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.
Dear Tax Adviser,
I’m working in California and partially living in California. My fiance is in Washington state which is income tax free state. I talked to my company to be able to work two weeks of each month from Seattle and I’m at the office two weeks in California. I started from Jun 2013.
I’ve been paying the California Tax in my paychecks.
I wonder if I can deduct the portion of Seattle stay from my income tax. if so, how should I file it?
Thank you,
looking forward to hear back from you.
Hi Arezoo,
If you spend equal time in both states, you can file a non-resident return to CA and only be taxed as a non-resident, meaning you will only be taxed by CA for income you earned from CA sources.
I lived in Oregon at the start of 2013 and moved to Hawaii in December. I telecommute to my old job in Oregon and my employer paid Oregon taxes for all of 2013 according to my W2. I was technically a resident of HI for 2.7 weeks at the end of 2013. Am I correct in thinking that I owe 2.7 weeks of my salary to HI in taxes and should have a credit from Oregon for taxes paid to HI or is it the other way around? Thanks.
Hello Tax Advisor,
In 2013 I was paid all year by my employer in New York. I lived in New York from January through April, stayed with my parents from May through July in California, and lived in Georgia from August through December. I rented apartments in New York and Georgia, but not in California because I lived with my parents. I am not a student, but a professor on a fellowship. Which states do I need to file taxes with?
Hi Gustavo,
Did you receive income from Georgia sources (or California sources)? If not, it sounds like you will just need to file a resident return for New York, reporting all of your income received in 2013.
My husband and I have a home in IL. Last year my husband worked in GA and rent an apt. there for the whole of 2013, but he’s thinking of finding a job back in IL. My husband still has his IL driver license and uses the IL address for all of his accounts, such as W2, Pay check, Medical insurance, etc. even though he works in GA. I’m a housewife and our sons and I have stayed at our IL home for the whole of 2013 and we have not attempted to sell our IL house.
Can we file a joint return for federal? Can we file joint return as IL resident and GA non-resident? Should I file as an Illinois resident and Georgia non-resident and my husband as a Georgia resident and Illinois non-resident separately and if this is the case, how can we get a tax credit back? Or should we file some other way? Also, in our case, can my husband’s expenses (rental, utility, travel, etc.) be deductible? Sorry for all the questions since this is my second year doing tax returns. Thank you very much.
My wife and I got Married in 2013. I lived in Oklahoma all year and worked here all year and my wife worked in NY for 6 month and moved to Oklahoma and worked here for 6 month. How do I file my tax returns? Do I file federal Taxes as Married filing jointly and state Taxes Married filing separate for each of us? I was trying to add her W2 from NY in federal it would let me because it says we need to be a resident of NY to File federal. thanks.
Hi there,
Yes, you will file as married filing jointly for your federal taxes and married filing separately for state taxes. For your wife’s state returns, she will file a part-year resident return for both NY and Oklahoma.