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.
here is my situation.
I lived in NJ from Jan-April 30 and was unemployed. Did not collect any unemployeement as it had run out!
I moved to Ga and started a job on May 1
My wife did live and work in NJ from Jan to Sept then moved to GA effective in Sept.
I usually file with TurboTax and I am wondering if this is still an option? Do I need to file seperate state income tax returns for my wife and I? Should I employ a tax accountant because of this situation?
Hi Ken,
I suggest filing separate state returns for this year but file your federal return as married filing jointly. You can create an account with Rapidtax and file today!
I am divorced, my 21 year old son attends college in California, he is a year round student. I am head of household and would like to claim him on my taxes for 1 more year. Can I claim my son for 2013? I still support him, by paying bills and sending him things that he needs and money.
Hi Linda,
There are certain requirements for claiming your child as a dependent.
1. The person must be a U.S. citizen, a U.S. national, a U.S. resident, or a resident of Canada or Mexico.
2. You must be the ONLY person claiming them.
3. You cannot claim them if they are filing a joint return.
4. The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them.
5. Your child must be under age 19 or, if a full-time student, under age 24.
6. Your child must live with you for more than half the year.
7. You must provide at least half of the child’s financial support.
thank you for the info. He is in school full time, only home about 6 weeks a year, Does this mean I cannot claim him?
I pay for his phone, send him money, some food and other things that he needs.
I own a vacation house in Maine (which I rented out more than 14 days in 2014) but I’m a full-time resident in New York and also work in New York. I know I have to file my regular NY State taxes but for the income that the house in Maine has generated, do I file separately as a non-resident in Maine and pay taxes to Maine for that income? Also, can I deduct things like air fare (to and from Maine), rental cars, things I buy for the house, etc? Thanks.
Hi Jeaniebeanie,
In this case you would only have to file as a resident in your normal home state and then as a nonresident in Maine since you earned money there. We have another article on our blog that may also provide you with a bit more insight on this. It is titled, “Can You Be A Resident of Two States at the Same Time?”.
As far as deductions go…
All rental expenses are typically deductible, although not always immediately. Along with HOA fees, you can write off repairs, maintenance, landscaping, advertising, legal costs of eviction and money you pay to property managers. Any major improvements (ie: a new roof or a remodeled kitchen) have to be depreciated over time. You would need to subtract some of the value each year as they age. You can also take depreciation to cover aging of the house itself.
It gets a bit more complicated if, instead of a full-time rental house, you have a vacation home you rent out for only a part of the year. Personal use makes some of your HOA dues and other expenses into personal expenses and therefore they are considered ‘non-deductible’. If the house is available for rent six months of the year, say, you can only deduct six months’ worth of expenses. If you rent it out to friends or family at a discounted rate, that counts as personal use.
Hi,
I live in Washington state (no tax). Staring Nov, I will be working in MA state (5% income tax); My family will be in Washington and I will be travelling back to WA on weekly/bi-weekly basis. I understand that I have to file nonresident tax forms for MA. My questions are –
a. If I earn some money from stock business
b. If I sell my stock options or ESPP
c. If I earn any bank dividend or interest
As above sources are not related to MA source of income, Do I have to pay taxes for above income in MA? If yes, how will I recover because WA has no tax.
Thanks in advance. This blog was very helpful.
Thanks,
Hi,
All three of these amounts should be reported for the state you were a resident of when you received it.
Hi – I am thinking about taking a job for a company that is based in NY, but I will be working from my home in CT (regional sales). Do i need to be paid through New York, or can i be paid(and taxed) in CT?
Thanks in advance!
Hi John,
I suggest speaking with the pay roll department with any specific questions. Generally, taxes are withheld from the state where you live and where you physically work and earn an income. Therefore, CT should be the only state withholding.