Sunday, February 21, 2010

Tax Help: Ex-Kansas couple owes no state taxes

We lived in Kansas the first seven months of the year (January to July), but neither my husband nor I worked in the state. My husband took a job in Texas and lived there by himself and worked three months (June to September). In August, I moved from Kansas to Tennessee and purchased a house here; my husband moved here at the end of September. Our only income was from that three months he worked in Texas. Do I pay taxes to Texas and Kansas or to one or the other? Can I deduct our moving expenses even if the move was not for another job?

— Claudia K., Franklin
Texas does not have a personal income tax, so no filing is required there. Kansas does have a tax on personal income, but based on your facts, you had no earned income in Kansas, so you do not have a filing requirement.

You cannot deduct your moving expenses for federal income tax purposes from Kansas to Tennessee, because the move was not related to the start of work at a new principal place of work.

Who pays tax on interest?

Christmas 2008 I gave my children certificates of deposit as presents. Because they did not bank at my bank and were not with me to set them up, the bank put them in my name, POD their names. Recently I received Form 1099-INT on these CDs. My children had me cash their CDs in December. Do I have to put that interest on my taxes since I received the 1099s or can I pass it along to them?

— Claudia K., Franklin

The interest income from the certificates of deposit will be reported to the Internal Revenue Service based on the Social Security numbers that were used to set them up. If your Social Security number was used, then the interest income will need to be reported on your federal tax return.

Washington ReportRutherford wants fees, taxes reinstated