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 Lil,
It might be that you won’t even have to file for Maryland. It depends upon how much your check was for. I would tell you what the minimum filing requirements for Maryland are but their web site appears to be overloaded right now.
If you had Maryland taxes withheld, you’ll want to file a Marland return to claim the refund.
If you do need to file in Maryland, you should receive a credit in California for the tax that you pay to Maryland.
Hi Ken,
The company is located in Oregon, but you’re working in Washington, right? In that case, you will only be paying Minnesota taxes. It doesn’t matter where the company is, what matters is where you phyiscally live and physically work. Since there are no state taxes in Washington, you will only pay Minnesota state taxes.
(I’m originally from Minnesota!)
Hi Lucas,
Congratulations on landing that internship! The way that works is that you’ll file a Virginia “non-resident” return and a Kentucky “resident” return. You should get a credit on your Kentucky return for the tax that you pay to Virginia.
Sometimes with students, they don’t earn enough money in another state to even bother filing, but since you’re going to be working there for seven months, I’m going to assume that you’ll need to file a return.
Hi there!
I am a flight attendant based in Portland, OR. I’ve been based here for the entirety of 2012, but lived in Phoenix commuting. I finally moved to OR at the beginning of the year, and my W-2 already notes the new address. I’ve been withheld the taxes for Arizona for the year.
So here are my questions:
1. What are the rules on income tax in this situation?
2. Should I change the address information on my taxes to reflect where I was living in 2012 or my new Oregon address?
3. Do I need to do two different state taxes – one for Arizona, and one for Oregon? 4. If only one, how do I sort out the address situation?
Thank you for your time!
Hello,
I was trying to do my husband’s taxes on my own which is what I’ve done for the past few years. However, this time there’s something different on his W2. My husband has lived and worked in the state of TX for the entire year. He has not left the state to work anywhere else. On his W2 in box 14 it shows CASDI (California State Disability Insurance). Then in section 15 there are two lines for his state and local info. One line for CA with an employer’s state ID and one line for TX which shows N/A for employer’s state ID, along with two different wages in section 16 for each state. Why is there a line for CA if he’s never worked in that state and why is he having to claim CASDI…Hope you can help. I’m so confused
we moved from maryland to california in jan 1, 2012. apparently my paycheck from maryland was delayed and wasnt issued till late jan 2012, so it looks like i have a maryland income for 2012. how will i be taxed by both states?
I have a question for you and I hope you can help. I currently have a home in MN. and pay MN state taxes. My home is there and I pay property taxes, I have a MN drivers license, cars are registered in MN, I have a daughter in the MN public school system, voter’s registration is in MN. I consider myself a MN state resident and have MN state taxes withheld from my checks. I currently work in WA and go back to MN about 6 times a year. There is no WA state income tax. I accepted a position that the company is located in Oregon. My question is do I have to pay both Oregon and MN state taxes? Thank you.
Hey Jan, I have a question:
I am a resident of Kentucky, and a student, but I’ll be doing a seven-month internship in Northern Virginia this year. Do I need to file a tax return for Virginia or Kentucky.
Hi Lyn,
I would file NC taxes only.
I moved to NC and changed residence the first part of 2012, and sold my residence in GA in Nov. 2012, and received a cancellation of debt when the house sold for way less than owed. Do I file state taxes with GA? I did not work in GA any of 2012- that’s why I moved.
Hey Charissa,
Yes you will need to file returns for both New York and Oregon. Claim New York as a resident and Oregon as a non-resident.
Granted, you lived in Oregon for the beginning of the year, but you were a non-resident when you actually lived there so it should work out just fine.
Hi Connie,
I would file with Tennesee as your resident state and Arizona as your non-resident state.
Now, if you knew for a fact that you would only be in Arizona for one year or less–then you might be able to deduct your rent on form 2106. Because it’s “undetermined” you can’t. (I know, I think that’s kind of silly myself, but that’s the ruling on that. Sorry.)
Hi Sean,
For three weeks you won’t need to file a California return.
