CPA Answers Blog Readers' Tax Questions

I Will Teach You To Be Rich took over 100 reader tax questions and posted answers to the best ones from from David Bergstein, CPA.

I live in CA but worked over the summer in TX and was not taxed on income while there. I still claim residency in CA so I’m wondering if I need to pay taxes on the income earned while in TX… thanks.

Answer: The answer may not be one you want to hear but California determines whether you file a return or not based on your worldwide income and their instructions for the Form 540 resident return states that you should “Enter the total amount of your state wages from all states from each of your Forms (w-2)….” This is one of those cases where you do not receive a credit for taxes paid to another state because Texas has no personal income tax.

Check out the series and bone up your tax knowledge:

Post 1
Post 2
Post 3

— BEN POPKEN

Comments

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  1. SoCal_Dave says:

    “With a Roth IRA you would use after-tax dollars. Those dollars would not be taxed (again) upon distribution, but any interest would be taxed.” –> Sorry guys, but I think you missed this one. The benefit of the Roth is that, upon distribution at retirement both the individual’s investment as well as any gains are withdrawn tax-free.

  2. bostonmike says:

    The CPA’s answer about Roth IRA interest is completely wrong — the interest is not taxed if you follow the Roth IRA rules. There’d be no reason for Roth IRAs to exist if the interest were taxed.

  3. cibaknife says:

    I second bostonmike’s comment. You’ve already paid the taxes on the money invested in a Roth IRA, so the principal and the interest are withdrawn tax free *as long as you follow the guidelines laid out for Roth IRAs*. I suggest iwillteachyoutoberich get a new CPA. This is financial investment advice 101.

  4. capnfive says:

    Ouch… that’s a pretty big swing and a miss…

  5. joelion says:

    yeah to follow soCal_dave and bostonmike, 1) why would a CPA say that, and 2) why did consumerist decide to post this particular answer? If a Roth IRA was taxed upon disbursement, then why wouldn’t I just put all my money in regular stock and pay normal capital gains when i cash out?

  6. joelion says:

    ummm, serisously, this guy is whack. Currently on the front page of that site:

    The decision of which IRA is best depends on your income level and objectives: would you prefer to put in pre-tax dollars, and allow the income to grow tax-free, paying taxes only as you withdraw funds during retirement? If so, then a traditional IRA is more likely the route to choose. If, though, you’d prefer to pay taxes now, let the funds grow tax free but then have to pay taxes on the interest income when you’re in retirement, then the Roth IRA is worth considering.

    there’s not way getting around this – that is 100% plain wrong.

  7. chemman says:

    Something I find quite hilarious, in lieu of the above comments about the CPA being wrong, I just tried to go to the website in the post and my work filter blocked it and stated the reason as “Unsavory/dubious website”. Apparently even my works’ filter knows how shady this CPA’s answers are!

  8. ramit says:

    Hey everyone, this is Ramit from iwillteachyoutoberich. Thanks for the sharp eyes. I’ve put up a note about that answer, and I’ve emailed David the CPA to correct it. I really appreciate the comments.

  9. capnfive says:

    I hope this gets updated on the Consumerist, too… not everyone is going to dig into the comments to find out the story posted on the main page is incorrect.