You can be a resident of two states but you may want to avoid it.
If your life mostly involves just one state, filing state taxes is relatively simple. When your life involves more than one state, things can get complicated pretty quickly.
Everything depends on residency. It determines where you have to file, what kind of return you have to file, and how much you’ll be taxed. The problem is, determining residency is more complicated than it sounds. The states have convoluted and differing definitions of what constitutes a resident.
Generally, you can only be a full resident of one state. Most filers who spend time in two states end up filing a resident return to one state and a non-resident return to the other.
Is this even possible?
Yes, it is possible to be a resident of two different states at the same time, though it’s pretty rare. One of the most common of these situations involves someone whose domicile is their home state, but who has been living in a different state for work for more than 184 days. In a situation like this it is conceivable that you could be the resident of two states.
Filing as a resident in two states should be avoided whenever possible. States where you are a resident have the right to tax ALL of your income. This is regardless of where it was earned. If you are a resident of two states, you will likely end up paying more in state taxes than if you were a resident of just one, or a resident of one state and a nonresident of another.
Check the definitions
The first thing to do if you think it’s possible that you could qualify as a resident in more than one state is to check the definitions of residency. Each state has its own definition of who constitutes a resident. It’s possible that, according to the exact definitions of the law, that you aren’t actually a resident of two states.
Generally you are considered a resident if your domicile is that state, or (if your domicile is another state) you maintained a permanent place of abode in that state and spent more than 184 days there during the year.
Most state tax authorities have a page explaining what exactly constitutes a resident in their state. If you can’t find a page on their website, try checking the tax return instructions themselves. Most include a section on residency.
Make sure you aren’t a nonresident
If you only worked in a state, or lived there for a brief amount of time – in a vacation home, for example – you likely aren’t a resident. In this case, you’d only file as a resident in your normal home state. You would then file as a nonresident in the other state only if you earned money there.
Make sure you aren’t a part-year resident
If you move from one state to another during the year, you’ll file as a part-year resident in both states. You’ll be treated as a resident of each state for only the days that you lived in that state. This will help you to avoid being double-taxed. Don’t make the mistake of filing as a resident in both states if you permanently left one state and moved to another.
Exemptions for students, military personnel, expats, etc.
Most states also have exemptions for students who attend college out-of-state as well as members of the military and their spouses who often have to move from one state to another. These people are generally considered residents of their home states.
For more information about filing taxes in two different states, please refer to this blog post. And don’t forget, you can always file a return for multiple states with the help of RapidTax.
I started work in MA end of 2013 and live in an apartment in MA. My wife works in California and lives in our house in CA. We have always filed joint federal return. In 2013 we filed Federal joint, CA resident and MA part year resident. In 2014 what is the recommended filing status. Are we forced to file as residents in both states? Should we stop filing as married-filing-jointly?
Your advice is appreciated.
Thanks
Hi Ted,
Even if you and your spouse lived apart the entire year for any reason, you can still file a joint return if you were legally married on the last day of the tax year and meet the other requirements. Take a look at the Filing Status IRS page for a better understanding and more possible options for how to file under your circumstances.
As far as filing as residents of both states, there are different rules for each state as to if you are a resident for tax purposes. You can check if you qualify on your California State Website as well as your Massachusetts State Website or contact them directly by telephone.
I live in Arkansas but work 10 days a month in California.
1- Do I pay both state taxes.
2- Can I claim and get refunded my travel expenses (airfare, food, lodging) needed for the California job?
3- Can I claim expenses for my work in CA (nurses license for CA, Uniforms etc..)?
Thank you
Hi Tim,
1. Along with your federal return, you will have to file both a resident return for Arkansas and a non-resident return for California. As a California non-resident you will only be taxed on your income received from CA sources. While filing your Arkansas return, you will have to report all income received, regardless of what state it is from. If you pay taxes to more than one state, you will probably qualify for a tax credit.
2.If you want to deduct expenses on your tax return, you will have to itemize your deductions rather than taking the standard deduction. If you are in fact itemizing your deductions, you can deduct work travel expenses (that you paid yourself) and work clothes, etc. Here’s a link to learn further information on the IRS website regarding deducting Employee Business Expenses .
Just a side note, the RapidTax application is designed for situations like your own. That way, you can easily file state returns for a state you work in but not live in, are a resident of, etc., as well as easily file a return with deductions itemized. The tax application was created to help find filers the maximum credits, deductions and refunds as possible.
Hope the above information has helped! Best of luck! 🙂
I have a home in nh and live there on the weekends… I work in ma and rent here on the weekdays. How should I file?! Help please :/
Hi Angela,
You should file a non-resident return for MA (along with your federal taxes, of course). As a non-resident of MA, you’ll only be taxed on the income received from MA sources.
Thank you!! I will do that!
What if MA (or another state in a similar situation) rejects the non-resident return saying that the number of days spent in that state makes you a resident?
Hi Harut,
If you spend more days in the non-resident state than in your resident state, then you are considering a resident of that state instead. If you did not live in the non-resident state, and only traveled there for the working day, you wouldn’t be considered a resident.
My husband and I live in MO. but he may take a job in Illinoi that requires him to be a resident of Illinoi he will rent a room for during the week. I will continue to live and work in MO while he works and stays in Illinoi during the week but MO on weekends. How would we file our taxes so that he is a resident of Illinoi as his job requires but I am a resident of MO on a joint tax return?
Any help greatly appreciated.
Thanks
Hi Robin,
I suggest filing jointly for your federal return and separately for your state returns.
I live in NY but work in CT. I started working in CT the end of Nov. 2013. For 2014 I noticed they stopped taxing me for NY. Does this mean I will end up having to pay NY at the end of 2014 when I do my taxes?
Hi Cynthia,
Hmmm, if nothing has changed with where you live, you should talk to the HR department about this if they were taking out NY taxes last year, and not this year.
When you file your taxes, remember to file a resident return for NY and a non-resident return for CT (which will tax you only on the income earned from CT sources)
Does NY exempt monies on which you paid taxes to another state? If so, your employer may not need to withhold for NY if they are already withholding for CT. You would still have to file for each state. (I think Arkansas does this, or used to, to avoid double-taxing income that was already taxed elsewhere. I am not a tax professional, I only play one in the comment section, your mileage may vary.)
If you are a resident of NY and a non-resident of CT, NT will tax all of your income even if it was earned in CT. In order to avoid being double taxed, you will have to prepare a resident and non-resident return to receive a resident credit from NY for taxes paid to CT.
If i owe money to unemployment and back tax to Washington state can Washington garnish my Idaho tax refund? I was only a short term resident in Idaho, but I made money there while I was there.
Hi Jason,
Actually your federal refund can be garnished to repay these obligations. I suggest contacting the state of Washington to set up a paying plan for what you owe. Most states will compromise when it comes to paying back through a payment plan.