Hi Keenen,
You are a Georgia resident and you live in Geogia–you only work in Texas. Therefore, you have to pay Georgia state tax on the income you earn in Texas.
Hi Joe,
I’m going to send you to a California tax preparer. You’ve got California and Arizona–and they’re both community property states–so you’ve got an issue there. Plus, California has different rules than everybody else.
Normally, I would say–claim married filing separately–but since you’re also from a community propert state–California treats that differently. So you’ll have another set of California rules (and they’re probably not going to land in your favor.)
So, I recommend a California preparer. They know the CA rules better than I do and you’re going to want a specialist. Sorry.
I lived in OR state at the beginning of 2012, but was unemployed. I moved to NY at the end of March and immediately started work. Usually I would just file a NY return and not worry about OR, but later in the year, my company sent me to OR to manage a seasonal location for a couple of months. OR state taxes were taken out of my paycheck, but my place of residence was still NY at this time. Do I file state returns for both NY and OR?
Hello Maryann.
My husband is in TN, where I lived until 4 months ago. I moved to AZ for a job. TN is my primary address and this is only temporary, providing the job works – it is a contract position.
The company that hired me goes through an employment agency to take care of taxes, etc. I could be on this contract position for 1 year or 3 years. It is undetermined as of yet. How do I file my taxes (what I have done over the years)? With TN as my primary address and AZ as a non-resident? If that is the case, can I deduct my rent here?
Thank you!!
Connie
I WORK FOR A GA COMPANY AND THEY SEND ME TO CA FOR MEETINGS AND OTHER THINGS THREE WEEKS OUT OF THE YEAR. DO I NEED TO FILE A CA RETURN?
I have a house in Ga that I stay in when I travel on the weekends. I work in Texas, which do not have state income taxes. I am still a resident of Ga because I only have a apartment in Tx for work during the week. Am I still responsible for paying state taxes in Ga?
how does this work. married but she lives and works in cali. i live and work in az. maintain a home is az. she works and lives with relatives in cali. we visit on days off so i say my domicile is az, here 10 months of the time, never over there much more than a weekend. she has to stay there because of visitation for ex. do i need to report income to those money grubbers over there or can file m.f.s. in our respective states?
Hey Maryann,
I really don’t have enough information to answer your question. It seems like your husband wouldn’t be taxed in Illinois–but I don’t know enough about the situation. Did you get professional help with your tax return?
Hi David S,
Isn’t it fun getting those weird W2’s. You will file as a part-year resident of Illinois. So the confusing part is that it sounds like you’ve got double reported income.
Question for you: are the federal EIN’s different or just the state ones? I expect the state EIDNs to be different. But if the W2’s have different federal EIN numbers, it’s important to make sure that you don’t have more than the total of you income being reported. For example, let’s say you made $20,000 in Texas and $30,000 in Illinois–you don’t want the total income reported to be more than $50,000.
You might need to have your employer correct the W2 if that’s the case. Also, your Illinois income should only be the amount of income you earned in Illinois–so you might need a corrected W2 anyway.
Sometimes you’ll get three W2s–one would say Texas: 20,000, Illinois: 30,000 and the third would say State: 50,000. Since you lived in Texas, you might not have one that says Texas at all.
Sorry if I’m rambling. Bottom line–you should only pay Illinois tax on the income you earned in Illinois.
My husband drives a truck over the road – all 48 states. The company he works for is based in Illinois. We live in Arizona. Last year, he paid in $1200 Illinois state tax. He had to pay $486 to Arizona. All Illinois refunded to him was $100! How is this fair? He is being double-taxed isn’t he? What happens if he claims 10 exemptions on his Illinois W4? Will they come after him for the taxes? This is not right.
Hi,
I worked in Texas until July where there is no state income tax before I took a promotion and moved to a suburb of Chicago. I work for UPS so there is a little caveat that is throwing me off.
The first W2 has all my income earned in Texas and the second W2 has my combined income between Texas and Illinois.
