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 worked in ohio until october 2013 we are moving retiring in nc on our vacation home (not working in nc) WHEN MY RESIDENCE START IN NC, ALSO DO I HAVE TO FILE STATE TAX IN NC
Hi Robert,
Yes, if you move to North Carolina and become a resident there you will have to file a NC resident return. In the year that you move you will have to file a part-year resident return in Ohio and a part-year resident return in NC.
Hello,
I worked and lived in NYC in 2011. When I left this employer at the end of 2011 they sent me a W-2 for my vacation pay, holidays, etc. but it was marked for 2012. I moved to Boston, MA on Dec. 31, 2011 for my new job that started on Jan. 9, 2012. However, the first 3 pay checks that were issued were to my old address in NYC. Normally I wouldn’t care, but because of this mistake that my company made, I now owe the state of New York money, rather than them owing me. Is there anything that I can do to rectify this error at this late stage? Thank you!
Kristen
Hi Kristen,
You shouldn’t owe the state of New York money if you were a MA resident and working exclusively in MA. It’s true that NY taxes were probably withheld because of this mistake and that you will have to file a NY nonresident return because of it. But if you were not a NY resident for any part of 2012 and you didn’t work in NY you should get all that money back as a refund.
Thank you for such a fast reply!
I believed that to be the case. One thing that concerns me is this. My employer does not take VA tax from my check as indicated in my W2. However, at the bottom of the W2 form it lists “VA” at box 15 and the employers VA tax ID. Then box 16 lists my “state wages….”. Although, my mailing address does state Florida.
I have always worked for an out of state company, lived in another state, and never set foot in the companies state. So, I looked back at previous W2 forms and noticed they put my state of residence in box 15 not the companies state location.
Is my current company doing this in error? I am concerned that these W2s are electronically submitted to VA and they are waiting for a return that isn’t coming.
First I wanted to say thank you for doing this!
I live in Florida and work for a company in Virginia. For this company I work in the Middle East as a pilot. I actually don’t set foot in Virginia.
Do I owe Virginia tax?
Hi James,
No, you should not owe any Virginia taxes. The only circumstances in which you would owe VA tax would be if you were a VA resident (which you aren’t) or if you physically did work in VA (which you don’t). In this case the only scenario in which you would have to file a VA return would be if VA taxes were mistakenly withheld from your pay – and this would only be to get that money back.
I just received a job in California. My wife works here in Florida and will be staying here working, and staying with the kids until she can find a comparable job in California (She is a radiation Therapist). We have never been to California, so we don’t even know if we will move for certain. I need to take this job in California, because I graduated a while back from a school, receiving a second degree in a medical field, and here in Florida it has been impossible, so far, to get a job in my field, so I jumped at the opportunity in California.
How would we pay state taxes. Florida doesn’t have any, but California does. Also, what state would or should be considered (if it makes a difference), our resident state.
Thanks
Al
Hi Alfredo,
Everything depends on where you are a resident. I assume that if you take a job in CA and are living there more or less full-time that you will be a CA resident. What you need to do is look at this document and figure out if you really do qualify as a CA resident – https://www.ftb.ca.gov/forms/2012/12_1031.pdf
Let’s assume that you are a CA resident. In that case you would need to file a CA resident return that taxes you on all your income, but you should file separate from your wife (assuming that she remains a FL resident) so that her income does not get included and taxed as well.
Since FL does not have an income tax and CA has one of the highest income taxes in the country, it’s probably best for your wife to remain a FL income until you are absolutely sure that you want to move the family out to CA.