How much of a credit for taxes paid to state


Problem: Annie is a resident of State A, which has a 4% tax rate. But Annie works in State B, which has a 5% tax rate. Annie's taxable income in State A is $120,000 (her entire amount of income generated everywhere). In State B, Annie's taxable income is $100,000 (her State B source income). Annie paid taxes of $5,000 in taxes to State B. There are no tax agreements between the two states. If Annie's State A tax before any credits for taxes paid to other states is $4,800, how much of a credit for taxes paid to State B will Annie be able to claim on her State A return?

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Accounting Basics: How much of a credit for taxes paid to state
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