How To File Taxes in Two Different States

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.

RapidTax will help you file taxes in two different states.

882 Replies to “How To File Taxes in Two Different States”

  1. H I,
    WHAT TAX FORMS WOULD I HAVE TO FILL OUT IF I AM A N.J. RESIDENT RETIRED AND MY WIFE IS A FL. RESIDENT
    THAT WORK A PARTTIME JOB IN N.J. ?

    THANKS

    RON L.

    1. Hi Ron,

      Basically you and your wife have a choice: you can either file a joint return or separate returns.

      If you file separately you will file a NJ resident return (computing income and exemptions as if you had filed a Federal married, filing separate return. Your wife would then file a nonresident return just on the income she earned in NJ. The advantage to doing this is that your wife’s income earned outside of NJ will not be taxed by NJ.

      If you decide to file jointly, then ALL of your wife’s income will be taxed by NJ as if she were a resident. The advantage to doing this is that the preparation is a little easier.

      I would say that if all (or most) of your wife’s income came from NJ, then it makes sense to file jointly. But if she is earning a lot of money in Florida (where there is no income tax) then she would probably benefit by filing as a nonresident in NJ so that NJ doesn’t tax that income. You can find more info on page 16 of the NJ return instructions: http://www.state.nj.us/treasury/taxation/pdf/current/1040i.pdf

  2. Hi,

    I worked in NY till the end of 2012 and filed NY taxes this time. My company moved me to Arizona in the first week of January where I have been since. I was paying NY state taxes till April’13 because the HR updated my address only in April’13. Now I pay Arizona state taxes.
    So how would I pay Arizona taxes for the first 4 months and get NY taxes back?

    Thanks,
    Tanmaya

    1. Hi Tanmaya,

      During tax season next year (when we all file taxes for the 2013 financial year) you’ll have to file in both Arizona and New York. If you’re company had switched withholding when it was supposed to, you wouldn’t have to file NY, but since NY taxes were withheld, filing is the only way to get that money back.

      So you’ll have to file an AZ resident return and a NY nonresident return. When you file your AZ return you should be able to claim a credit for taxes withheld by NY to prevent you from being double-taxed. NY will end up transferring that money to AZ or you’ll get it back as a refund.

  3. Many thanks! So we would complete tax forms as WA residents and then complete a 40P for the 1st year and a 40N for the following years. for OR income. Which form would we use to show the breakdown of his days at the office and days overseas? Many many thanks for your help!

    1. Hi AC,

      Well the great advantage of living in Washington is that they have no income tax, so you won’t have to file anything there. You’re correct about Oregon. You would have to file a 40P when you move and then a 40N for every year after that. On the 40N you’re only supposed to pay tax on your ‘Oregon source’ income which can be a little tricky to figure out, especially if your husband is a salaried employee. I would just take his overall salary from that OR company and then multiply it by the % of the year that he actually worked in OR. For example, if he worked in OR 185 days out of the year his OR source income would be 50% of his salary.

      Note that in the year that you move, some states require you to file both a part-year resident return and then a separate nonresident return on the OR income you earn after you move. I don’t think OR is one of those states, I think you should be able to report everything on the 40P but I’m not 100% sure. You should try calling the Dept. of Revenue or talking to an OR based tax adviser just to make sure.

  4. Hello, please guide me…. Husband will start working in Portland however, he will travel overseas 50% of his time. I work from home and would benefit living in WA to avoid state income tax being withheld on my salary (9.9% bracket). Will hubby have the same benefit of paying OR income tax on only 50% of his salary? My question is – if he travels overseas say 180 days a year – does he pay taxes on those 180 days income since he did not drive and worked at his desk in Portland? Can he pay WA taxes as resident and non-resident tax to OR on 185 days of work. (not considering weekends, etc, just trying to simplify my question)

    Thank you for any guidance! AC.-

    1. Hi AC,

      If you guys moved to Washington and became residents there, then you personally would be able to avoid state income tax entirely, as you would live and work completely in WA, which has no income tax. Obviously this would be a pretty big benefit.

      Your husband, however, would still have to pay Oregon tax as long as he is physically doing work there. If you do move to WA, he would not have to pay state income taxes on all the work he does overseas. He would just have to pay OR tax on the work he actually does in OR. Obviously I’m not acquainted with every aspect of your financial situation, but it sounds to me like you stand to gain quite a bit (at least on the tax front) by moving to WA.

  5. If I am not working for years and living in PA as a full time resident for 9 years and my
    spouse gets a full time job in Connecticut and needs to rent an apartment and come
    home weekends how does the duo state taxes work here. Plus, our child will
    go to PA full time school and me staying home in the PA home as the main residense.
    Otherwise, renting an apartment to work in Connecticut during the week and
    keeping our same PA home residense. How doe the state taxes affect us and
    how do you suggest we file? OR handle this the best way?

    Thank You,
    Kathy W.

    1. Hi Kathy W.,

      Okay, this is a pretty difficult situation and I highly suggest you sit down with a tax professional who can take a look at your situation in detail. That being said, the most important part of figuring this out is determining where your spouse is a resident.

      Take a look at the definitions of residency in the two states and see which one your spouse fits with the best.
      CT (on page 7): http://www.ct.gov/drs/lib/drs/forms/2012forms/incometax/ct-1040nrpybooklet.pdf
      PA: https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC4QFjAA&url=http%3A%2F%2Fwww.portal.state.pa.us%2Fportal%2Fserver.pt%2Fdocument%2F629012%2Frev-611_pdf&ei=gue1UZubHaHA4AP-mYDoCA&usg=AFQjCNHvQU5A6jLSDgUxWr7Zjf0hVO0rww&sig2=yqw4XT5gDK4zCGk-q_nkJg

      If your spouse is a PA resident, you’ll have to file a resident return there (jointly with you probably) and a nonresident return in CT. If your is a CT resident, you two should file separate state returns.

      Hope that helps, but again, I suggest sitting down with a tax professional because this is a particularly tricky residency call.

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