You can be a resident of two states but you may want to avoid it.
If your life mostly involves just one state, filing state taxes is relatively simple. When your life involves more than one state, things can get complicated pretty quickly.
Everything depends on residency. It determines where you have to file, what kind of return you have to file, and how much you’ll be taxed. The problem is, determining residency is more complicated than it sounds. The states have convoluted and differing definitions of what constitutes a resident.
Generally, you can only be a full resident of one state. Most filers who spend time in two states end up filing a resident return to one state and a non-resident return to the other.
Is this even possible?
Yes, it is possible to be a resident of two different states at the same time, though it’s pretty rare. One of the most common of these situations involves someone whose domicile is their home state, but who has been living in a different state for work for more than 184 days. In a situation like this it is conceivable that you could be the resident of two states.
Filing as a resident in two states should be avoided whenever possible. States where you are a resident have the right to tax ALL of your income. This is regardless of where it was earned. If you are a resident of two states, you will likely end up paying more in state taxes than if you were a resident of just one, or a resident of one state and a nonresident of another.
Check the definitions
The first thing to do if you think it’s possible that you could qualify as a resident in more than one state is to check the definitions of residency. Each state has its own definition of who constitutes a resident. It’s possible that, according to the exact definitions of the law, that you aren’t actually a resident of two states.
Generally you are considered a resident if your domicile is that state, or (if your domicile is another state) you maintained a permanent place of abode in that state and spent more than 184 days there during the year.
Most state tax authorities have a page explaining what exactly constitutes a resident in their state. If you can’t find a page on their website, try checking the tax return instructions themselves. Most include a section on residency.
Make sure you aren’t a nonresident
If you only worked in a state, or lived there for a brief amount of time – in a vacation home, for example – you likely aren’t a resident. In this case, you’d only file as a resident in your normal home state. You would then file as a nonresident in the other state only if you earned money there.
Make sure you aren’t a part-year resident
If you move from one state to another during the year, you’ll file as a part-year resident in both states. You’ll be treated as a resident of each state for only the days that you lived in that state. This will help you to avoid being double-taxed. Don’t make the mistake of filing as a resident in both states if you permanently left one state and moved to another.
Exemptions for students, military personnel, expats, etc.
Most states also have exemptions for students who attend college out-of-state as well as members of the military and their spouses who often have to move from one state to another. These people are generally considered residents of their home states.
For more information about filing taxes in two different states, please refer to this blog post. And don’t forget, you can always file a return for multiple states with the help of RapidTax.
i LIVE IN AZ BUT ALL MY WAGES ARE FROM TX WHY CAN i NOT CLAIM TX AS RESIDENCE AND NOT PAY ANY AZ TAXES.
Hi Mike,
This can be frustrating when you live in a state with an income tax and work in a state with no income tax. However, by (tax) law, every individual who spends more than nine months of
the taxable year within Arizona as long as it is not for a temporary or transitory purpose.
I worked and lived In New York State until Aug of this year when I retired. I own a home in New York State and 3 years ago bought a second home in Arizona. How can I find out if I should switch legal residence from NY to Arizona? I am currently collecting Social Security, my retirement pension from New York State and a deferred comp monthly distribution and my New York home is For Sale. I am living in Az full time. I did get my Az drivers license and car registration switched to Az. Any comment or web site or accountant that may help guide me???
Hi Gary,
For tax purposes, being a state resident generally depends on your intentions to live in the state permanently or temporarily. It is important to know that a driver’s license, voter registration, etc will not determine your state residency.
As far as NY state goes, you are a resident if:
– your domicile is New York State; OR
– your domicile is not New York State but you maintain a permanent place of abode in New York State for more than 11 months of the year and spend 184 days1 or more in New York State during the tax year.
For further explanation and exceptions to the above, you can visit the NY government website HERE.
When it comes to Arizona, you are considered a resident if you meet the qualifications listed HERE.
Hi,
I lived in and worked in CT for the first half of 2015. I then moved to TX (for permanent residency), however, I continued to work for the company in CT. I did not get a job in TX. Do I file for part-time residency in CT for the income I earned while I lived in and worked in CT and then a non-resident for the second half of the year when I worked in TX? (Is that even possible?). Thanks for your help!
Hi Ashley,
If you are preparing your taxes yourself, you will use Form CT-1040NR/PY. As you will see when you take a look at this form, it is for part-year residents and non-residents of CT. You will be asked to provide the time frame you lived in CT and the time frame you just worked in CT. Your taxes will adjust accordingly. You will not need to file a form for TX since it is an income tax-free state.
My driver liscense is in Florida but I have been transferred by my employer to Texas, so I am now living in Texas for a year now and I earn my check from Texas but still maintaining the driver liscense as Florida resident . Would it be a problem to file my taxes in Texas not Florida although still have Florida liscense and we only pay federal taxes only in both states no state income taxes. Please advice
Hi Matt,
Seeing that both Florida and Texas are income tax-free, you won’t need to worry about filing state taxes in either state. You will only need to file a federal tax return to the IRS. When doing this, you will use your current address as your ‘home address’. All income is reported on the federal tax return so you won’t need to calculate how much of your income was earned in Texas versus Florida.
I own a permanent home in NY, which is where I intend to live permanently. I accepted a construction job in California in the middle of December, which is expected to last for 11 months. When the job is over, I intend to return to NY, unless I’m offered another assignment, but that could be anywhere. While in California, I am living in an apartment that the company pays for. My wife and two children also moved to California for the duration of this work assignment. My wife did not work in NY, and will not work in California. My son is school aged, and we have enrolled him in public school in California. While on this assignment, I only intend to return to NY for one weekend every two months to perform maintenance. If the assignment ends as planned, I should have about one month of income in NY at the end of this year, and the rest would be from California.
From the definitions each state has provided, it seems they will both consider me a resident for 2016. If this is the case, what are the tax implications? For now, I have stopped my NY withholding, but I’m not sure that was a good idea. Any insight and advice would be greatly appreciated.
Hi Chad,
When it comes time to file your taxes, you will file two part-year tax returns; one for NY and one for CA. Reporting your income for each state should be fairly straightforward seeing as you will receive two different income statements. You may not want to seize your NY withholding since you will still be liable as a resident.