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.
Thank you for your response. However, not clear about our retirement income being taxed. Both our retirement pensions are from California employers. His from alameda county and mine from United way, San Francisco. Are you saying those will continued to be fully taxed?
Both my husband and I are retired and receive pensions from our employers as well as social security benefits. We own a home in the Bay Area in California. Our home is paid off but we are bleeding from paying property and income tax etc. we would like to buy a home in Texas. A no income tax state and cheaper to live. My husband wants to keep our home in California. But not rent it. We plan to live in each home 6 months. What state should we claim as residents and minimize paying high taxes. Pls advise
Loretta,
If you live in two different states for a number of months, then you are can file part-year state returns. Since TX does not have state taxes, you can file a CA part-year state return, however, CA will tax all income earned in CA.
I was born and raised in MD, but my husband lived in PA. He has been living with me in MD but his license and some of his W-2s still have his PA address (the house in PA belongs to his parents– he does not own a house in PA). He was also deployed to Afghanistan for the majority of 2017. He was only in the states for 129 days during 2017 so the “wherever they spent 183 or more days” thing does not really help me.
So my question is what state do I file us under? I know I am a full time resident of MD.. but is he technically a full time resident of MD since this is where he comes home to? Or is he PA because he still has that address on some things?
My son works in Alaska February and May through September. He lives in Arizona the remaining 6 months. Is he required to file an Arizona return if no income was earned while in Arizona?
I’m originally from north carolina but went to stay in arizona with my sister and her family the middle of July 2016.. While there I did enroll my daughter in elementary school and got a job in October.. May of 2017 we moved back to north Carolina.. My car and license are still from north Carolina and is the only place I am registered to vote.. How would I claim residency for both states? I do not plan on going back to Arizona for it was just a temporary change.