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 have a question,
I am a Californian resident who works from home but my company is based in California, I currently staying in Texas but told my company to keep me as a Cali resident even though I moved to Texas however have no property pay no rent here in Texas my car and license are still registered in Californa, i wanted to get a side part time job while here in Texas working weekends only. If I do that will i have to fill in both states? Or it’s not possible as my current job has based in Cali has me registered as a Cali resident
because you reside in the state of Texas, which is a state that has no income tax, filing a state return with them is unnecessary. However, because you are still an indicated California resident, you may need to file a full-year return or at least a part-year return with California. If you are staying in Texas, you can no longer hold onto your residency in California for the full year. You must indicate the change of status, however, this does not mean you will be forfeiting your California residency outright. There are still domicile rules, which are better explained when you contact your local State offices. It’s best for you to get in contact with your state for further assistance on your situation.
Hey! great post! Had a question;
I’m 20 yrs old from Cali, but a student in MD. I also run a wholesale trading business in Maryland from my dorm room. How should I file? im looking to open a Maryland Corp or LLC for 2018. Should I become a resident of Maryland? Or stay a Cali resident….
Any help would be appreciated!!
Based on the information you have provided, you will need to file a CA resident return and a MD non-resident return. If you become a full-time resident of MD for the next tax year, then you will not have to file a CA return.
I live in Oregon. I am receiving my broker statements and 1099’s at my mailing address in California. My Beneficiaries address.
Does the IRS SEND A COPY OF THE 1099’S TO THE CALIFORNIA FRANCHISE TAX BOARD.
THANK YOU
Hello Moshe,
I don’t believe the IRS sends the CA FTB information unless it is requested; the IRS can disclose information to the CA FTB if requested by them. You may contact the IRS and CA FTB for confirmation.
This question is a little off subject but does relate concerning residency in 2 states. I own a home in both VA and WVA. The WVA home is a vacation home and was paid in cash approx. 2 years ago, 2015. Having now paid WVA real estate taxes for 2 years, I would like to change my residency to WVA for college tuition purposes. My son currently a Junior in HS would like to attend the University of WV. I would like to pay in state tuition if possible… I work from home and can change my driver’s license and voter’s reg. to WVA using my vacation home address… Also, I can begin paying WVA state taxes on my income for a 2 year period leading up to his HS graduation, along with registering a vehicle in WVA to help aid my case. However, I do not plan to change my wife’s driver’s license and do not plan to live in WVA, my son will finish HS in VA. I have two questions…
1) will the actions above allow classification for in state tuition – not sure where to turn to find this answer?
2) will I have any issues with VA over state taxes?
thx for website and information…
1) The actions above may qualify you for in-state tuition. Be advised however, In-State Tuition Qualifications are determined by each individual institution. The criteria differ from school to school and you would need to research WVU tuition policies to determine if you qualify. Your spouse’s residency to VA could complicate the matter, but you would have to consult with WVU for definite answers.
2) I cannot guarantee you would not have issues with VA, however as long as you are reporting income to VA and paying VA state taxes you should be fine. I would recommend contacting VA for more information.
I was living and working in California but have accepted a full-time permanent job in Arizona were I will be living and working. My family will remain in our home in California.
Do I pay Ca taxes, AZ taxes or some combination there of?
This year?
Next year?
I will be changing my DL and Voter reg to AZ.
It may be best to file married filing separately this year and the coming years that you are living away from California. If you choose to keep your CA state residency, you will be subjected to taxes on all income earned throughout the year. This becomes more complex because you have chosen to live in AZ, and if the state considers you as a resident you will subject to taxes on your income earned throughout the year over there as well. For the remainder of this year, it seems that you can file 2 part-year resident return forms. However, if you remain in AZ for the full year in 2018, you will likely have to file 2 full year resident returns in both CA and AZ if you choose to file jointly with your spouse.
Ouch??
Could I end up double taxed on my income (AZ + CA)?