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.
My husband works in nyc the whole year, but i staye with the kids in California. Do we have to declare taxes in both States?
Hi Aida,
If your husband’s income is from New York sources, he will have to file a non-resident state return for New York along with his resident return for California. You can still file a joint federal return.
I live in MA and work in CT. I got 2 W2 forms from my employer one with my federal information and CT state taxes and one with just my MA state tax information *(ive been getting a large amount withheld for MA taxes to avoid paying at the end of the year) when I enter the information as 2 W2’s it tells me that I am earning twice my actual income and taxing me thusly, (even after taking out the CT credit) Should I be entering my income again in line 16 for both CT and MA? I’m quite lost actually….
Hi Susan,
You will file a resident return for MA and a nonresident return for CT. As a nonresident you will only report income earned from that nonresident state’s sources. Our website is designed to easily guide customer’s that have situations like this, by having you simply click a box saying you earned income outside of your resident state (then filling in your W2 info).
Hello,
My husband and I were both discharged from the navy this past May. We own a house in NY, but moved to TX before being discharged. Being military, we used our home of record for state taxes, so we never paid NY income taxes. My question is this; we began renting our home out in May. We’re renting it for well below the mortgage and are taking a loss. Are we supposed to file a NY Income Tax Return now that we’re getting income from our home? Is there any cut off of the amount needed before requiring to file? And, not to be a pest, do you know the rate for the taxes if we have to pay? Thanks for the info.
-Maureen
Hi Maureeen,
Regardless of it being a loss, you have to report non-resident or part-year resident rental income. That means you’ll have to file a non-resident return or part-year resident return for New York reporting your rental information.
NY Income Tax Rates are dependent on a variety of factors. Here is a link to the NY State Dept of Taxation website so you can learn how much you will be taxed.
Hi I am in the military currently and have a truck registered in north carolina and live in North Carolina but am a resident of Georgia how do I file taxes?
Hello,
I am in the Reserves. I was a partial resident of MN, a partial resident of NE, and a nonresident of NC (rental property) for 2013. For some reason when I try to fill out the tax forms on a program, I end up owing tons of money on state taxes even though I was unemployed for half of the year. Any tips on what I might be missing?
Hi Carissa,
First, are you sure you indicated you are in the Reserves for each state? Second, be sure you reported all income information for each state. I suggest seeing if the tax due adds up to the same amount on a different program. You can do so with us, create an account on our website, you can get started with your return for free. That way, you can see if our website program gives you different results. There may be a small issue in their website’s development causing the issue.