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.
Hi Dillon,
I’m not comfortable with Turbo Tax handling more than two states. You were never a resident of MO, I’m pretty sure you just check the box that you’re not a resident. Missouri doesn’t tax non-resident military so that should handle that.
The VITA people on base are usually pretty good at these things. You can get some live, in person help there if that doesn’t solve the problem.
Hi Munroe,
I’m not sure what you want me to do. I don’t know why Mass would take your brother’s refund. Maybe your brother should contact them.
Hi Alex,
The Missouri tax return is really funky when you move from one state and then work in that state while living in MO. You’ve most likely best off claiming a credit for taxes paid to Kansas and being a Missouri resident.
The hard part is showing KC that you weren’t living in KC for the entire time. You may need to supply them with a copy of your deed or lease to show you didn’t live in KC for the entire year.
Hi Tatiana,
You did the work in Florida. You only presented in Maryland, but you did the actual work in Florida. I believe you do not have to file a Maryland tax return.
Hi Larry,
Everything goes on your federal tax return. Then the items get appropriated to the various states. But everything goes on your federal return first.
I am active duty military stationed in oklahoma. My home of residence is Arizona. I got married last year to my wife who lived in Missouri for part of the year and moved to oklahoma for the remainder of the year. We are filing jointly this year and are having issues with missouri trying to tax me for my military income when i am claiming exempt in arizona and non-resident exempt in oklahoma. My wife is paying taxes in both oklahoma and missouri, however, missouri is wanting me to file my income in their state as well. We are using Turbo Tax and I’m thinking that the software just can’t figure out what to do in this situation so i figured i would ask for advice. How should we go about filing for each state?
Hello,
So my brother-in-law works in Massachusetts, but he lives in Connecticut. He told me that Mass has taken his State tax return which came to around $1,500. I do not believe this is right. Can you clear up our confusion?
Hello Jan,
My wife and I lived in KS for 9 months and for the entire year earned our separate incomes in KS. We moved across town to the MO side of KC and bought a home the last 3 months of 2014. We informed our employers and we started to have a Kansas City, MO earnings tax withheld on top of everything from before. Our MO W-2 lists having no state income, but local wages, tips etc. and local income tax amounts. Appears I will file as part time with each state for last year, and going forward I would file as non-resident for KS and resident MO if I keep working in KS and living in MO.
Also, what is better for me the NRI Form or CR Form?
PART A, LINE 2: PART-YEAR RESIDENT — If you were a Missouri part-year resident with Missouri source income and income from another state; you may use
Form MO-NRI or Form MO-CR, whichever is to your benefit. When using Form MO-NRI, complete Part A, Line 2, Part B, and Part C.
Turbo tax wants me to do a joint filling and have my wife on the NRI alone and myself on the CR. Maybe that is a software error?
Thanks for your help!
Hello Jan,
I am a resident of Florida. NASA ask me to serve on review panel for
proposals submitted to NASA. I made this reviews in my home state (Florida). Then I presented my reviews on the meeting in Maryland. I was paid Honorarium. My question do I need file Maryland tax return? I am confused.
Thank you.
Hello.
We moved to California but couldn’t sell our home in Las Vegas so we were lucky to get renters. We were trying to do our taxes on the HR Block program but a little confused; do we put the amount of our mortgage interest and real estate tax (1098) on the FEDERAL – Income – for Rental, royalties, etc.? or does it go under the STATE for Rentals, royalties, etc.? thanks
Hi Amber,
You don’t claim a credit for taxes paid to another state when you file a part year residency form.
So even though Montana shows all of your income–many state returns do that. There should be another form somewhere that figures the percentage of your income for the state.
Look at the printed form to see it it was computed out. If it’s not there then you probably need to go into the software and click the box to make it happen. You might need to call the Tax Act customer support line to find where that box is.
Hi Olga,
Lots of families are spread out across the country. It makes tax time confusing. So while you are full year residents of LA, your husband is only a part year resident.
Of course LA wants to keep you as a resident because it’s a community property state so they want the tax on half of your husband’s income.
