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.
Good Aftrrnoon,
My husband and I lived in Fl and became permanent residents of NC on 7/1, however for the first part of the year my husband earned income in NC while being a resident of FL. Does he need to do multiple returns for NC (one resident one non resident) or when he does the part year resident form can he just include all the income from Jan through end of year in one return? I am trying to avoid doing multiple returns for the same state (NC) and FL doesnt have state income tax. Also, I received income from the Hartford through my FL based employer for the whole year. This has nothing to do with NC. Do I still owe NC taxes on that money from JULY-DEC when I became a resident even though the money was being paid to an FL address? I appreciate your help!
Hi Stephanie,
You will only need to file one state tax return per state. In your husband’s situation, he should file a part-year resident tax return for NC and report that income on it. On this return, he will be asked to provide the dates that he lived there and earned an income there.
When it comes to your insurance, double check if it is taxable. Typically, insurance income will not be taxable income and therefore will not be included in your gross income total.
I worked for about a month and a half before I had my first child in 2015. So from January to mid February. I have been unemployed from then on until I moved to Georgia from Florida in late August, early September. I got a short term job that only lasted a day because I breastfeed my child and have been having a difficult time weaning her. I have gotten my W2 from the job I had in Florida, but have not gotten a W2 from the job I had breifly here in Georgia. I did not qualify for the EITC or CTC this year for so little work. I was wondering if waiting on my W2 from the job here in Georgia would make a big difference in the amount I get back this year or if it’s required?
Hi Sara,
If you still have not received your W-2 from that job, you should contact their payroll department as there is a deadline that they are required to issue it to you. Since that job only lasted you a day, chances are, it would not have a great effect on your tax due/refund amount at all. You can file without it as soon as you would like. If you receive your other W-2 and realize that it would have a huge impact on your return, you can amend your tax return and update it to include the income amount from that W-2.
I work and live in Texas 10 months of the year. My employer pays for my apartment and all utilities and I have a company vehicle. All my income is earned in Texas. However, I come to Alabama during my off season to check on my Mom. I have Alabama driver license because it is just easier to take care of that while off work. Now Alabama is saying I owe them back taxes for the last 4 years even though I had no earnings there. Can they do this?
Hi JT,
As long as you are not conducting business in Alabama or residing there, you should not have an issue. It sounds like your records on file with your state have not been updated since living in Alabama. You should update your records as soon as possible and also explain the situation to them. I also suggest updating these records with the IRS while you’re at it so that you don’t encounter a similar issue with your federal taxes.
I live in and Work in DC. But my employer withhold my taxes for MD and I realized the mistake recently. Now I want to file my taxes. How do I fix the problem? thanks
Hi Eli,
Since Maryland and DC have a reciprocal agreement, you won’t have too much of an inconvenience to deal with. You will need to file a resident tax return for DC and report all income earned. You will also need to file a non-resident tax return for MD and report that zero wages were earned and how much was withheld for taxes from MD. You will owe taxes to DC since none were withheld throughout the year, however, you will receive a refund from MD since you did not earn income there and taxes were withheld.
Going forward, be sure to speak with your employer so they update where your state taxes are being withheld. Once this is updated, you will only need to file a resident tax return for DC.
My company’s headquarters located in Illinois, I recently got promoted but now living in Texas. Will I still get state taxed from Illinois even if I live in Texas now?
Hi Jorge,
If you are working remotely, your company HQ state does not have an effect on your tax owed. You are responsible for tax in the state where you physically work and earn an income and the state where you reside. Just be sure to notify your payroll department and complete an updated W-4 form so that they do not continue to withhold Illinois state taxes.