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.
Hi, I have some questions about state tax return.
in 2012, I am a full-year resident of NY state and got W-2 in NY. However, my wife is a part-year resident of NY (another is OH), and got two W-2s, one from NY, one from OH.
So for our NY state tax return, are we full-year resident or not? If yes, where in state tax form can I deduct my wife’s OH income?
Thank you.
Hi Feng,
Even if you and your wife file a joint federal return you can file separate state returns. In your situation this might be the easiest thing to do. You should file a New York resident return and then your wife should file an Ohio part-year resident return and a NY part-year resident return.
Thanks!
At the beginning of 2011 my brother interned in MD while living in PA. Late in 2011 he moved to MD and started a full time job for the same company. Somehow his state taxes paid didn’t get changed from PA to MD until partway into 2012. Now on his 2012 taxes, which he was a full time resident of MD, he paid a portion to PA. How do we do his state/s return?
Hi Marcus,
If he was a resident of Maryland for the entire year, then he only owes taxes to MD. Under normal circumstances he would only have to file a MD resident return and be done with it. However, because taxes continued to be held for Pennsylvania, he needs to file a PA nonresident return in order to get that money back. On his MD return he should also be sure to claim a credit for taxes paid to PA. Basically what will happen in PA will transfer that money to MD and then your brother will be responsible for paying the difference or will get the difference back as a refund.
Hi–
My husband and I lived in MA for 5 months. I lost my job and collected unemployment in MA. I then moved to NY where i still collected unemployment from MA, while my husband worked in MA during the week and came to NY on the weekends. I had no income in NY for the year. My husbands income from the year was totally in MA. Do we file both NY and MA returns?
Hi Melissa,
The crucial question here is whether you became a permanent resident of New York. It sounds like your move was a permanent one, in which case you are probably now a NY resident (This page from the NYS Dept. of Taxation and Finance should help you make that determination: http://www.tax.ny.gov/pit/file/pit_definitions.htm#resident).
For now let’s assume that you are. I should also let you know up front that even if you and your husband file a joint federal return, you can still file separate state returns. In your case this might be the best thing to do.
Since you were a Massachusetts resident for five months you need to file a MA part-year resident return, Form 1-NR/PY. But then because you continued to collect MA unemployment (which is considered MA source income) once you moved to NY, you also need to file Schedule R/NR. Finally you have to file a NY part-year return because you were a resident there for the second half of the year.
It sounds to me like your husband remained a MA resident for the entire year so he should probably just file a MA resident return.
I own a home in Ca. but worked and lived in West Virginia from Jan. thru Oct. 2012. I rented at first but then bought an r.v. to save money. What living expenses can I deduct ? All my withholding was from w.v.
Hi Andy,
I’m not aware of any living expenses that you can deduct, however you may be able to deduct some of your travel expenses.