In which state will your income be taxed?

Question

If you do work in Austin, Texas, as a remote online customer care specialist for the Augusta National Resort (situated in Georgia) do you pay Texas or Georgia income tax?

Answer 1

The Texas state constitution, Article 8, Section 24-a prohibits a Texas income tax, full stop, so your question "Texas or Georgia" can not be answered "Texas" under any circumstance.

There is no state income tax at all from the activity you described. Georgia does tax income earned by nonresidents, but only if the work is physically performed in Georgia.

The website freetaxusa.com explains it succinctly as follows:

• If you lived and worked remotely for a Georgia employer from another state and you did not physically work at any time in Georgia, your employer will not be required to withhold any Georgia income taxes on your W-2. If they do withhold Georgia taxes, you will likely want to file a Georgia return to be refunded the tax which was withheld.
• If you are a Georgia nonresident, you did not physically work in Georgia, and your employer did not withhold Georgia state taxes, you probably don't need to file a Georgia return at all unless you otherwise have a Georgia nonresident filing requirement.

Going directly to Georgia tax statutes, § 48-7-30 (2022):

• a. The tax imposed by this chapter shall apply to the entire net income of a taxable nonresident derived from employment, trade, business, professional, or other activity for financial gain or profit performed or carried on within this state, including, but not limited to, the rental of real or personal property located within this state or for use within this state, the sale, exchange, or other disposition of tangible or intangible property having a situs in this state, the receipt of proceeds of any lottery prize awarded by the Georgia Lottery Corporation, and withdrawals of contributions to a savings trust account under Article 11 of Chapter 3 of Title 20 which are required to be included in taxable net income as provided in subparagraph (b)(10)(C) of Code Section 48-7-27.
• b. A taxable nonresident whose income is derived from employment, trade, business, professional, or other activity performed or carried on within and outside this state shall be taxed only upon the income derived from carrying on the activity within this state. The amount of taxable income may be determined by a separate accounting of the income if the commissioner is satisfied that the separate accounting reflects correctly the income fairly attributable to this state. Otherwise, the amount of taxable income shall be determined in the manner prescribed by this chapter for the allocation and apportionment of income of corporations engaged in business within and outside this state.