Multi-State Tax Returns

Posted on: 03/30/11 894 Comments
Preparing multi-state tax returns is tough.

It isn’t always easy preparing your taxes when you’ve worked in more than one state. We can help you get it right!

 

 

I get many calls from people who prepared their own returns with two or more states and they all say something pretty similar, “I did the return, the federal is okay but the state just doesn’t seem right.”  Then I ask, “Do you owe way more than you think you should?”  “Yes, how did you know?”  I do this for a living.  The quick answer is to check to see if you took a “credit for taxes paid to another state”, that’s usually where the problem is.

 

Normally, I would have put that at the end of the blog post, but it’s such a common problem that I figured it needed to go first.  Quick answer and you’re done.  If you need more information, I’ll start from the beginning.

 

Two states can usually be handled by most of the major tax software companies with no problem.  Remember the credit for taxes paid to another state and you should be good.  On the other hand, three or more states can send your software into a tizzy.  Even with my professional grade software, I still have to compute numbers by hand and manually input them into the program.  If you’re dealing with three or more states, spend the money on a professional.  It’s a good idea to ask, “Have you ever done a California return before?”  (Or Ohio, or North Carolina, or whatever.)  Experience helps.

 

Back to the two states:  There are two situations where you could have two state returns.  One would be you moved from one state to another, for example moving from Indianapolis to Chicago for a job.   The other would be where you live in one state but work in a different state, for example living in St. Louis, Missouri but working across the river in Alton, Illinois.  These two types of situations use different forms.

 

Moving:  When you move from one state to another, you’ll be filing your two state returns as a “part-year resident”.  You’ll be completing paperwork that says how long you lived in the state, what your earnings were for the state, etc.  You should only be taxed on the income that you earned while you lived and work in the state.  If you withheld properly, your taxes should come out normal, no big refunds, nor big balance dues.  Most of the time in a case like this, you won’t be filing a “credit for taxes paid to another state” because the “part year resident” return will handle you income allocations.  (Most of the time—there’s 50 states and they all have different rules, so in some cases you’ll still be doing the credit for taxes paid to another state.)

 

Living in one state and working in another:  this situation is a little different.  You will be a “resident” of the state you live in and a “non-resident” of the state you work in.  The state you work in is the state your company is going to withhold taxes from.  But the state you live in is going to tax your income too.  This is where it’s really important to remember the credit for taxes paid to another state, because if you miss taking that credit your tax bill could be enormous.  Sometimes, the tax bill is still pretty large even when you’ve done everything right.  For example, here in Missouri our state income tax rate is 6%.  Next door in Illinois it’s 3% (although it’s moving up to 5% this year.)  If you live in Missouri and work in Illinois, you’re going to get hit with a pretty harsh state tax bill unless you had Missouri taxes withheld or paid estimated taxes.

 

Here’s some other tips that will help you with your multi-state return:

1.  Always do the federal return first.  Don’t start the state returns until the federal is done and you feel that it’s correct.  If you have to go back and make changes to the federal, your state numbers will be off.

2.  Non-resident income:  that’s wages that you were paid in a state you didn’t live in.  It also includes self-employment performed in the state.

3.  Resident income:  the state you live in will tax everything, in addition to your wages, it will tax your pension, interest, investment income, everything.

4.  Moving expense deduction-always goes to the state that you moved to, not the state that you moved from.

This is a pretty quick and dirty summary of multi-state tax returns.  If these tips don’t solve your problem, do call us and get some help.  They’re not always easy to handle and we do this for a living.

894 thoughts on “Multi-State Tax Returns”

  1. I have a friend who has a partly owned LLC filed as a partnership which provides a K-1 for nearly every state. He lives and works from FL. Would he file a return for every state having a K-1, or just FL (although FL doesn’t have income tax)?

  2. Hi Jim,
    California believes that you have California source income, and they don’t care what I think. (Being brutally honest.)

    But, using California’s definition: https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents_PartYear_Residents.shtml#compensation

    it sounds to me like you really don’t have California source income.

    I’m thinking that the company that issued the 1099MISC to you reported you as working in California when they should have reported you as outside of California.
    But it’s not really the business’ fault either. California has really strict rules about reporting all 1099 contract labor.

