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.
Hi there,
I worked in OK state for almost 11 months in 2015, then at the end of Nov. 2015 I relocated to IN for a new job, so my majority income was from OK state. And I haven’t registered my car or purchased a house in IN yet to establish my residency in IN, but I did have W2 and paid IN state tax. How can I file the state taxes for the two different states? Am I part-resident of both states even though the time was 11 months vs. 1 month?
Thank you so much!
Hi Charlie,
You are correct. In a situation like yours, you will file two part-year resident tax returns; one for OK and one for IN. Next year, assuming you stay in IN, you will file a state resident tax return only (along with your federal tax return).
I lived in Ga for 7 months then moves to Florida for the remainder of the year. Could I file my taxes separately?
Hi Lacey,
Along with your federal tax return, you will only need to file a part-year state tax return for Georgia reporting the income earned while you lived there and how many months you lived there. You will not need to file a state tax return for Florida because it is an income tax-free state. If you continue to commute to Georgia for business, you will file a non-resident state tax return in future years to report the income you earn while physically working in the state. If you continue to work for a Georgia business, then you will not be responsible for GA taxes.
Trying to help my sister work through her taxes. She is active duty military so it gets a bit complicated. She was stationed in CA, but her home is listed by the military as OK so she has always had to file an OK state return. While stationed in CA, she met a man, they moved to Texas, got married, and has now officially changed her residence with the military. We know for the federal return they will file married filing jointly. When it comes to the state returns, he has to file a CA return for part year and she must file an OK return for part-year. They were not married while being residents of this states so do they file a separate return as single in those states or are they forced to file married if they file that way on the federal level. I would think they should file single for that time period in those states because to file jointly would tax their incomes twice. If they do file separately, how would her income be shown since her employer is the same, but her residence isn’t being that OK’s instructions say to act as if all of your income was from OK. Thanks in advance.
Hi Troy,
A few things to touch base on. When determining your filing status, you will report which ever status you are considered to fall under on December 31st of that tax year. If your sister was married on the last day of the year, then she and her husband can file their taxes as married. This should work in their favor since they will have access to more tax benefits with the married filing status.
With that in mind, if your sister and her husband prefer to file a joint federal tax return and separate state returns, they can do that. However, they would not file separately and claim the single filing status. They would file as married filing separate. This, once again, goes back to you claiming the filing status that you are on the last day of the year.
I lived in NJ part of 2015 & then moved to NY State. I continued to Work in NJ & my employer offered a NY State tax withholding. At the end of 2015 they issued my W-2 with NY Taxes for the Full Year (which they say needed to match my Federal Wages in Box 1). Please advise if this is correct or does my employer need to correct my W-2?
Hi Lisa,
This tends to happen frequently to taxpayers when moving from one state to another. You won’t need to have your employer update your W-2 for this past year (just make sure it’s correct for the current year). Instead, you can file a part-year tax return for NY and one for NJ. When you complete these, you will be asked how long you lived in each state. Your tax will adjust accordingly based on your resident situation.
Hi,
I’m work and live in Puerto Rico (we are not subject to Federal withholding), but I’m going to be in Business travel in Florida for 4 3-month rotations. I’m paid by my company in Puerto Rico. Do I need to file Federal Tax return for the time I’ll be in business travel?
Hi Jeflor,
Whether or not you will need to file a US federal tax return will depend on several other factors including your income, bona fide residence, etc. HERE is a link to the Internal Revenue Service’s website page about filing a tax return with income from Puerto Rico while in the US.