I’m thinking that you’re still better off filing jointly–but you might want to hire a professional on this one. You’ve got the communnity property thing going–so even if you file separately you’re still going to be claiming his income in LA. And the tax credits on the children are going to be worth it (I’m assuming.)
So while he’s a part year resident of LA and AZ, since you’re all in LA he can still claim that he’s an LA resident for tax purposes and take the credit for the taxes he paid to AZ to offset the LA tax. That’s probably going to be your best bet.
–Oh my, I just agreed with the Louisiana Department of Revenue in writing, on the internet. I think I’m going to mark this date on my calendar. 🙂
Hi Galina,
I’m guessing that you’re still a Missouri resident and your work in Hawaii was for a school job or some other temporary situation.
You file as a Missouri resident and a Hawaii non-resident. (Although with only $800 of income, I’m guessing you’d get not credit for taxes paid because they’re going to refund your $4.00.)
Hi Angel,
You’ve got a pretty normal situation. A college student goes to school out of state and gets a job near school. She will file her tax return (not claiming herself because you are claiming her.) You will use your state, (Kentucky) as her resident state. You will use her college state (Ohio) as her non-resident state.
You need Kentucky to be her resident state because you are claiming her on your taxes (to get the American Opportunity Credit.)
This can be a hassle for some folks. Like here in Missouri if your child goes to school in Texas–no state tax, and claims Missouri residency-Missouri has tax, then the child can wind up paying income tax.—BUT–the American Opportunity Credit makes it worth it. So pay the tax and take the credit.
Depending upon her income, the discrepancy between Ohio and Kentucky shouldn’t be a big problem.
I am so glad I found your site! I just filed my federal taxes without any issues for 2014 via a Tax Software. However, I filed part year for Montana (I worked until April there while I lived the ) and then filed part year for Iowa as I had moved there (I earned the same time I lived there). Montana includes all the income earned on the part-year resident form. Even though I specified from my W-2, it marks my taxable income on the summary page based on all earnings, even those earned while no longer living there. I think this is where I need to claim the credit for the other state.
Here is the question: do I claim that credit for both state forms?
Thanks for your help!
Hi Jan,
Please help me to decide with the “residency status” on my state tax returns. Here the deal. All our family lived in Louisiana for 6+ years. In August of 2014 my husband moved PERMANENTLY to Arizona (get job, car registration, driver license etc). I with two children stayed in LA so they can finish their school year. My husband is the only person who earns money. My only income for the whole year was interest of ~$300.
I understand that for AZ we should file pert-time residency, however, can my husband claim all us or at least children as his dependents?
What about LA? do we file part time residency? or we have to file as full year residents? Than we owe to LA too much. Can we file married filed separately and my husband claim children as dependents? I called to LA department of revenue and they said that I need to file full year residency for all of us and get the tax credit we payed in different state since my husband lived in LA for more than 6 mo during 2014.
Thanks a lot!
I have a question about state income taxes. I’m a full time Missouri resident, but last year I worked a full time job in MO until July 4th and then moved to Hawaii until the remainder of the year. While in HI, I worked a part -time job for couple of months and earned $800 in gross wages and they withheld $4.53 from my paychecks for HI state income tax. How do I claim and pay taxes for both states?
Hi, This is my daughters first year of college. She goes to college in Kentucky. We live in Ohio. She lives in an apartment in Kentucky and has a job in Kentucky. We claimed in on our Federal return. We are trying to file taxes for her and are not sure how to file state taxes. They have her address in Kentucky on file for her job. So KY taxes were withheld. I hope this makes sonce and you can help us. Thanks!
Hi Krsiten,
It’s too late to amend your returns for a refund. sorry.
@Dusty again,
I’m thinking you shouldn’t have to do this all by hand. It’s more likely that you need to check the OK box in the W2 input screen to get the numbers to flow to the OK state return in your software. There’s the obvious State section on the W2–but software often has a state box at the top of the input screen–or sometimes on the main information page. Checking one of those boxes can get the wage information to flow. If that doesn’t word–there’s always adding it by hand.