    I’d try just talking to the California folks first–I’ve found their department of revenue folks to be pretty knowledgeable and helpful when I’ve called to ask them questions. They might have a simple solution for you.

    If not, I’d file the California return and show that it’s not California income. You should not be paying tax to CA, but you should be paying to Michigan.

  3. Hi – I live in Michigan and do chart reviews only, for a company that is based in California. I did not perform services in the state of california. I simply get them mailed to me in Michigan and perform the work in Michigan.
    I get a 1099 annually.
    I got a letter from State of California Franchise Tax Board telling me I need to file a California income tax return as I have source income. Do that sound correct? If so, do I pay Michigan and California taxes on the 1099 income?

  4. Hi Kennard,
    Yes, it looks like you needed to file for DC too. What I’m thinking is that DC received a copy of your return from the feds and it had your DC address on it. DC is thinking, “”Where’s our DC return?”

    Now, you’re going to want to review that because it’s highly likely that your DC letter is charging you for taxes for the whole year. They don’t know that you lived in Maryland for part of the time. You’ll need to amend your Maryland to show you were only there part of the year. And you’ll also need to file your part year DC return.

    I think you’ll save some money doing that rather than just paying what’s on the DC bill.

  5. I’ve gotten a tax bill from DC claiming that I owe taxes for yr 2010. I lived in MD for 9 1/2 months, and then in DC for the rest of the year (2 1/2 months). I filed a regular MD tax return. Should I have filed a DC return also for that short period of time?

  6. Hi Tom,
    Is the state of Illinois required to pay you to get your records together for the audit? No. I’m afraid not. Are they supposed to give you time to do it? Yes, they should give you some time to gather your records.

    Since I haven’t seen the letter, I’m just shooting from the hip but a couple of questions come to mind–

    1. How many years are they talking about? Usually an audit is for one year, then if there’s a problem they ask for other years. It’s usually not several years at once. (Then again, Illinois has revenue problems so I’m not that surprised.)

    2. Exactly what type of records do they want? Do they really want to see each of your patients details? Or is it that you’re paying taxes to Missouri and Tennessee and Indiana (or whatever other states you do business in?)

    It might be worth your while to get someone to take a look at your letter and talk to Illinois for you before you go gathering all of your receipts and blocking out patient names. Now that could be exactly what Illinois wants–but I’d make sure before you do that.

    And one final thought–I realize that as a medical professional you do have confidentiality rules, but I’m thinking that since your patients are horses that the HIPPA rules don’t apply and you don’t have to worry about your client names.

    And one final thing–normally I never recommend having the auditor go to your place of business. But–in your case, I’m assuming that your 100% legit and honest and haven’t done anything wrong (If I’m wrong–then don’t do this.) But have the auditor come to your place of business and look at the records there. That keeps you from having to copy everything, you’re just giving him access to see that you really had income in all those states.

    Do not have the auditor come to your place of business without a professional there to help you. Hire an EA, or CPA and have her make sure you’re books are tight first too.

    The first priority is to keep the scope of the audit as narrow as possible–which, from here I’m seeing–what income is derived in Illinois? And did you report that accurately? And how do you back that information up with the least amount of hassle?

  7. Dear Ms. Roberg,
    My wife and have received notice from the Illinois department of Revenue that we are being audited. We reside in Mo. and earn income in several states from my veterinary practice limited to equine dentistry. I am 67 yrs. young and earn Social Security income, am on Medicare and have congestive heart failure.

    They want to see our records of earned income in Illinois for several recent years and it would take us a lot of time and effort to copy the records and block out the owners names and addresses (of the horses we provide service for) which is veterinary/client privileged info I’m guessing.

    Can they require us to do all this without compensating us or allowing us time to get this large amount of work done?

    Thanks for any help!
    Tom

  8. Hi Amanda,
    Okay, first you prepare your federal return and you file a form 1116 to claim a credit for any taxes that you pay to a foreign country. Don’t start the state returns until the federal is finished and is right.

    Then you will file a part year resident return for Kentucky. Unfortunately, Kentucky won’t give you a credit for taxes you paid to a foreign country so they’re going to tax all of your foreign income. Sorry.

    But, then you become an Alaska resident. That’s the end of your paying state income tax. Yippie Skippy.

