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 am a NJ resident. In 2014, I switched job from a company that is based in NJ to one based in IL. I have not moved yet though and remained to be a NJ resident for the entired 2014. The income I earned in NJ had tax withheld for NJ and the one I earned in IL had tax withheld for IL. I a filing as resident in NJ and nonresident in IL. The NJ 1040 mentioned in line 41 about Credit for Income Taxes Paid to Other Jurisdictions. Do I qualify for that credit if the income I earned in IL was not subject to tax in NJ? Thanks.
Hi Richard,
Congrats on the new job! Yes, you are required to file a resident return to NJ and a nonresident return to IL. While doing so, you will be taxed by NJ on all income you received, from all state sources. The taxes already withheld from your paychecks will be deducted from this amount. With that said, yes, you will qualify for the credit since IL will tax you on the income earned from IL sources and NJ will tax you on your income earned from both NJ and IL.
If you still need to file, I would suggest using the RapidTax application. By doing so, you’ll avoid complicated tax lingo and will be able to reach out to the RapidTax team with any questions you may have regarding your tax situation.
We own and rent out a house in Washington state, but we currently live in Hawaii. Hawaii taxes the rental income we receive from our house in Washington. Can I claim (deduct) that tax I pay on our Washington house from our Hawaii state taxes?
Hi Randy,
You won’t be able to claim the Washington house tax on your Hawaii taxes. However, you will be able to report your rental expenses and deduct them on your federal tax return.
There’s a lot of useful content regarding what you can include as a rental expense on the RapidTax blog. Here’s the links to a few of these blog posts: Part 1, Part 2 and Part 3
Hi,
I am trying to file taxes and I need your assistance. In 2014 I was a resident of Texas but I went to school in NY and lived in the dorms there. During my time in NY I had a paid internship that I earned a total of < $3000 for the year. What forms do I have to fill out? This is my first time filing taxes so any assistance would be helpful. Thank you.
Hi J,
Great question! In addition to filing a federal tax return, you’ll need to file a non-resident NY state tax return. On the NY tax return, you’ll report the income that you earned from your paid internship. NY state will tax this income.
The good news is that you won’t have to search for the NY non-resident tax form. Instead, you can use the RapidTax application and file your federal and non-resident return together. The application will do all the calculations for you! If you have any questions along the way, feel free to reach out to our tax team by phone, email or live-chat support.
Good luck with the rest of your studies in NY!
My husband works in Afghanistan for a company based in Maryland. We live in Alabama. I’m aware I’ll need to file for us in AL – but I’m running into questions concerning MD. He’s never actually worked in MD.
On his 2014 W-2 the state info is filled in (box 15 says MD box 16/State wages,tips, etc. has his full income listed). There were no state income taxes withheld. So, do I simply not file in MD?
Thank you very much for the help!
– Mary Beth
Hi Mary Beth,
Reporting income earned from a state that’s not your resident state can be confusing. You’re right about needing to file a resident return to AL.
Regarding MD, yes you will also need to file a non-resident tax return to Maryland and report the Maryland sourced income your husband earned.
Fortunately, we’ll help you file both state returns (along with your federal return). Rather than filling out multiple tax forms, you (and your husband) will just need to enter your tax information once. We’ll do the calculations!
If you have any questions along the way, feel free to call or message our support team. We’re here to help.
Hi I just moved to Washington from California. I have been here in Washington for about a month now. How do I file my taxes?
Hi Jose, if you earned income from California sources in 2014, you’ll file a resident return to California for the 2014 tax year. Washington does not have an income tax so you won’t have to file a state return to Washington. We are here to help if you have any further questions.