Lesson: State Income Tax Issues

In this lesson, Nick Palazzolo, CPA, demystifies the complexities of state income tax, especially discussing what triggers "nexus," and therefore tax obligations, for businesses operating across state lines. He uses relatable examples, like why certain businesses might avoid expanding into states with intricate tax laws, and provides a clear explanation of how nexus is determined through physical presence or economic activity. Nick also covers apportionment and allocation, essential concepts for businesses that must distribute their income according to operations in multiple states. By exploring various scenarios, such as a company opening up a new location or sending employees to work in another state, Nick breaks down when and why a business would owe taxes in a particular jurisdiction, helping untangle the often complicated web of multi-state taxation.