  9. Hi Jan,

    Great article! I have a question about working overseas and how it complicates filing when I also moved home locations in the US. I lived in Kentucky while working overseas as an engineer. I maintained residence in KY and made regular trips back to the US (worked overseas for 6 weeks, home in KY for 3 weeks on rest back and forth)

    Then, in July I moved to Alaska. Same company, but work site in Alaska as well as new rental home in Alaska. As a resident of Alaska from July forward, do I file part year resident in KY for the income I earned while working overseas but NOT any of my income earned once moving to and starting work in Alaska as they do not tax income?

    Thanks so much for your input,
    Amanda G

  10. Hi Eric,
    I’m originally from Minnesota so the idea of moving in January sounds kind of crazy. Moving furniture when it’s 30 degrees below zero–just the thought of it makes me shiver.

    Oh, but you’re talking about North Carolina! Might not be a problem.

    But the bottom line is, although your taxes might be a little easier moving on January 1–it won’t make that big of a difference. So do what’s easiest for your life–not the tax return.

    What will happen is that your wife will now be taxed as a North Carolina resident–so her company should withhold NC taxes instead of Delaware.

    You’ll still file a DE return because you’ll now be a landlord and claiming rental income. (Although with depreciation and other expenses you’ll break even or maybe even claim a little loss.)

    So, let’s say you move now–this year you’ll file a “part-year” NC and a “part-year” DE return. Next year you will file a NC resident and a DE non-resident return.

  11. Hi Jan,

    My wife want to move to NC for a few 2-3 years to see if we like it. She works from home in DE and her company headquarter is located in MD. The company is taking taxes out based on her working and living in DE. We will keep our house and will probably rent it out.

    How should we file taxes as renters? What forms will my wife need to change with her job? Is it be easier for to move in Jan 2015 for tax filling?

  12. Hi Amanda,
    No you shouldn’t owe NC for tax year 2009. What happened is that when you filed your federal 2009 tax return, you have your NC address on it so that’s why NC thinks you owe them money. All you need to do is to send NC a copy of your NJ tax return with a letter explaining that you did not have taxable income for NC for 2009.

    Call them and talk to them, explain what the situation is, but I’m guessing they’re still going to have you send them the documentation.

  13. Kevin,
    You want to consider the high level tax implications of your move, right? Serioiusly, you should sit down with a professional and pay the fee to get some high level answers. You’re asking questions for a sit down type consultation meeting. And that’s what you really need.

    But, here’s some quick and dirty answers–but seriously. Spend the money and talk in person to a professional. It will be worth it.

    1. Technically, you should pay your employment taxes to NC once you move to NC.
    2. Your NY rental property will be taxable to NC if you claim NC residency. Not if you claim NY residency.
    3. It doesn’t matter when you move for the taxes. Do what’s right for your family and yourself.
    4. Since the home was your main residence for at leat 2 of the past 5 years, then you will still be able to exclude the gain on the sale of the home.

  14. So I lived in NJ for all of 2009. Moved to NC in 2010 in January. We didnt file a NC state return because we didn’t live in NC in 2009. but now the state says we owe them 1400 for tax tear 2009. How is that? do we owe for just moving?

  15. Hello,
    My wife and I are considering moving from NY to NC on November 1, 2014. We are thinking of renting out our home in NY and simultaneously renting a home in NC in which we will reside. The intent is to do this for one year in order to determine if we want to move to NC long-term and to also hedge our bets; if we don’t like NC we will move back to our current home in NY. Some other pertinent info:

    1. The home in NY is the only home we own. We still have a mortgage on the home and pay some of the highest property and school taxes in the nation, percentage wise.
    2. We will be moving all of our belongings to NC
    3. Our children will be enrolled in elementary school in NC
    4. I will be keeping my current job with a multi state employer. I will remain a NY employee working remotely out of NC for internal cost center purposes, even though my company has an office location in NC. I will likely spend about 2 weeks per year traveling to states outside of NC for work and the remainder of the time I will be working out of a home office in NC.

    We are trying to determine the high level tax implications of this move. Clearly I will pay NY taxes while living in NY but what happens when I get to NC?