Hi Dusty,
Where do you live? I’m assuming that you live in Oklahoma. If so, then all of your federal income is taxable in Oklahoma and you should get a credit for the little bit of tax that you pay to Minnesota.
If you’re a Minnesota resident, then you still pay tax to Oklahoma on the income you earned working there.
So, yes, you show all that income you earned in OK on your OK return.
Hi Barney,
I understand your thinking, but I’m sorry to say that you need to file a CA return. I’m assuming that your wife made enough money there for her to meet the minimum filing requirements.
So, file the return. Even though she had income withheld, how do you know that she withheld enough? And if California decides she owes, then there could be fines and penalties for not filing.
I believe my tax preparer did my taxes wrong from 2005. I lived in NY state till mid Sept2005 took an early retirement buy out my job offered. Moved to NC in sept 2005 i was still receiving paychecks from NY as a part of my buyout I would get paid for 12 weeks etc..i didnt work in NC at all in october or november i finally got a job mid december in NC and my wages were only 254.84..the reason i think my taxes were done wrong cause it said i owed NC state 1,204 dollars. how is this possible if i didnt work in NC state is this right? if NOT how can i refile and get this resolved and money back i have paid.
Ok so I work for a company based out of Minnesota but worked in Oklahoma for the entire year except for 3 weeks i worked in Minnesota. On my w2 it shows I paid all of the federal in mn and shows $0 in Oklahoma basically the state of Oklahoma wants to know why I made 50,000 dollars in their state but didn’t pay any federal im assuming. Do I calculate it by hand take all my pay stubs and manually put in the correct amount paid in for both states? Help!?
Hi and thanks for having this site. My wife worked a few days in Calif. and CA withheld $500 for their taxes. We live in NJ. Though CA “requires” nonresidents to file a tax form, I can think of no reason on earth why we would want to do that. How can CA have any jurisdiction over us? They have their money, why would we file a return there? We can claim a credit for that amount withheld on our NJ taxes. But is there any reason I’m overlooking for me to fill out CA’s complicated forms and submit them? Thanks.
Hi Carson,
Since you had no earnings in Montana for 2014 you only need to file a Kentucky tax return. Now, you’ll probably get a letter from Montana asking why you didn’t file? You will just tell them that you moved to Montana but did not have taxable income in Montana for 2014. (And that’s only if you get a letter.)
I’m sorry about your wife’s accident. The insurance proceeds should not be taxable unless they reimbursed for missed wages. It the payment was to repair the car or for hospitalization, then no tax is owed on the insurance.
Two questions. I moved from Kentucky to Montana at the end of October. I made money in Kentucky but did not make any money in Montana. Do I still need to file a part year for Montana, or can I just file for Kentucky? Question two. My wife was in a car accident in july. At fault party’s insurance settled for policy limits. Our lawyer was involved but it did not go to court. Does that settlement need to be reported? irs.gov says that as long as I did not itemize any of the medical expenses related to that accident it is not taxable and does not need to be reported. is this correct? Thank you.
Hi Elisabeth,
You are a part year resident f Virginia and a part year resident of Maryland.
Hi Mark,
You’ll want to file an Illinois return because you had Illinois withholding. If you earned no income in Illinois, then you’ll want to file a return to get a refund. (Let me warn you, Illinois thinks that if you had Illinois withholding then you worked in Illinois and proving that you didn’t could be the hardest part of your Illinois tax return.)
I’m thinking that you file the Illinois return, claim the income on the W2 as being earned in Illinois. Even though you didn’t actually work in IL in 2014–you really did earn the income in IL so just file the return that way.
I would file your returns as a full year Kansas resident and file IL as a non-resident. Missouri–since you had no income and you moved anyway, would not be filed.
Hi Hanns,
Basically, if the money you made is Connecticut is more than the amount of your personal exemption there, then you need to file a CT return. If you made less, then you won’t need to file one.
