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 employer neglected to show income reported for two states when I moved. therefore, I paid the entire tax year for one state, but moved in July. The W2 does not reflect a 50/50 split in income for both states. (as a matter of fact, of this writing, I am still paying taxes to the state that I moved from – though this should change tomorrow). what do I need to do in order to get the correct income from both states (essentially a 50/50 split) and report it on my state income taxes for each respective state.
Thanks
Hi Dennis,
You will file a part-year resident return for both states. When filing for each state, report the income to both states and report each state’s taxes deducted from your income. If you were overtaxed, you should expect a refund.
Hi – My wife moved from Kansas to Maryland on January 4, 2013. She did not work in Kansas for those three days, but she didn’t establish residency in Maryland until the 4th. Does she need to file a return for Kansas?
Thanks.
Hi Frank,
No, she will only need to file a resident return for Maryland.
Hello Tax Advisor,
I have a question about my tax situation. My company head office is in NY and I am living in NJ. I was working in NY office till October 2012 . Then due to hurricane Sandy Company accelerated the move to NJ office and I starting working in NJ office since middle of December 2012. All my pay check tax deductions for 2013 are for NJ state only. But when we got the incentive paid in January 2013. The company deducted the NY tax for the incentive amount and nothing for NJ state.
So when I file the return this year do I have to show any income for NY state. I did not work in NY office for whole 2013 year. I did get a W2 for NY state which only the NY state paid on incentive amount and the total salary for 2013.
Do I show NY income for 2013 because of my incentive tax ? Or I should just show the NJ income and get refund from NY state and pay NJ state for tax amount on incentive ?
Can you please advise on it.
Thank you.
Considering you are a resident of NJ, you will report all of your income received (from NJ and NY sources) on your NJ resident return. From what it sounds like, you’ll only need to file a non-resident return to NY if you want to receive a refund from NY.
I moved to nc from georgia but never changedmine or my husbands license or address, but I’m receiving medicaid for my children in nc and my husband has worked in nc since june, which state are we considered residents of?
Hi Tracey,
In most cases, you are considered a resident of the state you have lived in for the most time during the tax year. It sounds like you are residents of Georgia. That means you’ll have to file a resident return for Georgia and a non-resident return for NC. As a non-resident you’ll be taxed on income you received from NC sources.
In the article above, it reads: “Take note: 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.”
I taught an online course for Ohio State University while living in Colorado (never any residence outside Colorado during the tax year), but the HR office in Ohio insisted they needed to withhold state tax. The quote from the article suggests this is incorrect. Ohio tax code says that I have to pay tax on any ‘Ohio-sourced income’. What is correct? I need to know so I can talk to HR again this year before teaching another course.
Hi Jim,
You’ll have to file a resident return for Colorado and a non-resident return for Ohio (considering you had Ohio state taxes withheld). As a Ohio non-resident, you’ll only be taxed on income received from Ohio sources.