    1. will I still pay NY taxes on my employment income?
    2. Will the NY rental property be taxable in NC?
    3. From a tax perspective does it make more sense to move to NC as of January 1, 2015 instead of November 1, 2014?
    4. If after one year we decide to sell our home in NY and to buy one in NC, what will the tax implications be assuming we sell for $150,000 more than we paid for the home?

    Thanks in advance for your assistance!

    Kevin

  16. Hi Rachel,
    So your parents are still claiming you as a dependent so you are “technically” living in California. If that’s the case, I’d file as a California resident and New York non-resident. Then, starting in 2015 I’d have you be a New Jersey resident and NY non-resident.

    That said, you might want to talk to your parents about claiming yourself for 2014. See how the taxes work out. It seems to me that you’re supporting yourself which is different from someone who graduates and doesn’t have any income. You and your parents should at least look at the big picture together and see what’s best for the family. (Yeah, it’s definitely better for you to claim yourself–but it’s often much better for parents to claim their kids–but not always. At least look at the numbers together.)

  18. Hi Farman,
    I put an address on tax returns that’s different from the W2 all the time. People move. That said, if you put an Arkansas address on your federal return, expect to get a letter from Arkansas asking why you didn’t file an Arkansas return.

  19. Hi Melinda,
    You’ve got a lot of issues here.

    First, you will still have your military income exempt in VA, you only have to pay tax in VA on the non-military income you make.

    Your LLC I’m guessing will be taxed on your 1040 on a Schedule C tax form. Since you have a loss, you won’t have tax and it may actually reduce your federal taxes.

    I think you need to sit down with a professional–when people say things like LLC taxes–it’s time to talk to someone. Good luck. And thank you for your service.

  20. Hi Anna,
    Your husband’s income won’t be taxed in New York whether you file jointly or separately as he doesn’t live or work in New York.

  21. Hi,
    I recently graduated from a university in NJ. During my time in school my parents were supporting me making me their dependent (they live in California). I’m starting a full time position in NYC so I’m confused about how to go about my residency status. Since I technically am their dependent for the year after being in school for the first 6 months of the year, my permanent residence has been California. Now that I’m permanently living in NJ and working in NY do I need to change my residency to NJ? Will I have to fill 3 separate state returns this year?
    Thanks.

  22. I live in California but work in Florida. Since Florida does not have a state tax how would I set everything up correctly to not be slammed at the end of the year by having to file a 1099 for California state taxes?

  23. i work and live in california because of my job ,and my wife lives in Arkansas,i am filing my stats and fedral in california as married filling seperately, i just want to put my family home adress in arkansas on my fedral return which is different than the adress on my W2. can i do that?

  24. I have a question, if I am a legal resident of Florida (active duty military stationed in VA) and own an LLC in state of VA will I lose my ability to not pay VA taxes on my military pay. I know I will have to file the LLC taxes in state of VA (don’t expect revenue though until 2016 as there are a lot of start up costs and I won’t be fully up and running until I reitre). I do plan on returning to Fl when I retire and having the businesses in both locations. However I can’t start the Fl LLC until I have an address there which won’t occur until my retirement in 2016.

  25. Hi George,
    I just prepare tax returns, I can’t explain the logic of the legislators who made up the rules. Logic and taxes are words that don’t go together.

    This is the best I can do: when you are a resident of a state, the state taxes your “countrywide” income and when you’re not a resident, the state taxes the income you earn within the state.

    Now when you earn income outside of the state, you get a credit for the tax that you pay to that other state.

    Now in your client’s case, he was paid the California unemployment while he was living in New York. So New York is taxing his “countrywide” income. Just because California doesn’t tax it doesn’t mean that New York is going to give him the same deal.

  26. Hi maybe you can help me with this question.

    I have a client in Queens New York who has live here for the entire year of 2013.He also work here the whole year and received a w2 ,,he also received unemployment compensation from the State of California for which the income received from unemployment is tax exempt on the State level.

    My question is why does he have to pay income tax here in the state of New York on the state side for his unemployment wages he received from California?

  27. Hi Harry,
    I agree with you. Your wife should only be taxed for the two weeks that she actually worked in New York. I realize New York taxes are kind of high, but $5,000 for two weeks of work is awfully steep. (Is she a rock star or something like that?)

    They should be filing her as a non-resident of New York and do the income allocation sheet showing the amount of money she actually made there. Once they do that form the numbers should be much better. (Unless she really is a rock star and makes that kind of money!)