Thank you so much for your website! I am wondering which tax returns I need to prepare for 2014. I lived an worked in Virginia until June of 2014. Mid-June, I moved to Maryland to attend graduate school. I have worked in Maryland. Will I need to complete Virginia and Maryland tax returns? If so, which kinds of forms will I complete for Maryland? They have different statuses (non-resident, statutory resident, and resident), and I am confused about which status would apply to me. Thank you so much.
Hi,
I lived in MO and worked in IL through 1/2/2014, then took a job in KS. I received a final check from my original employer in 2014, though I never actually worked in IL during 2014. My last day at work in IL was actually before Thanksgiving in 2013.
I then lived in a hotel in KS from about 1/6 through 3/14 while I worked there. I bought a house in KS on 3/14 and sold my house in MO on 4/23.
1. Do I have IL income? The W-2 from my former employer withheld IL taxes.
2. When did I become a KS resident?
I appreciate the help.
I received a 1099 for two days of work as an independent consultant in CT – I am a New York State resident. Do I have to file a CT non-resident tax form?
Hi Tami,
Great questions.
Yes, you want to claim a home office and you want to claim your miles to offset your 1099 income. That’s smart thinking. I would keep the mortgage on your partner’s tax return because I’m guessing that’s what works best for you two as a couple. So–you don’t claim the mortgage interest or real estate tax as a home office expense, but you will claim the utilities and home owner’s insurance. Or, since this is only for the one year, just use the safe harbor formula which for you is probably a better deduction anyway.
Hi Jan,
First, I appreciate what you are doing here. Next, I usually file a 1040 ez form and let my partner, who is on the house deed, take the house deductions, etc.
In 2014, I worked for some friends as a Property Manager in Kentucky. (I live in Indiana).I also have a full-time job in Kentucky not related to the property management position. I will have to do a long form this year as I will be getting a 1099. Can I or should I use a percentage of my home for an office space (this is where I did the books for the building, paid bills, etc.) Can I do mileage deduction from my home to the building and any other errands I had to run regarding the building?
Also, since I am doing a long form this year. I probably made more money than my partner. Is it an advantage for me to take the house deductions, etc., if I exceeded their income? This is a one year thing as the building will be selling in the next month or so. Any help would be appreciated.
Hi Katie,
Allow me to confuse you even more! First, you need to know about the Military Spouse Residency Relief Act (MSRRA.) Here’s a link: http://www.militaryfamily.org/get-info/money/what-is-the-military-spouse.html
Basically, it allows you to keep your NC residency along with your husband. It makes you tax exempt in VA (if you choose to be an NC resident also.) But this is the important part–you have a choice!
So, if you want, you can be a VA resident. Have I confused you enough yet?
Okay, either you and your husband both file as NC residents–that’s one option.
Or, you file as a part year NC resident and a part year VA resident with him as a full time NC resident.
Personally, since you have a choice–I’d run the numbers both ways and use the status that gives you the best advantage.
Hi Jennifer,
Your employee has one of those confusing situations. To be honest, I usually run those returns two different ways. But here’s my best guess as to how he’s going to file.
I would have him file as a PA resident and a MD non-resident. Technically, he’s a part-year resident of MD, but doing it that way is going to wind up having him do paperwork by hand and in the end, he’s going to have the same taxes as what I’m going to tell you anyway so why bother with the extra work?
He will take a credit in PA for the taxes that he pays to MD.
Don’t get bent out of shape over having the state amount reported twice. That’s what’s throwing him. Basically, if he made $50,000 all together, that’s what he made. Don’t double count the state income.
I hope that helps.
Hi,
This year I am confused on how do taxes. My husband is in the military and is a NC resident. We are stationed in VA. Last year we was our first year married and I was a resident of NC as well (living/stationed in VA). So that was easy.
This year we bought a house in VA and I became a resident of VA in April.
My question is what to file for federal can we still file married jointly. And the what to do for the states? My employer took out NC from January to April and then VA taxes from April to December, but my husband is still a NC resident since he is military.
Thanks!