On the first W2, from working in Texas there is, of course, no state taxes that were paid. However, on my second W2, the taxes I paid after moving and while working in Illinois are listed and which I believe were deducted properly, but it shows my total income for 2012 as being “taxable” in the state of Illinois. Does this mean when I file I will owe Illinois taxes on all of my income for 2012? Or, am I going to have to subtract my income from the first W2 from the all encompassing second W2 and just note that I moved in July?
All of this would be much easier, but I technically changed “companies” within UPS when I received the promotion. The employer addresses are the same, but the EID’s are different. I am just not sure how to proceed.
Thanks!
Scott,
Even though you are a resident of Tennesee, you have to pay Ohio taxes on the income you are earning in Ohio. Change your W4 today. You are not exempt. That’s for high school kids who don’t work enough to have taxes withheld. I’m guessing you’re a professional. Your human resources person shouldn’t have let you do that.
You wil also have to pay your city taxes, usually that’s automatically withheld, but check with your payroll person on that.
Whether you work for a full year or part year in Ohio and maintain your Tennesee residence, you must pay Ohio taxes for the wages you earn there.
I lived and worked in Tennessee for all of 2012 and still maintain an address there, at least for a few more months of 2013. So the TN residence might not be permanent for all of 2013, but I will try to keep it for all of 2013 if I can.
My company moved me to Cleveland Ohio for an indefinite length assignment (starting Jan. 2nd 2013). I may or may not be able to move back to TN in 2013. I have a short term lease on a temporary residence here in Ohio (3 months) but may have to extend it if this assignment becomes longer term.
I have filed an Ohio W4 with my employer that lists my TN address and put Exempt on it so that taxes are not witheld. TN has no state tax.
So let’s say the work assignment in Ohio lasts all year 2013 and into 2014 and I have maintained a residence in TN for all of 2013 while renting and working in Ohio. Should I file a W-4 with Ohio now and have them withold state taxes, and then at tax time file a claim to get state tax back because of my residence in TN (hopefully I will move back at the end of 2013)? Or leave it the way I have it where I have listed myself as exempt and no state tax is deducted?
Not sure what to do in this case but I would prefer to have my money now rather than err on the conservative side by paying Ohio taxes and file to get the money back later. I understand that there may also be city taxes here in Cleveland.
This scenario assumes I will work in Ohio all of 2013 and maintain an address in TN for all of 2013. Any suggestions?
Thanks, really appreciate your response. I think I will just end up making a doing a mock run of our federal taxes as married-filing seperately and then plug my wife’s numbers into the VA tax return and send that in. But I plan to file our Federal taxes as married and then I should be good to. For second, I though that VA Tax Office wanted me to a copy of my federal taxes in to them as well as the state taxes.
Thanks
Chris
Hi Jennifer,
I think I understand where you’re coming from and I think I know the answer for you. Here’s the Alabama employer withholding handbook: http://www.revenue.alabama.gov/withholding/whbooklet_0112.pdf
You want to go to page three. I think if you go to the paragraph after the section about a non-resident employer withholding taxes on non-residents who work in Alabama—the next section is about non-residents not working in Alabama.
The way I read it, as long as the Florida guy does not work in Alabama–then you do not have to withhold Alabama taxes. If he works in Alabama–well then you do.
I hope that helps.
Hi Jim,
if you live in Michigan and work and get paid out of Texas then you’re going to pay taxes to the state of Michigan on the wages that you earn in Texas. Normally you get a credit for the taxes that you pay to another state, but since Texas doesn’t have a state tax, you’ll pay it all to Michigan. Sorry about that.
Hi Alicia,
On your W-4 you’re going to put your current New York City address because that’s the address that your employer has listed for you, and that’s with the address you want them to have. You are a New York resident and you will file a DC tax return as a nonresident. You will file a New York City tax return and you’ll file New York State tax return is a New York State resident. You don’t really work in New Jersey it’s just that your company’s offices are in New Jersey. Since you’re not setting foot inside New Jersey you won’t be filing an NJ tax return.