  28. Hi – My wife has her employer in NY; she is a consultant and worked in WA and TX all of 2013 (except for maybe 2 weeks of stay in NY for meetings). Her address and residency are in TX. Her company withheld taxes based on her out of state status. My company takes care of our filing since I travel and work internationally, and they hired professional tax consultants who claimed that her NY state taxes were withheld at a very low percentage, and we need to pay about $5K more bringing the state tax to about 6.8% of wages. This does not seem right.

  29. Hi Mark,
    Hmmmmm. Although it sounds funky, your taxes might actually be right. I know it sounds weird, but let me explain.

    You say that you actually had a loss on your NC rental property. But when you look at the NC return, it doesn’t show up at all.

    Not looking at the return, my best guess is that you had something called “Passive Activity Loss Limitation”. You’ll know this is the case if you’ve got a federal form 8582 in your federal tax packet. Basically, if you had income over $150,000 you probably had a passive activity loss limitation.

    If that’s the case, then the amount you’d see on your rental income (loss) would be zero and your income tax preparer did the return correctly.

    If your income was not at the level or higher, then you might want to have a little sit down and have her really explain what everything on your return means and how it flows.

    Here’s the thing–there are schedules and stuff that don’t actually show up on the tax return. Fine–but your preparer should be able to either print them out and show them to you OR she should be able to do them by hand and show you why your figures didn’t show up on the return.

    If she can’t do that for you, I recommend you find yourself a new preparer.

  30. Hi Anand,
    You and your family live in an apartment in Massachusetts. Now, you’ve been working in Texas–but the operative part of your statement is “you and your family live in Massachusetts”.

    You will file a Massachusetts tax return and pay tax to Massachusetts on the income you earned while you were working in Texas.

    That said, did your employer pay you a stipend or reimburse you for your expenses for the time you were in Texas? If not, then you may be able to claim a deduction for your temporary liviing expenses. While you didn’t pay for an apartment, you did have meal and entertainment expenses. It’s possible that you may have a deduction to claim on form 2106 Employee Business Expenses. It’s worth looking into.

  31. thank you for your advice! I appreciate you taking the time to respond so thoughtfully.

  32. Hi Tina,
    You will file as a New York resident and a Virginia non-resident. The reimbursements your husband receives for his travel expenses are not taxable as I’m guessing that they are an “accountable” expense. That means, his company reimburses him for his actual expenses and that he provides reciepts to them for the reimbursement.

    If that’s not the case, then you would file a form 2106 to claim the expenses as a deduction to offset the “per diem” payments he’s receiving from his employer.

  33. Hi Sean,
    bottom line–put your Mass income on your Mass return and your Utah income on your Utah return. It’s the best solution for you.

  34. Hi Sam,
    You probably don’t have enough income in Massachusetts to be required to file a return, but if you had MA withholding, you might want to file a MA return just to get the refund.

    I assume that you are filing a Schedule E with your federal return for your MA rental income. If you have net income, then you should file a MA return, otherwise I wouldn’t bother.

  36. Hi Aariel,
    Congratulations on your pregnancy! I figure I should get the important part out of the way.

    Okay, the work stuff. Technically, you don’t work in Illinois so you shouldn’t have to pay Illinois taxes. What they should be doing is withholding California taxes for you.

    That’s should–clearly that’s not what’s been happening.

    I see that all the time. A company isn’t registered to do business in a certain state so they just withhold the taxed for the state they are located in and then people file the way you filed your taxes.

    That seems to work just fine and dandy until a person has a problem like yours–because your employer hasn’t been paying into the state system–no California SDI has been withheld for you.

    So–you’ve got a bit of a balancing act to follow. You see, your company did wrong–athough probably not intentionally. But if you report them, you might lose your job. Also, it’s SDI withholding–so repairing the situation may also require a pay in from you since technically–you should have been paying the SDI out of your wages.

    See what a mess this is?

    I suggest you do some research first. Here’s where to start: http://www.edd.ca.gov/ That’s the California SDI website.

    But you’re going to need to make some calls. You need to know:
    1. What are you entitled to right now with no changes to your SDI?
    2. What would you be entitled to if payments had been properly made?

