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 am working and living in California. When I retire in a few years, I will move to New Mexico. I will be receiving income from a California State employees pension, a 457b, and an IRA. Since Nevada does not have a state income tax and New Mexico does, could I maintain a separate residence in Nevada and receive any/all my income at that address to avoid paying state income tax on it in New Mexico?
I advise that you contact the corresponding State authority for more information regarding your future state filing requirements.
Are you automatically considered a resident of California if you buy a real estate property as the main and first home property even though you occupy it just a few days a month while earning income in a different state?
Which state do you pay taxes to?
Residency rules vary from state to state. For example, if you spend more than a certain number of days in some states, you’re considered a resident. It’s best to check with your State Department of Revenue for specific residency rules as they apply to your situation.
I am working in Virginia and have an apartment in Virginia where I will be living for more than 180 days in 2017. However, I am a domiciliary of New York because that is where I intend to return once my work is completed in Virginia. Therefore, in 2017 I will be a resident of 2 states. What can I do?
From the situation that you have outlined in our comment, it seems that you may have to file 2 full year resident tax forms, one with VA and one with New York (considering you are still a domiciliary of New York). This may mean that you will have to pay taxes to both VA and NY for income earned in VA.
My wife and are both retired. We have houses in both Florida and Vermont. She spends 10 months in FL and two months in VT. I spend 7-8 months in VT and the rest in FL. We have no earned income. All income is pension, interest and dividends. We each have pensions. Interest and dividends are ifrom joint accounts. Can we both be considered Florida residents? If not, how do we determine which portion of our income belongs to Vermont?
Typically, pension, interest and dividend income are reported in the state you lived in on the last day of the year. Technically you would want to report the income to the state where it was actually earned.
I am currently attending college as an “adult continuing education” student in NYC. My primary and established domicile is in Virginia. I temporarily moved to NYC to attend college beginning of 2016 and I also work in PA. I go back to VA pretty much most weekends and only in NYC for school during regular/summer semesters on weekdays. I know I would have to file non-resident for PA. What would/should I do for VA and NY? Do I still claim VA as resident and NY as non-resident/part-time resident?
From the situation that you outlined through your comment, it seems that you may have to file 2 full year resident forms with both VA and NY, with a non-resident with PA for a non-refundable credit to be allocated to your full year resident forms for income earned in PA. Since you stated that you were a domiciliary resident of Virginia, if you resided in New York for more than 183 days and maintained a permanent place of abode, you will have to file in this manner.