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,
My name is Carlos, if my wife was working in California and getting deducted CA state taxes but is a resident of Texas, will she get all that money back since Texas doesn’t pay state taxes? We were both living in California because I’m in the Military.
Hi Carlos,
Thanks for serving our country.
Considering you are in the military, she might not have to pay taxes on the California income, under the Military Spouses Residency Relief Act. This is true if the following are true;
1.Both you and your spouse have the same resident state.
2.You were stationed, in compliance with military orders, in a state (in your case, CA) that is not your resident state
3.Your wife is in that state (in your case, CA), solely to live with the service member
Under these requirements, once you are no longer stationed in California, your wife no longer receives this and her income from CA will be taxed for the time you are not stationed in CA. That means, she would have to file a non-resident return for CA for the income she received at that time. The California website has more information about the MSRR Act.
I have a home in Pittsburgh and my wife lives there , I work in Maryland and go home on week end .
Which tax should I file ? Also does turbo tax qallow me to file the tax for dfferent states ?
Thank you
Giorgio
Hi Giorgio,
You can file taxes for multiple states on our website, RapidTax.com
You will file a state resident return for Pittsburgh and a non-resident return for Maryland. As a non-resident of Maryland, you will only be taxed on income received from Maryland sources.
In late December ’13 I moved from a state where there is not state income tax to a state where there is. I ended my job before I moved, but I received my final paycheck in January ’14. Since I was technically a resident of my new state at the time I received the paycheck (but not during the time I did the work), will I need to pay state taxes on that income in my new state when I file my 2014 taxes? Should I file as a full- or part- year resident for 2014?
This is different from the common “I live in one state but earned income in another” situation, as I was a legal resident of the state in which the work was performed but when the check was received, I was not.
Thanks,
Elizabeth
Hello!
I worked at a major retail chain in Michigan in 2012 then transferred to a different store in Minnesota in the middle of 2012. That year I filed taxes accordingly.
I noticed about halfway through 2013 that taxes were still being taken out for Michigan even though I had not lived there or worked there in about a year. I was able to contact my employer and have them stop taking taxes out for Michigan, but I am stuck now at tax time. I did not work or live in Michigan at all in 2013 but I have quite a bit of state taxes removed. How do I file in this situation?
Thank you so much 🙂
I should add that taxes were being taken out for both Minnesota and Michigan until about mid-2013 until I called and had them stop taking them out for Michigan.
Hi Stacey,
That must have been pretty annoying for you! Anyways, you did everything right. I would suggest filing a non-resident return for Michigan, that way you can receive a tax refund. Also, report the Michigan taxes paid when filing your Minnesota resident tax return.
Hi
I am resident of IL and beginning Jan 2013 I purchased couple of homes and rented in MI. Though this was in my name, my wife took care of these homes in maintaining and collecting the rent and spending most of the time more than 200 days in MI. So can my wife file her tax separately in MI and I with my 2 kids file tax in IL.. Since I work in IL and kids reside with me. My wife intends to move to MI, subsequently and I may too after year or so. What is the best way to file our federal and state tax returns. Please advice. Thanks in advance.
I would suggest filing separate state returns. Since you have income coming from MI sources, you’ll have to file a non-resident return for MI (along with your resident return for IL). As a non-resident of MI, you’ll only be taxed on income received from MI sources.
If your wife has income from MI sources also, she can file a part-year resident return for MI (and IL), considering she moved during the year.
For federal return, it doesn’t matter. Remember, there are more tax incentives to file jointly. However, you can file federal return as “married filing separately”. It’s up to you.