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 live in Indiana and work in Illinois. I believe the states at one time had reciprocity but am not sure if that is still the case. My employer only deducts for Illinois taxes. Should they also be deducting taxes for Indiana? Thanks
Hi Regina,
I think the reciprocal agreement between Illinois and Indiana was rescinded in the ’90s. Give your situation, you will have to file a resident return in IN that taxes you on all of your income, and then a nonresident return in IL. You will be able to claim a credit on your IN return for the taxes you’ve paid to IL through withholding. Hopefully IL will then transfer some of that money to IN. If you don’t end up owing either state any money, then I would say there’s probably no reason to have more money withheld, but if you end up owing money to one of the states then you might ask your employer to withhold IN taxes.
i work the hold year in nj but i was a resident in ga and paying taxes, but i moved to nj in july i star paying tax in nj how i do my faling and the gross it’s different of the case 1 should i put the gross amount or the amount in case 1
Hi Gus,
If you moved in the middle of the year, you should file a part-year resident return in GA on all of the income you earned for the portion of the year that you were a GA resident. Then you should file a part-year resident return in NJ that taxes you on all of the income you earned for the potion of the year that you were a NJ resident.
Hello,
I have a similar situation where I was living in CA for half the year then moved back to WA for the second half where I was already a resident. I worked for the same company for the whole year, and while living in WA, I only physically worked in WA and never in CA.
CA has income tax, WA does not. My company withheld CA taxes for the entire year when only the wages earned while I lived in CA should have been withheld. Additionally, the W-2 reflects my entire year’s wages as if I was a CA resident and/or working in CA, and shows the entire year as taxable by CA. How do I claim back the taxes withheld on the wages earned while living and working in WA for the second half of the year?
Thank you
If the company is a CA company, they should be withholding taxes for every paycheck you receive. You will file a part year resident return for CA or nonresident return for CA. That means you will only be taxed on the income received from CA sources (and will not be taxed on anything else).
I have a similar situation. I moved to WA in May 2017, receive pensions from 2 CA agencies – a county & the state. My wife has worked the entire year in CA. Will I have to pay CA tax on pensions rec’d after May? I have the bulk of withholding, and our deductions are joint.
My husband got a job in Arizona and we live in New Mexico. He is the primary bread winner although I work in New Mexico he is a resident of Arizona and comes home every other weekend. Where do we file resident tax and non resident tax?
Hi Eileen,
Even if you and your husband file a joint federal return you can file separate state returns. He should file a resident Arizona return if he is a resident there and you should file a resident New Mexico return if you are a resident there.
Which is better, to file separate state tax returns, wife as working resident of one state and husband as working resident of other state and joint federal return; or better to file joint federal and joint resident return in family (wife) home state and non resident return in husband working state??
Hi April,
To avoid confusion, I typically suggest filing separate state returns and a joint federal return to people in your situation.
Please I live in New York and I worked at WhitePlains, Connecticut state. Where do I file my tax? also at the end of tax return should I pay any interest? Thanks
Hi Kwame,
First of all, make sure that you actually worked in Connecticut. If you worked in White Plains, that sounds like you were probably working in NY state.
You definitely need to file a NY resident return that will tax you on all of your income no matter where it was earned. If you worked in CT, then you also need to file a nonresident CT return that will tax you only on the income you earned in CT.
Hi Kwame,
First of all, make sure that you actually worked in Connecticut. If you worked in White Plains, that sounds like you were probably working in NY state.
You definitely need to file a NY resident return that will tax you on all of your income no matter where it was earned. If you worked in CT, then you also need to file a nonresident CT return that will tax you only on the income you earned in CT.
Also, you will only have to pay interest if you fail to pay your tax liability by the deadline.
my wife lives in our home state and worked short time in 2012, i work in a different state but fully support her financaily.the state i work taxes is taken out, do i have to pay more taxes becasue my family in 1 and i am in another state? where do i file?
Hi Amy,
You need to file a tax return in the state where you are a resident and then a nonresident return in any other state where you earned money. You refer to the state where your wife lives as your “home state” which gives me the impression that you are still a resident there. If that’s the case you and your wife can file a resident return in that state, which will tax you on all of your income no matter where it was earned.
But you also need to file a nonresident return in the other state where you earned your money. This return will tax you only on the income you earned in that state. Don’t worry about being double-taxed. When you file your resident return you will be able to claim a credit for the taxes that were withheld for this state. The state where you work will then likely transfer some of that money over to the state where you live.
Hi I received unemployment in Pennsylvania from Jan-August I moved out West Virginia and started working in September where would I file my return
Hi Anthony,
You’ll have to file a part-year resident return for Penn and one also for West Virgina.
WV and PA have a reciprocal agreement from what I understand. I work in PA but live in WV I have only done one state tax return the past few years. Have I been doing it wrong?
Hi Brett,
You’re right…PA has a reciprocal agreement with WV. Meaning, you do not have to pay PA income taxes on your wages. You should have submitted exemption form REV-420 to your employer.