Good Morning: I have an employee that lived & worked in MD until April 2014 and then moved to PA. He still continues to work in MD. He rec’d two W2’s; one for MD and one for PA. Both W2’s have the total amount earned and withheld on boxes 1-6. On box 16 of the MD one, it does have an amount for state wages and box 17 for state income tax and on the PA one, it just has an amount in box 17. He’s just a little confused on how to file his taxes. Any help you could provide would be great!
Hi Tom,
You’ll be filing a part year New York and a part year Virginia return. I’d recommend using a New York preparer for this year, unless you can find a Viginia preparer that has the authorization to file a New York return. New York is one of the states that has extra requirements for preparers.
retired in 2013 in NY . moved to Va. June 21st 2014 what should I do to get file help for both states/
Hi Pete,
So if I understand correctly, you are still working in Arizona but they are withholding Ohio taxes, is that right?
What you would do for that is file an Ohio tax return but claim that you didn’t work there and get a refund for your Ohio taxes.
Then you would file an Arizona tax return and pay the full tax.
Now, if you are actually working in Ohio, then it would be right of them to withhold Ohio taxes even though you still live in Arizona. Then you’d file an Ohio return as a non-resident, and claim a credit for taxes paid to Ohio on your Arizona return.
Or by my opinion, did you mean, do I think it’s stupid to withhold state income tax on someone’s paycheck when they don’t actually work there? Well, yes, in my opinion it is kind of stupid. But, I can see how once they have you set up in payroll that way, it’s can be hard to switch back. Or maybe they have some need to have your payroll be in Ohio even if you’re not there.
Bottom line, it’s much easier for your boss to have you adjust your tax return than it is for your boss to adjust his payroll books if you see what I mean.
I was recently transferred to OH from AZ but am still work from AZ office. My paycheck now withholds both OH and Columbus city taxes. I will move to OH in April 2015
Employer is saying to deal with in tax returns.
Please let me know ur opinion abt this. Thank you.
Hi Rich,
No matter what, you’re going to wind up paying the higher California tax no matter what. So make your decision on where you will be staying based upon your heart and not the taxes.
Hi, Jan,
I’m a long-time CA resident whose son started going to boarding school in MA so I bought a small apartment there to be closer to him whenever possible. Luckily, my company has offices in both places so I am flexible about working from either place. I was trying to understand the way taxes interact between the two states and was hoping to run my understanding by you for confirmation.
I’ve retained my house in CA and plan to return there eventually so I understand that I remain a CA resident regardless of how many days I stay in MA each year. CA (Schedule S to form 540) appears to give credit for income earned in another state ONLY IF that state does not allow tax credit for CA tax and then only for income earned in the other state.
MA appears to require non-resident tax payments on income earned there w/o any tax credit for CA tax as long as one in present in MA for less than 183 days otherwise, if present for more than 183 days and owning an apartment (as I do), one becomes a statutory resident for tax purposes but it appears (worksheet to Schedule Z of Form 1) that one is able to deduct taxes for ALL income taxed by another state (regardless of where earned).
My impression from this is that I will owe the higher CA tax rate no matter how long I stay in MA. (For me the CA tax is higher than the MA tax.) It seems like, if I stay 183 days or less in MA, I pay MA for wages earned while there and claim those payments as a credit against my CA taxes while, if I stay more than 183 days, I become a MA resident and can claim my higher CA tax payments as credit to zero out any MA income tax obligation. Hence, it seems like I end up paying the higher CA taxes either way and, counter-intuitively, if I stay over 183 days in MA, the MA income taxes will shift over to CA.
Am I missing something major? It just seems surprising to me that staying longer in MA means they get less of my taxes. On the other hand, nothing says that states need to have compatible tax viewpoints.
Any insight you have on this would be greatly appreciated. I don’t yet know how much time I’ll spend in MA next year and tax issues may be a determining factor. Thanks!