    Because quite frankly, if it wouldn’t make a difference, then fighting wouldn’t be worth your while.

    But let’s assume that it is worth fighting for: Now you’re armed with what the value of the SDI really is. Then you have a “friendly” discussion with your employer. “Hey, I’ve discovered that you should have been withholding my California SDI…” Remember, any fair discussion with your employer will include you ponying up your share of the withholding.

    Maybe the penalties, or other fees for operating in California may be too high for them. They might consider paying you for the disability you’re losing out on. Keep that open as an option for them.

    If all the friendly options fail, you could “tell on them” to the state agency. Let the state go after them for the SDI. I really hate that option. 1. You can pretty much guarantee you won’t work for them again, and 2. you can guarantee they won’t be inclined to give you a good reference. Suing your employer is not something you ever want to mention in a job interview either.

    One last thing, you might want to find out if you qualify for unemployment benefits from Illinois if your employer lays you off. It’s something else to think about.

    Sorry I didn’t really answer your question, I just gave you a bunch more questions to ask. Good luck.

  37. Hi, I live in California and work remotely for a job based in Illinois. I have been filing in both states-paying taxes to Illinois and claiming a credit in California. Now I am pregnant and would like to claim SDI for when the baby comes. I see that SDI has not been withheld from my paychecks (since they come from Illinois), and I am afraid I won’t get that benefit. Am I supposed to pay so much tax to Illinois (even though I have never been there?) Shouldn’t SDI have been withheld since I live in CA?
    Thanks for your help,
    Aariel

  38. I live in another state (NJ) and work in New York. My spouse neither lives nor works in New York (lives and works in NJ). We filed a joint federal income tax return and are married, filing separately for NJ and NY. My question is, on the NY non-resident return, for federal gross income, can I put only my income so my spouse’s income is not taxed in NY?

  39. Hi Jan,

    I’d like to know if my income and expenses for a rental property in NC should be shown on the NC tax filing form.

    I moved from NC to CA last year and just filed my taxes locally in CA as a part-time resident/non-resident for both states.

    I own a house in NC for which I rented out toward the 2nd half of last year. With all costs involved, there was no profit for last year, and in fact, there was a loss.

    The tax professional who filed my taxes electronically indicated that I owed a significant amount to federal and a smaller amount to NC, but I was receiving a small return from CA.

    The next day I was reviewing the filed tax forms and noted that my rental property income and expenses are listed only for the CA return, but not anywhere on the NC tax forms.

    I contacted the tax preparer who reviewed again and told me to not pay any taxes because the rental property expenses did not get put into the federal tax forms.

    Two days later, I was asked to go back to review and sign the amended forms for federal, NC, and CA taxes.

    I was told by the preparer that I will now actually receive a tax return from federal and both states.

    Here is the problem though. When I review the NC form which shows my taxable income for last year, it’s showing my portion of income as listed in my federal W2 from my employer for the period I lived in NC.

    I still don’t see any further income listed, i.e. my rental income and I also don’t see the corresponding expenses for the rental listed.

    I asked the tax preparer about this and was told that I don’t see it, but it’s all done behind the scenes in the system after all data is entered into the tax filing software.

    If the negative amount from the loss were added to my income as stated on the W2 for when I lived in NC, the amount would be significantly less. I think that my NC tax return would then be higher. As it stands, the NC tax return amounts to the cost of a cheap dinner.

    Sorry for all the background details, I just have never had a rental property before and also this is the first time that I filed taxes for two different states.

    Thanks,
    Mark

  40. Hi, I need your input on my condition. me and my family ( spouse and childern) are living in rented aprt in MA for entire 2013. However as part of my consulting job I had to move to TX from Aug 2012 till Jan 2013. So I was living in both state ( MA on weekend and Tx for weekdays). since I show my TX address ( living on paying guest with no lease) on my payroll hence my emplyer did not deduct any Income tax since TX does not have any income tax. However since feb 2013 I am working in MA only. now my question is: 1) Will I be consider as MA resident or Part-yr resident in 2013 2) If I’m a resident do I need to show my Teaxs income while filing MA state return. If yes do I need to pay MA state income tax on my TX income

  41. Figured out question #1 after more than a few hours on the phone with the software vendor…it was indeed an issue with their software. Still curious on questions 2 & 3 though…
    Thank you.

