Although I have a day job, I run a small consulting business. I'm organized as a single member LLC which gets taxed as a sole proprietorship meaning I really get soaked this time of year.
A major client is in another state and I'm being told I owe income taxes there in addition to income taxes in my own state. Is this actually possible? Aside from the fact that I do all the work where I actually live and don't go to that state, it seems like if I'm earning in one state, that same income shouldn't be subject to taxes in another state. Between a marginal fed tax rate of 25% + 15% self employment + almost 15% between the two states, that brings my marginal rate over 50%.
I have a meeting with the accountant next week. I don't mind paying my fair share but I feel like I'm getting hosed on some kind of technicality and want to know how I need to approach the issue with my accountant.