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 was a student in Philadelphia from Jan-May 2017 where I completed my studies in May 2017. I then went abroad till 25th June. 2017. I returned back and started job in NYC but lived in NJ from 25th June to 31st December 2017. So for the year 2017 which tax forms should I fill for Pennsylvania, NYS and NJ?
Which state returns you file depends on which state you were a Resident and which state is indicated in Box 15 of your W-2 statement. If you’re W-2 shows NY, you would definitely file a Non-Resident NY Return since your income was earned in NY.
But whether you file two Part-Year Resident Returns (PA and NJ) or file one Full-Year Resident (NJ) depends on where you had established residency during the year.
If you were still an NJ resident and only went to PA for school, you would file a Full-Year Resident NJ Return and a Non-Resident NY Return.
If you had established PA residency while you were in PA, you would file a Part Year PA and Part Year NJ Return; and a Non-Resident NY Return.
Hi, I sold my house in Delaware on 6/24/16 and moved to Florida. Should I be paying Delaware State Income tax on all 2016 wages or just what I earned form 1/1/2016 to 6/24/2016?
You should only be paying Delaware State Income tax on wages earned in Delaware during the time of DE residence (assuming you were no longer earning the DE source income while you were living in Florida).
If a New Jersey employer pays wages to a PA resident employee who has obtained a NJ-165 for NJ withholding exemption under state reciprocity, is the employer obligated to apply for a PA employer ID in order to remit income tax to PA? Or can the employee agree at time of hire to report wages at year end without PA wages listed on his / her W-2?
Please contact the NJ Division of Taxation for instructions and requirements for your employer as this is an inquiry for payroll and is not related to individual tax preparation.
What we can address is if your W-2 shows NJ tax withholding, you would file a Non-Resident NJ to claim a full refund of your NJ tax withholding as per the reciprocal agreement. If your W-2 only shows PA withholding, then you will not have to prepare a Non-Resident Return.
Hello,
My spouse and I are residents of Florida and own home there, but also own a home in California and live there part of the year. My spouse is the primary earner and works in Florida. I would like to get some part time work when I am in California. We want to maintain our Florida residency. If I get a job in CA, how would impact our residency, and how would we file our tax returns?
If you live in FL and earn income in CA, you will be required to file a CA non-resident return. You can choose to prepare your Non-resident return with http://www.rapidtax.com today.
I am a resident of Virginia, but I attend school in North Carolina from the months of August thru May. I also receive work study from the school in NC. Do I have to file as a resident in VA and a nonresident in NC?
That is correct, you will need to file a full year resident form with Virginia in order to receive the proper non-refundable residential credit from your NC non-resident form.