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.
Hello,
This article was really very helpful. But I see myself in a completely different situation.
I am an International Student on F1 Visa at NYU. In 2016, I worked here at school in NYU but for the summer I took up an internship in Colorado and I didn’t stay in NY.
How my taxes look like now? Do I owe anything to New York State for the summer months. Can you guys help file my taxes?
From the situation that you outlined, even though you may have resided in Colorado for a while, because your state of domicile was still New York, you would be considered a non-resident of Colorado. You would be filing 2 state tax returns and we would be able to assist you to ensure that you had the proper allocated credits to prevent double taxation. Please feel free to call in or use our live chat support through our website rapidtax.com
I have a hypotethical situation/question. I understand that if you move from one state to another during the year, you should file a part year resident tax form for each of the states. But looking at Pennsylvania specifically, they have 2 exceptions to the part year resident status: if you reside in PA for less than 31 days of the year, you are considered a non resident; and if you reside in PA for at least 184 days of the year you are considered a full resident.
So question is, if you live in say, Michigan, for 100 days of the year, then move to PA for the remaining 265 days of the year, will you be double taxed on the income earned for the 100 days in Michigan? Because since you were in PA for more than 184 days, you are considered a full resident, which taxes you on all income regardless of where it was earned (which would include the income earned while in Michigan). Then you would also have to file part year resident tax form with Michigan for the income you earned during those 100 days in Michigan.
Two part year resident returns can be filed, as you still resided in another state partially during the year, even though you meet the requirements to be considered a full year resident. Your income earned in Michigan will only be taxable to Michigan and your income earned in PA will be taxable to only PA. Priortax should make it fairly easy for you to file 2 part years and our customer support is only a call away.
Hello: My wife and I and children reside in MA in 2016 full year. But I work in Rhode Island in 2016 full year and she works in MA in 2016 full year. We will file federal tax jointly as we always do.
But I will file non resident for RI but should I file a married filing separately or married filing jointly? if I file married filing separately, should I list all my dependents/children as well?
Same question for my wife, should she file resident MA state tax as married filing separately? or should we file MA resident tax as married filing jointly?
Thanks a lot in advance!!!
Hi, I worked in NY for whole 2016 but I lived in NY for 9 months and NJ for 3 months. How should I be filing my state returns?
I only lived in Indiana from 12Mar2016 to 31Dec2016. The time before 12Mar2016 I lived in the Philippines. How do I calculate all the interest from banks, brokers, mutual funds for the time period I was in the state of Indiana?