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The Dream Life of Living on a Boat Comes with Tax Questions
By The BIDaWIZ Team - February 22, 2010 Share:
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Ah, the prospects of living on a boat traveling from port to port makes us all smile. While sailing into the sunset is a beautiful thing, unfortunately it does come with some tax questions.
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Do I owe Federal Taxes?
Regardless of where you are physically located, you will have to declare your income for federal tax purposes.
What if I Travel from State to State?
You will only have to file taxes in a state if you physically earn income in that state. For
example, if you take a job in a state, and are paid wages, those wages
are taxable in that state and state specific taxes are withheld for
that state. This is why on a W-2 form, the state designation is listed on
the bottom left hand corner of the form.
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But note that if you do not work in the
state, then there are no 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.
Do I always Pay State Taxes if I Earn Income in a State?
Even
if you do earn income in a state, if it is below a certain amount
(which varies from state to 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
You have to declare income for federal tax purposes but 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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