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 Todd,
Here’s what I would do. I’d only change your Illinois return, as they are the only ones complaining. You can get your Missouri tax from line 30 of the Missouri 1040-that’s your actual Missouri tax and it’s separated out from your wife’s tax. That’s the number that you need for your credit for taxes paid to another state.
Question for you–are you really saving that much by filing separately? You could be, depending upon your income, It’s just that my quick gut reaction was that for most people, claiming a full year residency in Illinois wouldn’t be hurting you that much on your taxes. (For some people it would, and I’m guessing that you must be in that category, but thought I’d bring it up, just in case.)
Here’s my other question–you had your return professionally prepared–why isn’t your preparer doing your amendment for you?
Hello. I greatly appreciate your help.
I am a resident of Illinois who works for a company based in Illinois.
I am relocating to North Carolina for non-business reasons, but my company has agreed to pay me to telecommute from my new location for a full 12 months after which I will leave the company and continue residency indefinitely in NC.
Essentially, I will be transitioning from Illinois resident to North Carolina resident in the middle of the 2012 year. However, my company is located in Illinois.
Am I correct in assuming that I will simply file as a part-year resident in each state, and only pay state taxes to whichever state I’m living in at the time (first part of the year to IL; second part of the year to NC)? Or does the fact that my company is located in IL impact additional taxes being due to IL in the second part of the year even though I will no longer be a resident of IL?
Thank you!
Me and my wife work in missouri and she lived in illiniois the entire year, but i lived in missouri for 7 months out of the year and then moved to illinois. We filed jointly on federal, jointly on missouri non-resident and then the person doing our taxes put that we didn’t live in illinois the whole year (since i didn’t). We just got a letter stating they changed us to residents. I looked and if one resident lives in illiniois the whole year and you file jointly, you both would have to be considered full time residents. We can make an ammendment and file separately so i would only claim 5 months in illinois. The problem is that the tax return to missouri was filed jointly so the only amount i have to give illinois for money paid to another state is for both of us. How should i handle this. Do i need to make an amendment to the missouri taxes and file separately? Can i take the amount paid for both of us and us a percentage based on wages? I am stuck on how to get the correct amount that each of us paid to missouri and provide proper documentation to illinois.
Hi Apu,
That’s a good question. When you are a traveling consultant (or perform any kind of traveling work) the point of being able to claim your expenses as a traveler is that you don’t stay in any one place for over a year. Once an assignment exceeds a year–then you can’t claim your traveling expenses as a tax deduction any more.
So here’s my question to you–it sounds to me like your assignment in Texas wasn’t supposed to exceed one year–but now it is. In that case–it’s okay that you claimed those expenses because your job at the time you took it, was supposed to be temporary. But now it’s going to be over a year? Is that the case?
But it also sounds like you are able to take a one month break for tax purposes–so you have a lot of flexibility there. My question to you would be–would you lose more income by not working in Texas, than you would gain in tax breaks?
Also, I’m not sure if this applies to you, but one of my clients had this situation–he had a temporary job in California–then he got another temporary job in another part of California. Texas is a big place–so if you’ve been moving around Texas–those are different temporary jobs. I’m guessing you’ve been in one spot, but I thought I’d mention that in case it applied to you.
So bottom line is: what’s best for you? I don’t think you lose any tax expenses you already claimed because at the time you took the job it was supposed to be temporary. So for you it’s all moving ahead. Will your client take you back if you take a month off? Will they give you a new temporary contract? Do they want to keep you permanently? (Texas has no state income tax!)
Sorry, seems I only have more questions for you and no answers.
Hi,
Im a travelling consultant, my house is in NJ. For the last 11 months im in Texas without travelling to NJ, I claim expenses for my stay in Texas from the client. Now my question is if I complete 1 year in Texas should I compulsorily take a one month tax break? If not should I pay any tax for the expenses I claimed.
Hi Yvonne,
I answered you privately but I’m putting my quick answer here because someone else might need to know. Basically, I said to contact the California Department of Revenue on this because they are the final authority.
