Work in Memphis? Live in Southaven? How to Handle Mississippi & Tennessee State Taxes.
If you’re one of the thousands of people who live in DeSoto County (Southaven, Olive Branch, Horn Lake) but commute to Memphis for work, you have one of the best setups in the region. You get the benefit of Mississippi’s homestead exemptions and cost of living, all while being just a short drive from the economic hub of Memphis.
It’s a fantastic arrangement, but it creates a unique tax situation that can be a minefield if you’re not careful.
Every year, countless Mississippi residents make a simple—and very costly—mistake. As your local mobile tax preparer, I want to make sure you’re not one of them.
🛑 The #1 Rule Every MS-TN Commuter Must Know
Here is the most important rule, in plain English:
As a resident of Mississippi, you must pay Mississippi state income tax on all income you earn, no matter where you earn it.
This means the paycheck you earn from your job in Memphis, Tennessee, is fully taxable by the state of Mississippi. It doesn’t matter that the company is based in TN, that your office is in TN, or that you never step foot in Mississippi during your workday.
If your permanent “domicile” (your home) is in Mississippi, you report that W-2 income on your Mississippi state tax return.
The “Credit for Taxes Paid” Myth
This is where the confusion—and the costly mistake—happens.
In many multi-state situations, you get a “credit for taxes paid” to another state. For example, if you lived in Alabama and worked in Georgia, you would pay taxes to Georgia (where you earned the income) and then Alabama (where you live) would give you a credit for the amount you already paid to Georgia, so you aren’t double-taxed.
But here’s the key: Tennessee does not have a state income tax on W-2 wages.
Because you aren’t paying any state income tax to Tennessee, there is no credit to receive on your Mississippi return. You simply report your full income to Mississippi and pay the tax owed.
Many people (and even some out-of-state tax preparers) get this wrong. They either assume they don’t have to report the income at all or they try to file a return that incorrectly claims a credit. This is a major red flag for the Mississippi Department of Revenue and can lead to a state tax notice, back taxes, penalties, and interest.
What About Memphis City Taxes?
It’s also worth noting that Tennessee and its cities do not have the local payroll or city-level income taxes that you might find in other states (like in Ohio or Pennsylvania). The main tax you pay in Memphis is the state sales tax, which doesn’t affect your income tax filing.
Why a Local Tax Pro is Crucial for This
While this “MS-TN” rule is simple in theory, it’s one of the most common reasons residents of DeSoto and Marshall counties get into trouble with the state.
Using DIY software can be risky. It might not ask the right questions to flag this specific situation, leading you to file an incorrect return. Using a national chain preparer who isn’t familiar with this specific, local issue can be just as dangerous.
A local, licensed tax preparer (like me!) has seen this exact situation hundreds of times. We know exactly how to file it correctly, keep you compliant, and ensure you’re not overpaying or (more importantly) underpaying.
Don’t Risk a State Tax Notice
Your cross-border commute is smart—your tax strategy should be, too. Don’t risk a nasty surprise from the Mississippi Department of Revenue.
Let your local Southaven mobile tax preparer handle your multi-state filing correctly from the start. We’ll come to you in Southaven, Olive Branch, and all over DeSoto County
