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.
Hello,
I am very confused on how to file 2013 state taxes. I am a resident of Arizona. I live and work there for most of the year. During the summer months (May, June, and July) I stay with my parents in MI and run my small business in IN. I also held a waitress job in MI for 2 months over the summer. I am using a tax software and asks me to list the places that I lived during 2013. What does it mean by this question? Do I list Arizona all year round? Do I list Arizona from January to May and then Michigan from May to Aug and then Arizona again until December?
Hi Kayla,
Depending on the tax software you are using, the data may need to be entered differently. When using our tax software at Rapidtax.com, you would enter each state that you lived in for the year and the time frame that you lived there for, as you mentioned above.
I moved to wa state this month with same company from the Midwest I received about 15% cost of living increase but noticed my federal tax with holding deduction went from $184 to $363. WA doesn’t have state income tax and I’m still paying more. I didn’t change anything other than update address does this seem correct? Federal Medicare and social security tax only increased about 10-15%. Current salary about 100k filing jointly, maybe crossed a threshold or possible error?
Hi Teddie,
It is possible that a mistake was made on your company’s part. I suggest taking a look at the U.S. Office of Personnel Management Tax Withholding Calculator tool. This will most likely not give you an exact number but you will be able to compare the amount that is being withheld with the amount that this tool is claiming should be withheld.
I recently took a similar job to the one I had before that was based out of St. Louis MO. I live in TN. The new job is based out of New Jersey. In the old job I was never taxed MO taxes – only Federal/withholding taxes. I received my first check with my new company based in NJ and I was charged NJ income and state taxes.
I am in sales and have for years sold products from different plants across the country and lived in TN with no income tax charges from my old company. The new company is deducting NJ taxes and it doesn’t seem correct. I do visit the NJ plant and have done some training there but it is just for a few days at a time – I live in TN.
Why did my old job based in St. Louis never charge me any Missouri Income taxes but the new job in NJ is charging me NJ income and state taxes?
I never had to file a non-resident return before when I worked with the Missouri company doing the same thing I’m doing now based out of New Jersey. Help.
Thanks.
Hi Jay,
I suggest speaking with your pay roll department as soon as possible. You are correct in that it does not matter where your company is based. State taxes should only be withheld from your paycheck in the state where you live and where you physically earn money. In your case, it would be Tennessee (which also does not have an income tax). If in fact this is a mistake on your job’s end, you will be able to claim back the taxes withheld when you file your taxes.
Me and my husband was together the first 6 moths of the year can he ad me on his taxes also our daughter is 17 she will be 18 may 2015 she moved out a month ago can we still claim her in his taxes
Hi Tonya,
There are certain qualifications that must be met.
In general, to be a taxpayer’s qualifying child, a person must satisfy four tests:
1.Relationship — the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of one of these.
2.Residence — has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.
3.Age — must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.
4.Support — did not provide more than one-half of his/her own support for the year.
I have a rental property in NY (my FHA home with a lease-to-own option), and moved to OH for work. Do I file an Ohio tax return for my income, a NY tax return for the profit/loss on the rental property, and a federal return for both of them together?
Hi Tarin,
Depending on when you moved to Ohio (within the tax year you’re filing for or not), you will either need to file a part-year state resident OH tax return or a OH state resident tax return. You will also need to file a federal return for all income from both states. Now for the tricky part; you will need to check the NY state tax laws where the rental property is located. In most states, you are not required to file a return if your income falls below a certain amount. States may use only income received in that state or count income from all sources. Every state follows a different set of guidelines when it comes to residency requirements.