  42. My husband and I live in New York State but he is employed by a company in Virginia. He travels there 3 days a week and the remainder of the week he works ‘remotely’ from our home.

    Do we need to file a NYS resident and a VA non-resident? Are the travel expenses to Virginia for the 3 days taxable income?

  43. Hi Jan, First off let me say this site and blog is a great source of information and I thank you in advance for providing direction to others and hopefully myself.
    My situation is:
    Lived in MA 1/1-9/30 = 75%
    Moved to and now live in UT: 10/1-12/31 = 25%
    Earned MA income while in MA
    Earned UT income while in UT
    But continued to earn MA source income after having moved to UT (severance pay from prior MA employer and a small amount of MA unemployment paid after becoming UT resident).
    I’ve concluded this means I need to file MA as part-time resident AND non-resident; and UT as a part-time resident.

    It looks as though I’ve got my normal W2 income allocated correctly (or close enough) between the two states; however, the issue (with the tax software it would appear) is that interest, cap gains, and unemployment – even though they were allocated based on time in each state (75% & 25%)- are showing up as 100% taxable on MA and 25% taxable in UT. My question: Are 100% of these really taxable in MA (at least some cap gains came from sales made after having relocated to UT) or is the software not using my allocation correctly? If 100% are taxable in MA, then I assume I would just calculate what the MA tax on 25% of them are and enter as a credit on UT (as the software is only considering 25% taxable by UT)?

    I also converted my home in MA to a rental property as of 9/1 (1 month prior to my relocating). The software appears to have done ok with this (I did have to do the math by hand on how much interest deduction went to personal deduction (1/1-8/30) vs. was entered in the property section of the return (9/1-12/31)), but my question is: it’s only be reflected on my MA return; does the rental income for the period of 10/1-12/31 need to be reported to UT (and thus I would take a credit on UT for this specific tax paid to MA)?

    Should I really attempt to allocate the amount of MA source income during the period of 10/1-12/31 to UT? Or will it just complicate matters and should I rather just let MA tax based on MA W2 income and let UT tax based on UT W2 income?

  44. Hi Jan

    We moved to California in 2013 and i worked the last week of December 2012 in Massachusetts, for which i got paid in 2013.Do i need to file Mass.state tax or should i just file my california state tax.
    Also I have a rental property in Massachusetts, do i have to pay mass taxes for that property even though i still have a mortgage on it.
    Please let me know.
    Thank you
    Sam

  45. Jan,

    I am a bit confused and wondered if you could assist me? I am a real estate agent and get a 1099 for taxes, I work in MA, but live in NH. I am licensed in MA and NH and about half of my income comes from home sales in NH, but the office pays me in MA.

    I am all set with NH as they do not have a state tax, however I have been told I do not have to pay MA tax as I get a 1099. If I do have to file MA taxes can I break down the money I made in NH sales and only pay MA tax on the sales I made in MA? Since my office is in MA, all of my income is paid from the MA Keller WIlliams office.

    Please email me your thoughts as I don’t want to not file when I should have and have it come back to haunt me in years to come.

    Thank you
    Carla

  47. Hi Andy,
    Since New Hampshire doesn’t have an income tax, you can’t file a New Hampshire income tax return.

    I’m guessing that your company pays you based on all of your working days being in Rhode Island so that’s how your withholding was done.

    You’re going to pay tax in Massachusetts on the income that you earned while working in New Hampshire, even thought NH has no state income tax.

    You’ll also get a credit in MA for the tax that you wind up paying to RI.

    You’ll need to allocate your income to make sure it’s all attributed correctly.

  49. I live and work in Virginia as a teacher but over the summer I worked a camp in Ohio and the school sent me a w-2 with state and federal tax withheld. I only made $1000. Do I need to file a Ohio nonresident return?

  50. I live in MA and work for a firm with offices in RI and NH. My principle office is RI, and so RI withholding is taken from my paycheck. Beginning in 2013, my working routine was such that I worked on average about 1 day per week in RI, 3 days a week in NH and 1 day from home (in MA).

    Questions:
    (1) Since my work from home days were an informal arrangement, should I apply them to RI or MA?
    (2) Should I file a return in NH, even though they don’t have a state income tax?

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