Do you carry the burden of dealing with multiple states on your tax return?
For most of us, filing a state tax return is just another step in filing a federal return. Your tax-filing software just transfers your information to your state’s return and you’re done within minutes.
But what if you moved to a different state during the tax year? What if you worked in a state other than the one where you lived? What if you worked in multiple states? Suddenly filing state taxes becomes a little trickier and it may involve filing taxes in two different states.
Basically there are three different types of state tax returns that you need to worry about:
- Resident
- Part-Year Resident
- Nonresident
As a general rule, you have to file a resident tax return in the state where you lived, a part-year resident return in any state you moved to/from, and a nonresident return in a state where you earned money but didn’t live.
Preparing your Resident Return
A resident return is the return you have to file in the state where you are a resident. This return will tax you on all of your income, regardless of the state where it was earned.
For most people this is very simple – the state where you are a resident is the one where you live and work. But for people whose lives involve multiple states, the first step to filing state taxes is figuring out where you are a resident.
Every state has different requirements for who qualifies as a resident for tax purposes. You need to visit the websites of the tax authorities of the states in question to figure out where you are a resident.
You should note that there are nine states without income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you are resident of one of these states, you don’t need to file a resident tax return.
Preparing your Part-Year Resident Return
A part-year resident return is for people who moved during the tax year. If you were a resident of one state for part of the year and then a resident of another state for part of the year, then you need to file a part-year resident return in the first state and a part-year resident return in the second state.
A part-year resident return taxes you on all of your income for the portion of the year that you were a resident of that state. Let’s say you started the year living in Illinois. Then in July you moved permanently to New York. You would then have to file a part-year tax return in Illinois that taxes you on all of your income you earned during the first six months of the year. Then you will have to file a part-year resident return in New York that taxes you on the income you earned during the last six months of the year.
Preparing your Non-resident Return
You need to file a nonresident return for any state (other than the state where you live) in which you earned money. This nonresident return will only tax you on the income you earned in that state.
Here’s an example. Let’s say you live in New Jersey, but you work in New York. You’ll need to file a resident return in NJ. You will also have to file a nonresident return in NY and pay taxes on the income you earned there.
Worried about being double-taxed? Don’t be. When you file your state returns, you will have the opportunity to claim a credit for the taxes that you’ve already paid to another state through withholding. The states will then settle accounts among themselves.
You may also have to file a nonresident return for any state that had taxes withheld from your paycheck. Normally you only have to file taxes in the state(s) where you were a resident and where you earned your income.
But sometimes payroll departments goof up and withhold taxes for a state you neither lived or worked in. This commonly occurs when you work for a company that is headquartered in a different state than where you work. You’ll need to file a return just so you can get that money back as a refund.
File all of your state tax returns with RapidTax!
It doesn’t matter where your company is located. If you didn’t live in a state, and you physically did not work there, you don’t have to file a return there just because the company paying you is based there, although you do if they accidentally withhold taxes for that state. If this happens, ask them to stop withholding taxes in that state so you have one less return to file!
Hopefully this information will give you some basic guidance when it comes to filing state taxes. Each state tends to have their own set of rules. It is always a good idea to do further research into your resident state and the state where you work. Whether you need to get caught up on a late tax return or file a current year return, prepare your state returns on RapidTax.
I have a house listed as my primary residence in New Jersey but I rent an apartment and work in Oregon. Where do i file my taxes?
Hi AR,
First you need to look at the residency definitions for both New Jersey and Oregon. If it turns out that you are an OR resident, then you only have to file a resident return there and you don’t need to worry about NJ. But if it turns out that you are a NJ resident, then you need to file a resident return there and a nonresident return in OR.
I live in the state of georgia, but I work and pay taxes in south carolinia. Since I have had taxes taken out for south carolinia already am I still going to be taxed again by the state of georgia? Thank You.
Hi Geo,
Yes, Georgia is going to tax you. As you are a GA resident, they have a right to tax all of your income, regardless of where it was earned. However, on your GA return would will have the opportunity to claim a credit for taxes paid to another state (in this case SC). What will end up happening is that SC will transfer some of that money to GA. Even though you’ll be taxed by two states you won’t be ‘double-taxed.’
I lived and worked in WI for 6 months then I moved to CA for 6 months. I did not work for the 6 months I lived in CA. Do I need to file a tax return in CA as well? I received a letter stating that I owed CA back taxes but I didn’t work while living there so I didn’t think I needed to?
Hi Pk,
That depends on whether you became a California resident. If you DID become a CA resident, then yes you probably do need to file a part-year resident return for CA for that year (though you should check the filing requirements just to make sure). If you remained a Wisconsin resident then you shouldn’t need to file in CA.
I live in NM and was offered a job in Texas. My Partner and our son won’t be going. My understanding is TX doesn’t take out income tax. How do I do taxes? We currently have a civil union but are going to get married. We own a home. I was told for tax purposes to become a TX resident or I’ll owe a whole bunch to NM. Is this true? What would be the best thing. It would be a significant pay increase.
Hi Jarod,
It’s true that if you remain a New Mexico resident, you will have to pay NM taxes, even though you are working in Texas. If you remain a NM resident you will have to file a NM resident return that taxes you on all your income. From a tax perspective, the best thing would be to become a TX resident since as you correctly noted TX has no income tax. If you and your partner end of getting married, that will make things a little more complicated, as you’ll likely file a joint federal return, but then s/he’ll have to file a married filing separately NM return.
Hello,
I am a first tour foreign service officer that maintains domicile in New York state but have been in Virginia for training for more than 183 days (their cut off for residency). I do not want to convert my domicile from NY to VA but am unclear on how to calculate how much to pay which state. Would I pay NY for the first 183 days of the year and the residual number of days calculate the payment to VA? I will move to Kenya in early October so at that time I will no longer be required to pay state taxes to NY (nor VA), correct?
Thank you,
C
Hi Foreign Service Officer,
You need to figure out where you were a resident over the course of the tax year. It sounds like you’re implying you ceased to be a NY resident and became a VA resident. If that’s true, then you would need to file a part-year resident return in each state for the days you spent as a resident in each states. Also note that being out of the country doesn’t necessarily exempt you from state taxes. In this case check with NY. You may still be required to file.