its own formula for how to apportion income among the states usually based on a weighting of where sales take place (usually the most important factor), where the employees are located, and where the corporation owns property. Your salary from the C corporation will be taxed in the state in which you work. If you live in a different state, you also will be taxed in that state, but will get a credit for taxes paid in the state in which you work.
Answered on Dec 20th, 2011 at 3:32 PM