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.
Our home is in California and I work for a California-based company, mostly from home, sometimes in the office.
I just accompanied my son to NYC so he can be in a play for approximately 8 months (HE will be earning money in NYC), but will continue to work for the same California company, getting same direct deposits, etc. Wife and other children will remain in our California home.
Approximately 3 3/4 months of this NYC work will be in 2015 and 4 1/4 months in 2016 (Sept.15-May 16).
I’ll also be going back to my California home and office approximately every 30/45 days.
I feel like i don’t qualify as a NY resident, but not sure about part-time resident or non-resident for tax purposes?
Hi Tom,
According to NYS, you are considered a New York State resident for income tax purposes if either of the following is true:
– your domicile is New York State; or
– your domicile is not New York State but you maintain a permanent place of abode in New York State for more than 11 months of the year and spend 184 days or more in New York State during the tax year.
Given your tax situation described above, you would file a CA state resident tax return. You mentioned your son would be earning an income in NY. IF you are also going to be earning some sort of income in NY (from NYS), you will then need to file a NY state non-resident tax return to report that income earned.
I am retired and receive a pension from the state of California. My current residency is CA, but I also live in Kansas part time. How should I file?
Hi Kate,
Although there is a law that specifically states “No state may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State”, you may still be responsible for tax on your pension if you live partially in two different states. Keep in mind that each state has their own set of rules so you will need to check with each state’s tax department for specific rules. You can see the pension withholding rules HERE and the California pension withholding rules HERE.
I owe Idaho State back taxes, and I moved to California. Can Idaho tax commission garnish my wages if I work and live in California now?
Hi Eileen,
Legally, the CA income you earn can still be garnished by ID. However, the creditor will need to take the extra steps to complete the additional necessary paperwork to do so. It takes a bit more effort on their part but is not impossible. Your best bet is to set up a payment plan sooner rather than later in order to avoid penalties and/or having to pay in one lump sum all at once.
I live in GA. The company I work for is in FL. I would like to have taxes taken out of my check every pay period, but because of the way my employer has it set up, I am paid as an independent contractor. Is it possible to get dual residency so that he can have taxes taken out?
Hi Maria,
As long as you are considered to be an independent contractor for tax purposes, you are paid an un-taxed income each pay period. This means that you will be issued a 1099 instead of a W-2 at the end of the financial year. You are still responsible for the tax owed and as a 1099 employee, you are expected to make quarterly tax payments or withhold the tax yourself.
To answer your specific question, dual residency will not help you in your situation. You may want to speak to your employer about him/her claiming you as an actual employee instead of an independent contractor. As an employee, you are given a W-4 to complete which will control the amount withheld from your paychecks to cover the tax owed. The situation in place now is saving your employer money but it is probably not the best decision for the effect it will have on you come time to file your taxes.
I am going to college soon. I live in PA, but will be moving to another city to go to school. Do I still have to pay city resident tax for the city that I use to live in or not? I will most likely be coming back in between each holiday. Do I still count as a resident of that city even though I wont be there most of the time?
Hi Tammy,
This will depend on if you are earning an income in these cities. There are two types of local city taxes that you could be responsible for; tax on income physically earned in a locality and tax on income earned while living in a specific locality. In your specific circumstance, you may want to speak to a local accountant about your tax situation regarding your residency.