Hi, I have a question. Does an employer based in California, but working in Guam have to pay CA state taxes for wages paid to thier employees? The main office is in CA, but they have a temporary construction job in a military base in Guam. Several employees, residents from California, went to Guam for several months to help complete the project. They also hired some local guam citizens. The accounting software automatically stopped calculating CA state taxes when the location of the job is entered. Based on information we have found, it seems like when the employees file thier return, they might owe taxes for work performed out of state. Would the employer also have to pay california state taxes for labor out of california? Thanks for any insights on this issue!
Hi Ariel,
I understand your confusion. For regular income tax purposes, you might still be a resident of Florida (especially if your parents are still there.) But for this particular case, they’re asking you where are you living right now. That’s so they can determine if you need to pay local taxes. Here in St. Louis, if you live in St. Louis city, you pay a city tax on your wages. If you’re outside of St Louis city limits, and live in St Louis county–you don’t. (Unless of course you work in the city, everyone who works within the city limits pays the city tax.–Confused yet?)
Figuring out if you live in a taxing district can be tricky. Here, there’s actually a booklet that you can get online and you look up your zip code and for some people, half the zipcode is in the city and half is out. Like I said, it’s a whole booklet of addresses.
For you, the simplest answer might be to go to the human resource department where you work (or the payroll person) and just give her your local address. She probably knows the local tax districts much better than you do.
Bottom line though–use your local address.
HI there! My situation is tricky. I am originally from FL. Lived there 18 years. Then I went to college in CA (so far for 2 years) and this summer I am going to work at an internship in Michigan. I am filling out the federal W-4, MI-W-4, and the Local Tax Withholding Form. I have a couple of questions about these forms:
1) They are asking me for where my residence lies. Should I put that I am a resident of florida or of the city I am temporarily living in now?
2) Where can I find out whether I live in a taxing city/district/county?
Thank you
Hi Pat,
Here’s my question to you: do you actually work in California? I think the answer is no–and in that case, you only file a New Jersey tax return. Lots of people work for companies that are based in other states, but they never ever go to work at the headquarters. If that’s your situation, then don’t worry about California at all.
If you are working in California, then you are a non-resident of California and a resident of New Jersey. Your wife’s income should not be subject to California tax under any circumstances. I hope that clears it up for you.
Hi,
I am a New Jersey resident and work for a CA based company. How should I pay state taxes. From what I read, it seems that I will need to pay the state tat to NJ as resident, but pay CA none resident tax. What is the tax rate for none CA resident? While my wife work and life in NJ as well, if we file tax jointly, will her income subject to CA none resident as well?Thank you.
Hi Karen,
Georgia is your tax home–100%. Technically–and I say technically because most companies just aren’t sophisticated enough to do this–technically you should have MN withholding when you’re working in Minnesota and GA withholding when you’re working from home.
If you’re only in Minnesota once in awhile–then you should have GA withholding all the time and the Minnesota time would be considered “minimal” and you wouldn’t have any MN withholding or tax.
But you seem to be in MN enough to be considered a Minnesota employee. You’re still going there three times a month.
Really, it’s going to be up to your payroll department. Do you submit to them weekly timesheets of what city you were in while you were working? I’m guessing you don’t. And I’m also guessing that your travel may be sporadic enough that they couldn’t just say X days tax in Minnesota, and X days to Georgia. So, you’re probably going to be stuck with the Minnesota non-resident and Georgia resident return.
But here are some thoughts for you: When you’re in Minnesota–are all of your expenses reimbursed? If not, don’t forget to be claiming your employee business expenses for the time you’re up there. And also, I’m guessing you already know about claiming your home office deduction–since it’s for your employer’s convenience to not have to fly you up to Minnesota every week.
It may not help (because they don’t help everyone), but it’s worth checking into the employee business expenses. It sounds like you’ve got one of those jobs that definitely qualifies.
I work for a company in MN but own a home in GA. In 2011 I spent more than half of my work time in MN and worked the balance from my home office, but in 2012 I will likely work from home more than half of the time and travel to MN a couple of times a month. In 2011 my employer withheld MN tax and I filed a non-resident return for MN, paid the state income tax. I also filed a resident return in GA and due to the credit for taxes paid in MN had no state tax liability in GA. Going forward, I’m wondering if I should allocate my salary to MN and GA based on the amount of time that I spend working from each site? If so, what kind of documentation will I need to have since I’ll only get one W-2 and withholding will go to MN. Or is there some other way that I should structure things so that Georgia is my “tax home?” Thanks!
