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.
I’m currently living in Colorado to help my mom and my husband lives and works in Texas. I have lived in Colorado this year just going back to Texas to visit. My husband more money than I do but my question is is there gonna be issue with me filling my state tax return since we file federal jointly? How would I file my state tax? As a resident?
Hi Lina,
It is common for spouses who live in different states to file a joint federal return and separate state returns. To see if you qualify as a resident, I suggest checking on the state government website since each state’s set of eligibility requirements are slightly different.
Moved to FL in July 2014 from CT worked in Ny for 1 month of 2014 received unemployment from ny for four months did not have taxes taken out and worked in FL for 4 months . How do I file and what deductions am I allowed for my move?
Hi Jacqueline,
Along with your federal return, it sounds like you will need to file a part-year state return for CT and a non-resident state return for NY. You will not need to file a state return for FL since there is no state income tax.
Hubby is active duty military and FL resident (therefore no state tax). I am a NC resident. We live in MA (stationed here on orders). I realize I do not qualify under the MSRRA (must share same state of residency with AD member) but how do I report my income that I have earned here in MA. On a non resident MA return? Does any of our income get reported on a NC return?
Hi Patti,
If you do not qualify as a resident of a state but you earned an income there (physically) throughout the year, you will file a non-resident state tax return along with your federal return.
i lived in MA from Jan-April in 2014 and then moved to NY. i transferred my job but only received 1 w2. when i do my taxes it wants me to the non-Massachusetts portion of the amount i paid during 2014 to Social Security (FICA), railroad, Medicare, U.S. or Massachusetts retirement and i do not know this answer since they are not separate. Where would i find this information?
Hi Jackie,
I suggest contacting your employer that did not issue you a W-2 as he/she is obligated to. If they refuse to or you cannot get a hold of them, you may need to contact the IRS and request a transcript. This will have all income information that is reported on your W-2.
Hi,
I live in Virginia and I’m self employed. My contract is with a Connecticut Holding company that owns other companies in NH and MA. I work every other week on site in CT, with day trips to NH and MA, and I work every other week remotely from Virginia for each of the three companies.
NH is not a problem since they don’t have taxes but what about MA and CT, do I split my income between those states and what do I do about the work done remotely?
Thanks
Hi Jean,
I suggest taking a look at another article on our blog that will answer any questions you may have about working remotely.
You will also need to see which states your company is withholding taxes from. This can be seen on your pay statements or on your W-2 that your employer issues at the and of the year.