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.
Hello Advisor:
I own an LLC in Florida and live year long in Maryland. The income from my company in Florida passes thru my personal income and then: Is it filed in my personal return in Florida (no state income tax for personal) or in Maryland? 🙁 state income tax….
Thanks for your time!
Hi Fernando,
You will have to file a resident return for the state you live in and file a nonresident return for the state you work in. However, Florida does not have an income tax so you would juts file a resident return for Maryland.
Hello Advisor,
I’m DeC 2011, I moves from Florida to CT. Therefor held a Job in Florida for the complete year of 2011. When I moved to Ct I had no job. So in 2012 I filed my federal taxes only but when I entered all the information, I used my new address on my federal forms and entered my Florida address as my previous one. I just received a letter from Ct asking for me to file my back taxes of 2011. I have no state taxes to file since I didn’t work in CT in 2011 and Florida is tax free. Why would they ask me this 2 years later?
Hi Bruno,
I would suggest contacting the state of CT about the letter you received. If you lived and worked in Florida for all of 2011, there shouldn’t be an issue. They may have been confused based on your address change. The best thing to do is to contact CT and ask them, this way everything will be sorted out and you won’t have to receive any more letters in the mail.
Good luck!
Hi,
I started 2013 in New York City (living and working) and then made a permanent move to Utah at the end of April (so, 4 months in NYC and 8 months in Utah). I transferred my same job during the move (same company, just the NYC office to the Utah office). I also got married in July. My husband and I plan on filing jointly. Since he has been a full year Utah resident and I have been a part year, what will I need to file uniquely given my situation and how will it affect our joint return? Also, how do I handle the added NYC city tax as well? Gotta love paying 3 sets of taxes!
Thanks!
Aimee
Hi Aimee,
Wow, what a year! You can file jointly with your husband for federal tax return and separately for state tax returns. For State taxes, you will have to file a part year resident return for New York and a part year resident return for Utah. When filling out your New York State income tax return, you will fill in your New York City personal income tax information. This link to the New York State website to help http://www.tax.ny.gov/pit/file/nyc_yonkers_residents.htm
Hello,
Next year I will be moving my family to Maryland, but I am an oilfield worker and will be working in Oklahoma. I will technically have Maryland as my home but will be there less than 183 days a year, since I work 14days in Oklahoma and then travel back to Maryland during my off time. My company advised that Oklahoma taxes will be taken out as that is where I will work (and technically live), I should file them (Oklahoma taxes) as a non-resident; and not have to file Maryland state tax as long as I do not claim my wife in Maryland or any dependents in Maryland on my state tax; federally I will still file joint. to be clear there will be no income derived from Maryland and there is no reciprocity clause with Oklahoma or the other oil-field places I may work. Thanks for your response.
Hi Michael,
You will file as a non-resident in Oklahoma (the nonresident return will only tax you on the income you earned in that state) and file as a resident in Maryland (considering that is where you live). If you don’t file as a resident in Maryland, you will have to file as a resident in Oklahoma.
Hello,
We purchased the house in Florida within two years we would like to move for good on retirement, but we still earning salary in IL and I was wondering what do we have to to submit to Florida? I understand to maintain the house as payments for assessments, cleaning service, and other as remodeling and etc. We never rented the property in 2013 and I will see if the expenses are not to high to keep as is for us. Your recomendations?
Hi Cukla,
You will have to file a resident return for where you live. Note, Florida does not have income tax, so you will not have to worry about filing a resident return for Florida. However, if you are earning salary in IL and living there, you will have to file a resident return for IL. If you are only working in IL and not living there, you will have to file a non-resident return.
Perhaps, I need file non-residential on Fed Return, isn’t?