How do I take advantage of no state income tax when doing contract work in that state?
Asked by techengr36
I live in Alabama and have a 1 year contracting job opportunity in Texas. My family will stay with me in Texas during the summer but go back when school starts. What do I have to do to keep from paying Alabama state income tax? Do I need to change residences? Do I need to buy instead of rent? Would a W2 arrangement be preferable to a 1099? Thanks for the help.

Best Answer:
If you change residencies to Texas, then you will no longer be obligated to pay Alabama state income taxes. But talk to a CPA to make sure you time it right. I think it depends on what state you reside in as of December 31 of whatever year you are filing taxes for. All you have to do is maintain an address in Texas to become a Texas resident. You can rent or buy (obviously you should rent if you'll only be there a year). You don't even have to actually stay there. You just trade in your AL license for a TX one and register your car in TX. Ta-da, you're a Texan.
I was an AL resident and worked in TX during college (I went away to school in TX). Then when I graduated I transferred residency to TX.
Answered by lizzgeorge