Hi Debbie,
Welcome to Missouri! Okay so right now you live in Missouri and your husband works in Missouri. All good all Missouri taxes. The issue is–what if you get a house in Kansas?
If you move to Kansas–straight up buy a house and live there–you would file a Kansas resident return and a Missouri non-resident return. Kansas would give you a credit for the income tax that you pay to Missouri. Depending upon your income–Kansas taxes can be lower or higher than Missouri’s. You may want to run some sample returns to see how they compare.
Now if you chose to live in Missouri and just have a vacation home in Kansas–that’s different. You would file a Missouri tax return, but you wouldn’t be filing a Kansas return at all–unless you rented out your vacation home for income or something like that.
Bottom line–you would not be subject to double taxation no matter where you live.
Hi dquinn–
I don’t have any numbers to work with here (and I don’t actually do tax returns in the comments anyway) but I think I can give you some information.
Your son will file as a resident of Illinois and a non-resident of Ohio. He will get a credit for the tax he pays to Illinois–that will be based on the actual tax liability if he has any–not the amount that was withheld from his paycheck.
Often, college students don’t have a tax liability with their school jobs and they don’t even have to file. Of course, your son will want to file anyway to get his refund. And–also there are students who do work and earn enough that they do owe tax so withholding is always a good idea.
Basically, if your son earns less than $3700 for the year–he should get all of his Ohio withholding back and he won’t owe Illinois anything either. If he earns more than that–well there will probably be some taxes involved. Hope that helps a little anyway.
We moved from WA state this year (2012) and are renting in MO. My husband works in MO and we are trying to find a house. By the sounds of it, we would be better off in MO in regards to taxes. However, we will still need a small home in KS for weekends (If we don’t live there full time). Would this be considered a “vacation home” and that we would avoid double taxation?
My son lives in IL but is in school in OH and is working there. The school is withholding OH state (and some local) tax.
I believe he has to file non resident tax form in OH. I also see that IL and OH do not have reciprocity.
I believe he will have tax liability in IL at its 5% rate. Will he have tax liability in OH?
If so, how much. If not, will he get a refund from OH for the amount paid in?
Thanks
Hi Diane,
You want to file a part-year resident return for Virginia, and a non-resident return for Maryland. The reason you want to do a part-year for Virginia is so that you’re not taxed in Virginia on the income you earned while you lived in Texas which is tax free. Getting these right when you’ve left a no-tax state can be a little difficult. Make sure you go over the return carefully to make sure you’re not over paying or underpaying.
My husband and I own a home in Texas and just recently moved to Virginia for our jobs. However my job is in Maryland, what state do I file taxes for in 2013?
Hi Patty,
your are absolutely correct in your understanding. Either have the mission correct the w-2 or write you a letter. I’ve found Illinois to be pretty good to work with when they say this is what you need–if you send it–it’s taken care of. And what they said makes sense so do that.
Now for the EIC–here’s the kicker, the rules don’t say that you can’t live overseas. BUT–and it’s a big BUT—your qualifying children have to live with you in the United States for over 6 months of the year. If you’re all living in Peru together for the entire year in 2012–then you won’t qualify for EIC. If one of you were back in the states with the kids–that would be different. But if I understand correctly then you’re all together and won’t be back in the States until 2013. No EIC for 2012. Sorry.
Here’s a link to the IRS website just so you can see where I’m coming from: http://www.irs.gov/individuals/article/0,,id=218779,00.html
I wrote with a question yesterday, and appreciate your time in answering me. I do have a few follow up questions.
I did fill out a form for IL for part-time residence, calculating what part of our income we received while we lived in IL. Our W-2 is blank as far as the state income is concerned. I called the IL Dept of Rev, and they told me we could have our mission write us a corrected W-2 or a letter on official letterhead stating that we only lived in Il until the end of July. Does it sound like I understood them correctly?
My other questions has to do with the EIC. We did take the Federal Earned Income Tax Credit, which we wouldn’t get if we use Form 2555. Could that be the problem? Also, can we take the EIC in the future if we are living overseas, or is it only for those in the US? Our salary, married filing jointly is about $28,000.
Thanks again,
Patty
Hi Patty,
This is one where it would be easier to see the return–but here are a couple of ideas.