I have a different kind of problem. I process payroll for my company located in Alabama. Our out-of-state owner has placed one of their employees on our payroll who resides in Florida. This employee has insisted that we do not withhold Alabama state taxes; that we need to indicate he is a sales person working out of Florida, not Alabama. He stated he has done this while working for other companies in taxing states and hasn’t had a problem. If I am told by my supervisor and another company official to do as he requests, how do I handle this when I know Alabama law says I shoulld withhold?
i should have said “got” paid out of Texas == i should add i also had earnings in Michigan and had taxes withheld there
if i live in Michigan and worked and get paid out of Texas for part of the year, do I owe state taxes to Michigan on wages earned in Texas (which has no state tax)?
@Chris,
I’ve got the spelling grammar problem myself. Plus the whole typing thing in general!
Hi Chris S.
Don’t panic, it’s not so crazy as it seems. First and foremost, you wife will have to pay Virginia income tax on the money that she earned in Virginia. She is a non-resident of Virginia. You are a non-resident of Virginia also.
You have a couple of options, you might file separately–that would keep your income out of the Virginia return completely.
It sort of depends what works out best.
Many states start their income tax forms with the numbers from the federal tax return. Since you’re married filing jointly–that’s why Virginia asks about your income. Later, there are other forms where you show that your income wasn’t earned in Virginia so you are not taxed on it.
Do your federal tax return using software. I have a program on my website, the 2012 will go up as soon as the software company makes the changes from the new laws Congress just passed. Then add the state of Virginia–if you input everything correctly, it will be really easy. The important thing is that your wife is a “non-resident” of Virginia and so are you.
If you really don’t want Virginia to have your information, then file separately.
Hi Jan,
I was living and working in DC until June 2012. In June, I moved to New York City for graduate school. I am still working with the same company (though on an hourly basis since I’m a student) and they transferred me to their New Jersey office (although I always work remotely from NYC). Do I file taxes in DC, NY, and NJ? What constitutes as a permanent address? I am from upstate New York and have never changed my permanent address (on my license or credit cards) to DC or NYC. On my W-4, should I put my current NYC address or my home (upstate) address? Thank you!
Sorry for the grammar errors, I was trying to multi-task while I wrote the above! I didn’t do too good of a job!
My wife and I live in Houston, Texas, for over a decade. No state income tax. We own a house here together and she was employed for the state of texas for over 13 years with her last day worked was 11/12/2012. She as taken a position for a year in Fairfax, VA and started on 11/26/2012 and received at least 2 full paychecks and smaller one.
We don’t own any property VA, her driver’s license is from Texas and the car she is driving is in my name only and registered in Texas. I am living and working in Texas and have no intentions of moving to VA until the end of 2013, as I have projects for work that require me to stay here as well as packing up the house and putting it up for sale in the next several months. My wife is currently staying in the Fairfax area in corporate housing and has no utilities in her name, no bank accounts there, nothing at all. And as I mentioned above, the car is registered in my name only and only in Texas. Her driver’s license is from Texas as well.
Does she have to file in VA? I see from her paycheck stub that they are with holding the Virginia taxes (TX-VAW), but her total amount earned in VA for 2012 will only be around $9k.
I really could not find any real answer on the Virginia State Dept of Taxation website that really answered my question. But it seemed like they wanted a copy of our Federal Tax return and wanted to know how much my wife earned the entire year, which was all in Texas and over $125K up to her last paycheck.
Couple of things:
I know she will have to pay taxes for the entire 2013 tax year when they are due in 2014 and I understand and am good with that, but since 95% of her income was from Texas (where she lives and still lives), why do they want that? That is really none of their business what she earned here.
Also, I don’t feel comfortable sharing my own personal tax information with them. I earn over $200K a year and that should not be taxed in VA. Nor should my wife’s $125K be taxed in VA since it was earned in Texas.
Also, we are both US Born Citizens, with nothing to hide. We pay our taxes every year and have good credit. I just don’t understand why, if she has to file, they want to see my income as well??
