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I am on an H1b visa in the United States and on my LCA(Labor Condition Application), multiple work locations are mentioned, out of which I work at one of the locations the most. The question is, which city should I be paying the city tax to given that the locations mentioned in the LCA are different cities.

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Generally, you pay tax to two sets of jurisdictions:

  1. Where you're resident

  2. Where you perform the work

In the US, most jurisdictions tax their residents on their worldwide income, so if the city you're tax resident of has income tax - it is likely to tax your whole income.

If you are not the tax resident of the city in question, they will only tax your income earned while working there, which means you need to maintain a log where you write down what days you work where, and how much you earned at each place. Year-end - a lot of accounting to do.

Your employer should report each jurisdiction you worked in on your W2 at the end of the year, and you should verify that it matches your log. The tax authority will go by the report on W2.

For most cities that have income taxes, the respective States are tasked with the collection and audits, and the city tax return is part of the State tax return.

In many States, like California, cities are not allowed to impose income taxes at all.

LCA? Irrelevant.

  • So if you live and work in different cities that both have income tax, you pay double? – phoog Dec 29 '15 at 13:38
  • @phoog Usually you don't. I work in New York City, which has a tax (though I am not sure if it's city or county) but I am not a subject to it because I do not reside within the City Limits. My township has a tax but as long as I didn't earn within the township limits I wasn't a subject to the tax. At least that's how it used to be. – Karlson Dec 29 '15 at 15:22
  • @Karlson I live in New York City and about a year ago started working in New Jersey. I will know a lot more about the tax implications of this arrangement when I file my 2015 returns. The NYC income tax is indeed a city tax; the city comprises 5 counties so it is a bit of an odd case. I believe that there is only one other municipality in NY that imposes income tax, which is the city of Yonkers. Yonkers does tax nonresidents; NYC seems to have repealed nonresident income tax in 1999. – phoog Dec 29 '15 at 16:13
  • @phoog usually relatively close jurisdictions have reciprocity agreements to avoid double taxation. Some jurisdictions provide blanket credits for foreign taxes paid (foreign to the jurisdiction). But in some specific circumstances, it is (at least theoretically) possible that you'll end up paying taxes to two different jurisdictions on the same level for the same income (almost everyone pays to two different jurisdictions, at least, on different levels - Federal and State). – littleadv Dec 30 '15 at 5:59
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Most cities have no income tax. For those that do, however, the amount of tax you pay will generally depend on how many days you actually work in that city. For example, if you work 25% of your work days in a given city, then roughly 25% of your income will be taxable by that city.

The same principle generally applies to states, too, in case your places of work are in different states.

  • Great. Thanks for the answer phoog. Any idea how to prove that I worked in a certain city? Not sure if this would be questioned. – Aspirant Dec 28 '15 at 18:54
  • @Aspirant it will only be questioned if your tax return is audited by the tax authority. I suppose you should keep a log or diary. If you have evidence from your commuting (public transit or toll roads), or from credit card use, that would obviously be helpful, too. – phoog Dec 28 '15 at 19:01
  • -1 This is quite misleading. Please see my answer. – littleadv Dec 29 '15 at 8:47

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