1. If you are claiming a full year residency in Illinois–then Illinois will tax all of your income. You may need to change to part year residency.
2. You may have filed as part year, but did something else to look like you should have claimed full year–not sure but possible.
3. Since you’re going to be out of the country for 2 years–you could wait until July and amend your return using a foreign income exclusion (form 2555). You have to have a full year out of the country which you won’t have yet, but you will have soon. Using that foreign income exclusion could take care of that Illinois problem (and should reduce your overall federal income too.) The income exclusion will be prorated for 2011, but it should still help a bit.
Bottom line–it all depends upon how you intend to claim your Illinois residency. I’ve got some clients that travel and work all over the country–yet they claim a Missouri residency and they always have Missouri taxes.
You’re really not living in Illinois so I would think Illinois would not be taxing you on the non-Illinois income–so the question would be, what are they seeing? It might be that you’re just missing a schedule that should have been sent with your original return.
My husband and I work for a Lutheran mission agency out of MN. We live in IL when we are stateside, and use my mother’s address as our permenent mailing address when we are overseas (Peru). In 2011, we lived in IL from January to July, and then moved back to Peru, and will be here for at least 2 years.
When I did our income taxes, I only claimed residency in IL until the end of July. Now we got a letter claiming we owe $450 more (ouch!), and that we are being taxed on the whole year in the state of IL. Because our mission uses our IL address, do we have to pay taxes if we don’t live there, don’t own a home there, etc?
Thanks for any help you can give me.
Patty
Hey Jason,
Let me guess–company in New Jersey–IT technician? Send me an email–I’ll talk you through what receipts I’m going to want you to save. Generally, the temporary assignment folks are in health care and IT. Once you said the company was based in New Jersey, my brain said IT. (I do a lot of these types of returns.)
Hi Jason,
this is kind of my specialty. Now, California is a little different from the other states, so I really want you to maintain your Massachusetts residence. I’d probably recommend that no matter what–but especially with California.
You are going to pay taxes to Massachusetts as a resident, and taxes to California as a non-resident. Massachusetts has the health insurance thing which may make you want to file as married filing separate for MA–you’ll probably have to play with that, but it should be an option for you.
Now–more importantly–you said that you were on temporary assignment in California. Will the assignment end within a year? If yes–then my next question is — will your employer pick up all of your housing and meal and transportation costs? If not, you may be able to deduct those things as employee business expenses. For some people, this makes a huge impact on their tax returns. This is also my other reason for not changing your residency if your assignment is known to be temporary.
I’ve saved people thousands of dollars on their tax returns because of the temporary assignment rules. It doesn’t work for everybody, but for some people it’s a great deduction.
Now, if your job really isn’t temporary–you can’t take those deductions. You’re going to want something in your hand that says–temporary assignment from date to date to back up the claim.
Sorry, forgot to mention that the company employs me is in NJ, I go to CA to serve my employer’s client. So the paycheck is sending from NJ.
I am now living in MA. Since May, I will take a temporary job in CA, and I will live and work in CA for the rest of 2012. I will not have any other income in MA. My family will still living in MA. I am thinking to keep my MA address (where my paycheck sent to) and my car registration/driver license at MA. However, I am not sure how this will affect my state tax filing. Is it better (considering the tax) to just change everything (address, car reg, driver licence) to CA?
Thank you.
Hey Susee,
I feel your pain. (Seriously, been there done that!) You pretty much have to redo the federal to get to the state returns. If you use my 1040.com software, you get all the states for one price. (Great commercial spot don’t you think?)
But before you do that–will your software to a part year state? If so, you can check out the individual state tax sites–they’re usually something like http://www.dor.statename.gov just try googling them.
Some state will let you file their state return for free and if it’s an easy state then you might just be able to do it without the hassle. It’s worth looking at anyway. Good luck.
Evening Admin Roberg…
Like everyone else here I moved this year, (from Mich to Georgia) my problem is this, the software (freetaxusa) I used doesn’t allow two state returns, so I’m trying on other sites but It’s driving me nuts, ? IS: Do I have to enter ALL of my info I entered for the federal in order to get the state as I have 5 w-2’s, (not a problem if I do other than the large amount of work) but is there any way to enter the state income & taxes paid, without doing all the fed over again! aaarrrggg ~ I hate tax time!!!