Any help is greatly appreciated.
Thanks,
Chris
@Anne,
Am I right in assuming that you did these jobs for one company? That’s even better, although not necessary.
When you work at a temporary assignment, you may be able to deduct your housing, your travel, and your meals for the time you were away from home. See why this could be a big deduction?
For a position to qualify as “temporary” you have to know in advance that it’s only intended to be temporary. A good example is traveling medical personel or traveling IT consulants.
The expenses go on form 2106 and they roll to the Schedule A.
Hi Admin Roberg. The positions that I was in for those two states were full time work but it was for a short duration. The expenses of moving were not paid by my company either. Do you think that I have to file this separately as well? If so, what types of forms do I need to claim for those expenses? Thank you
Hi Roger,
Your home really is in Illinois. Your wife is in Illinois. You’re going to have to pay Illinois taxes. Sorry.
Hi Anne,
In your situation, I’m thinking that you should file as an Oregon resident and non resident of Washington and non-resident of Nevada. I’m thinking that you really are an Oregon resident and that’s your home base, right? You weren’t really moving to Nevada or Washington.
Now it also seems to me that you had “temporary” job assignments. You may be able to claim your expenses of being in those other places as “employeee business expenses” unless your company paid for everything. There’s potential for this to be a really big deduction for you.
Hey Duke,
My son works on software for GPS tracking devices for commercial vehicles. Small world isn’t it?
Thank you. Not a salesman but I travel a lot. I install GPS tracking devices on commercial vechicals.
Hi Duke,
You sound like a traveling salesman. You are in so many places that you probably haven’t been in one place long enough to count for taxes. I suspect that you don’t need to be doing state taxes for those other states, and since you live in Florida–you’re scott free.
The only exception would be is if your company is withholding for those other states, but I’m guessing that they’re not doing that.
Hello. My permanent residence is in Oregon but have worked in Washington for 3 months and Nevada for 3 months this year. I do not own any properties in both Washington or Nevada. How do I file my taxes? Thank you.
Hi KDT,
So you moved to Minnesota–didn’t find work, and then moved back to Colorado. That makes you a part year resident of Minnesota and a part year resident of Colorado. (You get that part already don’t you?) If you made no income while you lived in Minnesota–then you won’t need to file a Minnesota tax return.
Your question is about the child care credit for the time you spent in Minnesota–but you didn’t work in Minnesota. In order to claim the child care credit, you either need to be working–or be in school, otherwise it won’t count. So let’s say you were in school, you can still claim the child care credit on your federal return, but you still won’t have to file the Minnesota state return.
Since you didn’t work in Minnesota, you can’t claim your moving expenses to MN. But, if you landed a job in Colorado, then you can claim your moving expenses back.
Hi Jesse,
Welcome to Missouri. Finally, an easy question! (For me anyway.)
Since you have not made any money in Missouri, you will not be required to file a Missouri return. That said, you’re now a resident of Missouri and you’ll have a Missouri address on your federal tax return.
Missouri is going to get a copy of your tax return from the feds and then they’re going to send you a letter asking why you haven’t filed a Missouri return.
Don’t worry about this. You will check the box that says, “I was not required to file a Missouri return in 2012.” Then on the back of the form you will write, “I did not earn any income in the state of Missouri in tax year 2012.”
That’s all.
Hi Antoine,
You’re in the Military in Maryland and your resident state is Florida. You will not pay Maryland state tax on your military income. You will have to file a Maryland return though because you have another non-military job. You will have to pay Maryland taxes on that job.
Here’s a link to the Maryland State Department of Revenue website that explains the rules: http://individuals.marylandtaxes.com/incometax/military/nonresident.asp
Admin Roberg,
I left you the question that you responded to on Dec. 23 at 2:56. Thanks for the answer, but I should probably have asked the question another way. If I spend 5 days & nights per week in Tennessee, and the weekends back in Illinois, is there a reason I cannot declare Tennessee as my primary residence (and benefit from the lower tax rates)? Thanks again for the help!