In which state should my stock option income be taxed?
March 22, 2006
Date: Tue, 14 Mar 2006
If an employee is granted stock options by a corporation headquartered in Maryland and he lives in South Dakota, where is the income taxed?
Date: Sat, 18 Mar 2006
This is becoming a big issue because of people telecommuting. I can’t get into the nuances here. As a resident of South Dakota, the income is certainly taxable in South Dakota. It could be taxable in Maryland, with an offsetting state tax credit to South Dakota. Income is usually taxable in the state where the services are provided. Your best clue is, where are your wages being taxed?
Many companies have satellite locations in various states, and the wages are usually taxed in the state where the employee is working in a corporate office. With multinational corporations, the issue becomes even more complex.
That’s all I can tell you with a “free” answer. For more help, pay a tax consultant.