Thank you,
Susee Harkins
Hi Tora,
No wonder you’re confused, you’ve got a couple of issues to deal with.
First–“exempt” means that you don’t have to pay income tax. That usually works for a summer high school job, but once a person graduates (and even some kids who are still in school) it’s not a good idea to claim exemptl
So–your nephew is going to have to pay.
Now the other issue is, can your parent’s still claim him? Technically they can because he was in school until June. That might be something they all want to discuss. Where’s the best benefit for claiming him? If he’s not going to college, they won’t be able to claim him next year. But this year there’s a little flexibility.
Hi Susan,
You are a resident of Iowa and a non-resident of Illinois. Check the guidelines for if you even have to file a tax return in either state depending upon your income.
Hi Kami,
Your rental income on your Wisconsin home is attributed to Wisconsin. If your employer attributed your Illinois income to Wisconsin it messes things up a little. Normally, I’d have you file two part year returns and it would work out nicely, but it looks like all of your income looks like it comes from Wisconsin. I’d file a Wisconsin return and leave Illinois out of it for this year. Make sure your withholding is fixed for 2012 and pay Illinois next year.
I know this sounds like you’re cheating Illinois–normally I’d have you file an Illinois return with a credit for taxes paid to another state–but you won’t be able to file a part year along with a credit to another state so you won’t get a fair return. Also–it will really mess things up for the folks who work at the Illinois Dept of revenue. So be kind and file for Wisconsin only.
Hey Paula,
Your situation really depends upon how the employer sees it. If your husband’s W2 says that all of his income is from Georgia–then you pay tax to Georgia on that income. If the company attributes some of that income to Ohio–then you’ll have Ohio taxes as well. I’m guessing that it’s all Georgia income though. So yes, you’ll have to pay tax on all of your husband’s income to Georgia.
John, John, John, John, John!
Why are you paper filing? What’s the percentage of efiled tax returns that get audited? One half of one percent! What’s the percentage of paper filed tax returns that get audited? 25%–that’s twenty-five percent. Which group do you want to be in?
You’re using Tax Act–a computer program (ahem–not Roberg Tax Solutions 1040.com?) –you have internet access. You reall should efile.
But–maybe you can’t. In that case–basically, any form that has tax withholding on it needs to be mailed with your tax returns. The states only need the documents that have income/withholding from that state.
I’m trying to complete my nephew’s Maryland tax returns and I’m at my wits end. My nephew was in high school until he graduated in June 2011. He turned 19 on 12/20. I don’t think my parents can claim him because he is no longer in school (they are his legal guardians).
The thing is since he was in school his employer considered him exempt and did not take taxes out of his wages until after he graduated. It’s been a while since I lived in Maryland but I thought you could file ‘EXEMPT’ if you were in school. Or is that only for full year student?
Thanks! Even though I’m totally confused.
I am a dependent in Iowa, but I work and attend college in Illinois, where is my residency? do I need to file for both Iowa and Illinois?
Thanks!
I moved to IL from WI 9/30/11 to take a new position for the same company (corporate office instead of satelite location). My employer never switched my withholding to IL from WI. I know I need to file in both states, but how will this affect my returns?
Also, after moving to IL we rented out our home in WI and have rental income from the WI home for 2 of the 3 months we have lived in IL. In which state do Iist that income?
Thanks much!
Hello,
My husband and I live in Florida. I work p/t in Florida. My husband works for a Georgia based company and travels to GA for work. He leaves Monday morning and stays in a hotel until Friday (returning to FL on the weekends). Some weeks he travels for work. He leaves from Jacksonville, FL airport and travels to different states (mostly OH) where he will stay and work for upto a week (again, staying at a hote – paid for by work). He also gets a per diem. I know I have to file a GA State Income Tax Return as well as a Federal Return. Do we have to pay GA State Income Tax on money earned while not physicallly working in the State of GA?
Sorry, 2 more questions:
1) I used TaxAct to complete my part year residence state income tax return. The program says to attach W2 and also 1099 forms if I go with paper filing. Does it mean all my 1099s? I have 1099-div, 1099-G, 1099- etc etc.
2) I have to file 2 part year residence state income tax returns, 1 for NJ and 1 for Virginia. Do I need to include all the W2s for each tax return? I have a W2 from NJ and a W2 from Virginia.
