Tax Questions That Come Up When Living on a Boat
Imagine living on a boat traveling from port to port and not having to worry about the day to day grind? Yeah, it does sound wonderful.
But, unfortunately, living your life on a boat does come with some tax questions that are often left unanswered.
Below, I have tackled some of the these hard to answer tax questions.
Do I owe Federal Taxes Even Though I am Traveling From Port to Port? Regardless of where you are physically located, you will have to report your income for federal income tax purposes.
What if I Travel to Multiple States? Do I owe Taxes in each State? Generally speaking, you are only required to file taxes in a state if you earn income in that state.
For instance, if you accept a job in a state, and are paid with wages, those wages are taxable in that state and state specific taxes are withheld from your taxes.
This is the reason why on a W-2 form, the state designation is listed on the bottom left hand corner of the form.
But note that if you do not work in the state, then there would not be any tax implications.
Items like social security, interest, and dividends are not state specific so they are not allocated to that state for income tax purposes.
If I Earn Income in a State am I always Subject to Income Taxes? Even if you do earn income in a state, if it is below a certain amount (which varies with each state), then there would be no income tax filing requirement (unless you had taxes withheld, in which case you should file to get the taxes refunded).
Key Takeaway for Tax Questions when Living on a Boat You have to declare income for federal tax purposes but you may not be subject to state taxes which depends on whether or not you earned income in that state & the specific state tax laws.
But, unfortunately, living your life on a boat does come with some tax questions that are often left unanswered.
Below, I have tackled some of the these hard to answer tax questions.
Do I owe Federal Taxes Even Though I am Traveling From Port to Port? Regardless of where you are physically located, you will have to report your income for federal income tax purposes.
What if I Travel to Multiple States? Do I owe Taxes in each State? Generally speaking, you are only required to file taxes in a state if you earn income in that state.
For instance, if you accept a job in a state, and are paid with wages, those wages are taxable in that state and state specific taxes are withheld from your taxes.
This is the reason why on a W-2 form, the state designation is listed on the bottom left hand corner of the form.
But note that if you do not work in the state, then there would not be any tax implications.
Items like social security, interest, and dividends are not state specific so they are not allocated to that state for income tax purposes.
If I Earn Income in a State am I always Subject to Income Taxes? Even if you do earn income in a state, if it is below a certain amount (which varies with each state), then there would be no income tax filing requirement (unless you had taxes withheld, in which case you should file to get the taxes refunded).
Key Takeaway for Tax Questions when Living on a Boat You have to declare income for federal tax purposes but you may not be subject to state taxes which depends on whether or not you earned income in that state & the specific state tax laws.
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