Hi Lennie,
I’m concerned about you filing LLC documents in Delaware. You don’t live in Delaware and you don’t do business in Delaware. Now, I’m sure that you’ve read on the internet that you won’t pay tax in Delaware, but even so, you’ll still pay tax in Ohio on that income and possibly California as well
Now, I have one accounting friend that always recommends registering an LLC for all rental property. But I’m not that gung ho. There are a lot of situations where I think the LLC for a rental property is overkill. For example, if you just moved from Ohio to California and you’re renting out your personal home–I’m not so sure that doing an LLC is the way to go. I would get insurance, but not necessarily do the LLC.
Now, if you’ve purchased an apartment building, that’s a different story. And, if you’re planning on setting up a company with multiple rentals in multiple states–well, then, I’m thinking the Delaware LLC makes sense.
But if you’re only planning on the one rental property in Ohio, then I’d set up the LLC in either Ohio or California. You’ll want to see which makes the most sense (I’m guessing Ohio but you’ll want to do your research.)
Bottom line taxwise, you will pay tax in Ohio on the income you earn in Ohio. California will tax your Ohio income, but will give you a credit for the tax you pay to Ohio. And Delaware–doesn’t figure into the equation at all.
Hi Jan, I live in CA and will be receiving rental income in OH. If I form an LLC in DE do I need still need to register it also in CA and pay $800 even though source of income is OH? Will I need to file in OH and pay tax there too?
Thanks for help!
Hi Ayo,
You live in Texas work in Delaware. Got it.
1. You are considered a non-resident of Delaware.
2. Non-resident of Delaware reduces your tax liability. If you were considered a resident of Delaware, all of your Texas income would count on your Delaware taxes also.
3. You will not receive a tax credit for you car purchase or apartment in Delaware. I don’t have a lot of experience with Delaware state returns, there may be something on the state return, but usually there isn’t. You may be able to claim the sales tax you paid on your car purchase as a deduction on your federal taxes if you and your wife itemize. Being from Texas, you probably already claim sales tax as a deduction. But with your Delaware income, not your income tax might be a bigger deduction. (I’m rambling sorry.) Bottom line, you’ll take the bigger deduction when you compare the two.
4. What other items can you legally claim on your return? Here’s my question. Is the Delaware job going to last for over a year? If yes, then not much. If the job is temporary and expected to last for less than a year, then you can claim your apartment, travel, and meal expenses as employee business expenses. (Unless of course, you’re being reimbursed by your employer for this.)
5. Definitely use your permanent Texas address on both your federal and your state income tax returns.
6. File jointly. Your wife is also a non-resident of Delaware, she just has no income earned there.
Hi Dave,
You’re not my buddy Dave the CPA asking me that just to drive me crazy are you? I just finished working on a return with a K1 like that and it was driving me nuts.
The answer to your question (I’m assuming you’re really asking and not trying to drive me nuts) is that it depends. How much money is being made in each state? And, is the partnership paying his tax for that income?
You see, some K1s will show income in all 50 states but its $1 here and $2 there. Mostly such small amounts that no tax return would be required. Sometimes there will be states that show enough income that you need to file. It helps to have a state tax book that has all the state filing requirements. (I know, not the kind of thing normal people have on their bookshelves.)
And sometimes the partnership will pay the state tax for partners so there is no need to file a return.
Are you confused yet? Sorry.
The main thing is to read the entire K1 letter. Usually the accounting firm that prepares the K1 sends a letter explaining what you need to do.
But I think the main part of your question is: is it possible that he could need to file a state tax return for another state even though he lives in a no tax state? And the answer is, Yes, it is possible. Sorry.
I live and own rental houses (that I receive income for) in Texas. I only worked 2 months this year in Texas and have worked the rest of the year in Delaware. The company I work for witholds for Delaware tax. While working oin Delaware, I rented an apartment and bought a cash car because cost of hotel living was becoming too expensive. My questions are:
1. Will I be considered a non-resident or part-resident of Delaware?
2. Which classification reduces tax liability?
3. Will I get tax credit for my car purchase and apartment rent in Delaware?
4. What other items can I legally claim on my return?
5. Do I need to use a Delaware address on my state tax return or could I just use my permanent address in Texas?
6. I’ve always filed jointly with my wife that also works in Texas. How do I file this year….jointly or separate?
Thank you