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.
Hi. I am considering a temporary job (16 months) as a salaried employee in California. I currently live and own a home in Maryland. I’m a salaried employee in MD now but that will end if I take the CA job. The job would be May 2017 – Aug 2018. California I believe classifies resident as living for 9 months or more in a year. Technically in calendar year terms I will be there less than 9 months of each year. I plan to keep my MD home and return there when I”m finished. Not planning on renting it. Any thoughts on how to handle this situation? I’m not trying to avoid being taxed in the proper states, just not double taxed. Any other considerations?
Additional questions in terms of if i need to change my drivers license, etc but I imagine that isn’t in your realm of expertise.
Thanks!
Hi Amy,
State residency for tax purposes depends primarily on your intention to stay in the state permanently and how long you’ve been present in the state. If you continue to have a permanent place to live in Maryland, then you would most likely be considered a Maryland resident. If you end up taking the position and have California taxes withheld, you’ll file a resident return as well as a nonresident return for the tax year.
HERE are the rules for California residency for income tax purposes.
HERE are the rules for Maryland residency for income tax purposes.
In regards to your drivers license, each state also requires that you update your license within a certain time frame if you plan on making that state your permanent home. You can check with each state’s DMV office for more of this information. Your license does not necessarily determine your state residency (for tax purposes).
On 2015 tax return we filed MA state tax return because we both lived in MA. Now in 2016 we purchased a house in
Texas, my wife moved to Texas and working there but I am travelling back and forth between TX and MA because I am still working in MA and paying state income tax. The home loan (in Texas) is under me and I pay property tax there.
There is no state income tax in Texas (but property tax very high to cover state expenses). I think my situation making me to pay more on state income tax because my Texas property tax is high and paying state income tax in MA.
How can I save some money on MA state income tax in my situation?
Hi Dan,
As long as you are physically working in MA, you are responsible for income taxes there. You will need to file a non-resident state tax return as opposed to the resident state tax return that you and your wife filed last year. You may consider filing your state return as Married Filing Separately and your federal as Married Filing Jointly to help out your tax burden.
Hi Dan,
As long as you are physically working in MA, you are responsible for income taxes there. You will need to file a non-resident state tax return as opposed to the resident state tax return that you and your wife filed last year. You may consider filing your state return as Married Filing Separately and your federal as Married Filing Jointly to help out your tax burden.
Hello,
I grew up in Texas and all of my family is still there, however, I have been living in Washington DC as a resident for the past 4 years. I am soon moving overseas on diplomatic orders for 3-4 years, and would like to change my permanent domicile back to Texas. I still consider it home, and if for some reason this job did not work out, that is where I would relocate. When I move overseas, I will not have been in DC for more than 183 days of the tax year, and since I only rent will not have a permanent residence here. Do I just need to get my drivers license changed before I move overseas, or are there a series of other steps that need to be taken?
Hi Barrett,
It is important to realize that residency rules differ for income tax purposes as opposed to state residency in general. For income tax purposes, residency is based on how long you are in the state throughout the tax year, if you intend to permanently remain domiciled there, and if you intend to return there after temporary trips out of the state (ie: vacation, school, etc.)
I need to know if it is legal for my company to take taxes out my check from two different states at the same time I live in Michigan and work in multiple states but the company is from North Carolina and I’m the only one in the company they are doing it to but I never work in N.C they took 1300 from Michigan and 1400 from N.C
Hi Phillip,
It is legal for a company to do this and, unfortunately, it occurs frequently when two states are involved between employee and employer. If you have already spoken to your employer or payroll department about changing this and they won’t, you have another option. When it comes time to file your taxes for the year, you will file two state returns instead of your typical one. You’ll file a resident return for Michigan and a non-resident state return for North Carolina. If you have no income earned physically IN North Carolina, then you should be issued a credit from your resident state for the tax you payed to the non-resident state throughout the year.
I live and work in NYC all of 2016. I have been renting in NYC for many years now, never lived in NJ but found a house I liked and closed on it on Dec 24th. I am not moving into house until March of 2017 b/c of some needed renovation and will be living in my NYC rental until then. Do I need to file any taxes (resident or nonresident) for NJ?
Hi C in ny,
For 2016, you would most likely not need to file for NJ as you would not meet the filing requirements for filing a state return for NJ. Your closing was at the very end of the year, only days before the end of the tax year.
Michelle, I have the same question as C, but our closing was at the end of October, then we changed our driver license and car registration, but were living in NYC renting the same apartment until Dec before we completely moved to NJ.
I was wondering how we supposed to file- as full year resident of NY and part time of NJ? or part time for both states ?( were working in NYS). thanks
If you move to NJ in Dec, then you should file a part year NY and NJ return based on your dates of residency.