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.
Hello, i was originally living in AZ. Moved to TX for work in sept 2015. When I filed my taxes for 2015, I just ended up paying state tax to az as I had not yet become a TX resident. I made the mistake of not changing my address from AZ to TX with my employer until a few months into 2016. Anyway, that address has been changed. Tx does not have income tax but this year I have paid approx $75 to AZ. I have been procrastinating on getting a TX license. I will soon. What should I do? Can I get that money back from AZ? Will AZ come after me for taxes for this year as I have not yet gained TX license/residency? Kind of a screwed up system for being a resident.
Hi James,
Based on what you have stated above, you will most likely be able to claim that tax back from AZ. You’ll need to file a non-resident tax return for AZ to do so. This will be filed along with your federal tax return.
If I am a resident of North Carolina but also own land in Texas can I also be a resident of Texas?
Hi Sean,
The sole ownership of property in two different states does not necessarily mean that you are a resident of both. Residency rules differ slightly for each state. However, generally speaking, it is based on your intent to live in that state permanently and the amount of time you spend in that state within one year. Unfortunately, I am unable to provide you with a straight answer based on your comment. However, your best bet would be to look into each state’s residency eligibility requirements. You’ll be able to find these rules on the State Department of Revenue websites for each state.
Does the double taxation danger exist if one of the states has no personal income tax?
Hi Sam,
You cannot be taxed by an income tax-free state. In this case, you could be taxed by the other state in question if you resided and/or physically worked in the state.
Hey, I just graduated college from SC and have been a resident there my whole life. I just moved to Georgia and signed a 11 month lease. I don’t plan to live in Georgia after that and hope to be in Florida. Should I change residency?
Hi Jeff,
Congratulations on graduating! State residency depends on several factors; one being the time frame that you reside in the state. This varies for each state. I strongly suggest taking a look at the Department of Revenue website for both Georgia and South Carolina. If you are planning to work in Georgia and live there for a length of time, then you may be considered a resident.
I recently got pulled over for the first time and was given a ticket for non residency liscence. Basically I have my liscence in NY and my car is register in Nj insurance in Nj and plates in Nj I do have a home both in NY and Nj and work in Ny I was told from officer that I have two weeks to change my liscence from NY to Nj. If I have proof of both residency can to ticket get dropped and not have to change my liscence.
Hi Susan,
I am sorry to hear that. Unfortunately, state tax rules tend to differ from certain state laws. In most states, your registration and driver’s license address must match. I highly suggest giving your local DMV a call for a more in-depth explanation about how to proceed with your ticket.