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 moved from Texas to Utah for work, but want to retain Texas residency in case I decide to attend UT Austin so that I can pay in-state tuition. Texas does not have a state income tax so I only have to pay an income tax on my Utah wages. I also rent. Is there anything I should be worried about?
Hi Matt,
I suggest checking the state residence guidelines for both Utah and Texas since each states follows their own set of rules when it comes to residency.
I recently moved to GA (Oct 2013), brought a home and established residency . Last month I purchased a duplex home in NY. My plans are to rent one of the apartments and live in the other apartment when visiting NY temporary (2-4 mths) out of the year .I don’t plan on working in either state.
Is it possible to have dual residency in both states? Can I apply for property tax exemptions in both states?
Hi Sandy,
Although it is rare, it is absolutely possible to be a resident of two states. I suggest contacting both the state of GA and the state of NY since each state follows a different set of guidelines for who qualifies as a resident for tax purposes.
I am about to begin travelling a significant amount for work as an independent contractor, while my wife will continue working at her present job in NC. I have been advised to change my state of residence to SD, primarily for the benefit of lower costs associated with vehicles. If she retains residency in NC and I am in SD (though I will be on the road extensively), would your advice be MFJ or MFS? My thought is MFJ, since SD has no income tax. Also, do you see any likely pitfalls (I’m not concerned about voting, for example, as I have used absentee ballots before when similar situations occurred in college days)? And would my income be taxable by NC in either scenario (MFS/MFJ)? I’m not trying to dodge any taxes, just trying to figure out the wrinkles.
Hi BConor,
I suggest filing separate state returns and MFJ on your federal return.
I am 63 and on disability and own a home in MA, but a currently residing temporarily in CA. I have my daughter living in my MA home for me to pay all my bills, handle my mail, water the plants, etc. and watch the house in general. I have been living in CA for 7 months now in order to see if my health would allow me to move back to CA permanently, as I wish to do. I have been working about 10 hours/wk in the state of CA and am on a month-to-month room rental. I have a MA drivers license and insurance on my vehicle. I tried to make the move in 2011, but had an emotional breakdown (again) and had to urgently return to MA and my family for help.
I am afraid to change state residency because my emotional/physical health is so fragile I never know if I have to go back to MA, as my children live there and could help me. I have been under psychiatric care since 2011.
Now, I am worried, as my paycheck has my CA address so they can mail this small amount to me here in CA.
I do not want to do anything illegally, but I am AFRAID to change my residency from MA to CA, as my health is unstable. I need to keep my MA home, as it is mortgage-free and I will retire there, to be near my children, most likely 10 years from now – IF MY HEALTH HOLDS OUT. I could return to MA at ANY time due to my health.
I am thinking of renting an apt. now and signing a year lease – just to get to step#2 in trying to stay in CA.
What should I do? Note: I worked 2 weeks in MA in the beginning of Jan., before I came to CA on Jan. 18, 2014.
Gloriann
Hi Gloriann,
I strongly suggest taking a look at the MA government website as well as the CA government website since residence laws are different from state to state. Since your health is in jeopardy, they may be able to provide you with an appropriate solution based on your residency.
How would a guy go about this I have a house in idaho that I own. But I comute to neveda for work looking to rent a house in neveda and have roommates live in my house in idaho to help with the bills goal is two have two furnished houses one in each state that I can call home. The reason being is that I am in one state for a week then the other for a week so a total of six months in each state. 0also would the fuel costs to go back and forth be something that i can claim on taxes along with the cost spent on the two places.
Hi Michael,
It is possible for you to be considered a resident of both Nevada and Idaho. I suggest checking each state’s website since each state has their own residency guidelines. If you are considered a resident of both states, you would need to file a Resident return for each state (along with your federal return).
As far as the fuel costs and home expenses; they would not be considered valid deductions unless they helped you to earn an income.