Thanks
John
Hey John,
It sounds to me like you are still a resident of Virginia and a non-resident of New Jersey. For 2011 anyway.
Hey Sunny,
I would file as Missouri residents and Illinois non-residents. Do a credit in Missouri for tax paid to Illinois. That’s the easy way to do it and it will give you the same tax result as if you messed around with all the part year issues.
Could you give me an advice on my tax return:
I lived and worked in Virginia for 11 months in 2011 before getting a job in NJ in December. I rented an apartment in NJ for december but I was travelling back and forth to Virginia on the weekend. Should I file as a part year residence in NJ and a part year residence in VA? If so, what should I use as my address on each tax return? Does the address matters if I intend to travel back to forth (as in Friday and weekend in Virginia, then live and work from Monday to Thursday in NJ ? It’s a permanent job but then things can change.
Thanks
I will try to make this as clear as I can,
Me and my wife lived in Illinois for 3 months before moving to MO and are staying there right now.
My wife was employed in IL all through 2011 and has had income tax withheld in Illinois only.
I worked in MO for the first 6 months in 2011 and had MO taxes withheld. I then changed jobs and worked in IL for the last 6 months and thus IL taxes were withheld.
What I understand from looking at the MO-NRI form is that we have to pay MO taxes on income earned WHILE we were MO residents.
– Would that be a 3/4ths of my wife’s wages (since we lived in MO for 9 months out of 12)?
– for me would that be 1/2 of my MO wages (since I lived in IL for the first 3 months while working in MO) and all of my IL income (since I lived in MO while working in IL)?
– I am going to put in 3/4ths of my interest and dividend income since that was generated all over the year.
Also if doing that is correct that how would I handle the Illinois taxes since they want to tax me on income that we had working in IL even though we were living in MO for most of the year.
Thanks in advance.
Hey Donnarae.
It all depends upon if she made enough income to require her to report it. If she has to report her income, she files as an Illinois resident and a Utah non-resident.
Hi Beth–
Rule 1–you must do the federal return first. Married filing jointly.
When it’s done-you do the state returns.
Your husband is a full year resident of Minnesota. You are a part year resident of Minnesota.
Your husband is non-residnet of Iowa, you are a part year resident of Iowa.
If the software won’t allow it–try being a full year resident of Minnesota and a non-resident of Iowa–the taxes should pretty much come out the same way.
Here’s a little State Income Tax class:
wages earned are taxed to the state they are earned in–same with self employment
pensions, interest and dividends, and other investment income are taxed to the state you live in.
Hope that helps.
Hey Rani,
Living in Georgia changes everything–you owe Georgia the tax on the money you earned in Florida. Sorry.
Hi Ning,
I’m going to make it even more confusing–California will tax your wife’s income even though she doesn’t live there if you’re filing jointly. You might want to get some professional help with this one. California tax law is different from most other states. I’d hire a California tax professional to make sure it’s right.
Here’s a clue: everthing I know about California tax law I learned from having to represent people who didn’t have a California preparer do their California taxes. Handling a non-resident spouse’s income incorrectly is a very common problem.
If you insiste on tackling this yourself, the best advice I can give is to make sure that you read each line on the tax return and answer the question exactly how it’s asked–not how you think they should be asking it. I know it sounds crazy–but you’re used to doing New Jersey taxes and the rules for California are very different. It’s worth the money for you to hire a pro this year.
My daughter’s residence is in Illinois. I claimed her as a dependant. She worked in Utah for 2011 while attending college. Do she need to file a Illlinos return and a Utah return?
Thanks,
Donnarae
Hi,
In 2011 I was a single Iowa resident with a child until April. In April, I moved to Minnesota with my daughter. While a resident of Minnesota, I received a 401K payout, but did not have a job with a Minnesota business. I did, however, receive money from sources in Michigan, California, and Iowa.
Then in September, I got married. My husband was a full year resident of Minnesota. I’m at a loss when it comes to the state taxes. When working with software, it’s requiring me to file married and enter his wages for Iowa, but he was never a resident of Iowa, nor did he make any money from Iowa sources.
Any advice is helpful. Thanks!
Beth
In response to your response…
I actually am a resident of Georgia. I just did my internship in Florida.
Does that change anything?