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I get a lot of questions from people about working in one state and living in another. That’s pretty common here in Saint Louis where we have lots of folks living in Illinois that come over the river to work here and vice versa. Today I’m going to talk about doing your tax return when you have two states to deal with.
First, the technical words you need to know:
The state you live in is called your resident state. There will probably be a check box or something like that in your computer program. If you live in Illinois, then your resident state is Illinois.
The state you work in (but don’t live in) is called the non-resident state. In this example, Missouri is the non-resident state.
Tax liability: This is not your refund or the amount of money that was withheld on your W2. Tax liability is a number computed when you prepare the state tax return. It will say “tax liability” on your state income tax form. This is the dollar amount the state says that you owe them for taxes before they take into account what you’ve already paid through your withholding or estimated payments.
That’s not so hard, right? Next, you need to make sure you do your tax returns in the right order:
Always do the federal return first. Make sure that it’s done and that it’s right before you start your state returns. If you finish, and then go back in to make changes to the federal, you’ll have to go back and double check everything on the state returns and that can be a pain in the back, so finish the federal first.
Next, do the non-resident state—that’s the state you work in. That one’s easiest. You only pay tax in that state for the wages you earn in that state. Usually, when preparing a non-resident state return, there will be a check box that says “non-resident” somewhere in your software. Be sure to check it. You’ll want to make note of your “tax liability” for the non-resident state. You’ll need that number for your resident state return.
After you’ve finished the non-resident state, then you can prepare your resident state return. You resident state is going to tax all of your income (including the wages you earned in the other state.) The resident state will include your wages, interest, dividends, stock trades, retirement income, and basically everything else that’s taxable.
Things to know about the resident state return:
Even though you pay tax on all of the income you earn to your resident state, you will get a credit for taxes paid to another state. For example: using our Illinois/Missouri return again—since you paid income tax to Missouri for the wages you earned while working there, Illinois will give you a credit for those taxes paid so you won’t end up having to pay twice for working in another state.
The form you need to complete will have different names depending on the state, but it will basically be called a Credit for Taxes Paid to Another State. Sometimes it will be listed as an NR Credit. Depending on which software you use, you might have to dig for it. Some software programs are really easy and it will just pop up automatically when it recognizes that you have multiple states.
Remember the tax liability number I told you to remember? Well that’s going to go on your NR Credit form. Some software is really good at automatically plugging it in for you. In some other programs, you’ll have to manually enter it. The important thing is that you know that number needs to be there and that you know to look for it.
I’m getting a really big refund from my resident state, can that be right? Most likely not. When you see an unusually large state refund, it’s always a good idea to take a closer look. Check to make sure that the income numbers match up to the federal return and that the Credit for Taxes paid to another state was computed properly. It’s rare to get a big refund to your resident state unless you’ve had some other income that had withholding. The credit for taxes paid to another state usually will almost never be more than what you would have paid for taxes in your own state.
I’m showing that I owe a whole lot of money to my home state, can that be right? Maybe yes, but maybe no. The first thing you want to check is that you’ve taken your credit for taxes paid to another state. That’s the most common problem when you owe a lot. Other factors could be working in a no-tax state while you’re living in a taxing state. For example, let’s say you live in Louisianna but work across the border in Texas. You won’t pay taxes in Texas so there’ll be no credit for taxes paid there. In a case like that, you’ll definitely owe. Also, you could have a big difference because the states have different tax rates. For example: Missouri’s tax rate used to be twice as much as Illinois. If you lived in Missouri and worked in Illinois (opposite of our example earlier), you’d still owe Missouri about as much again as what you paid Illinois. (Now the rates are much closer, but people who live in Missouri and work in Illinois will still wind up owing extra for their Missouri taxes.)
What if I live in a reciprocal state? Some states have arrangements with their neighboring states to share tax information and tax revenues. In a situation like that, you’ll just pay taxes in your home state. The states will actually sort out who gets how much of your tax money. Usually, it’s simply a matter of checking the “reciprocal state” button in the software.
For most people, if your federal return is fairly simple, preparing two states is not that difficult. Use a good software program, follow these directions, and you should be fine.
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I work in Ohio and live in Indiana. I understand the reciprocal agreement and have filled out the form to have my employer withhold Indiana taxes. No problem. But my question is this: Can I rent an apt in Ohio to live in during the work week, while maintaining my home in Indiana, and still work under the reciprocal agreement?
Hi Louise,
There’s the “right” way to do your taxes, and there’s the way I’m going to tell you to do your taxes. Yes, I’m going to tell you to do the wrong thing. It will make your life easier, your employer’s life easier, the state of Virginia’s life easier, and the state of North Carolina’s life easier.
I’ve done this the “right” way before, and it only caused problems. So here’s the easy way.
Just file for Virginia. Forget North Carolina.
Really, your employer should have withheld NC taxes from your wages. She didn’t. You can file a North Carolina return, and go through all the rigamarole, but the NC folks will be looking at it going, “why is she filing here?” She lives in Virginia and had no withholding.
Now what should be happening is that your employer should withhold NC taxes. I’m thinking that she just figured there was reciprocity between the states. Virginia has reciprocity with lots of states, it’s just that NC isn’t one of them.
Have your employer withhold NC for 2015 and do the two state shuffle next year. (Which is the right thing to do.)
Hi Jan,
Hi, My husband lives and work in VA, however I work in NC but live in Va. Only Va taxes were taken out, so do I still have to file NC nonresident since no taxes were taken out for the state? And if I do have to, how will I file since I’m filing fed jointly? Will I have to file both states married filing separately? According to the NC website If I file married filing separately I have to complete either a federal return as married filing separately reporting only my income, deductions, and exemptions, or a “schedule” showing the computation of my separate federal taxable income and attach it to my North Carolina return. I must also include a copy of my joint federal. It sounds like I have to complete 2 federal returns and I have no idea what schedule they are referencing. Is that correct? I am very confused and need help. Thanks
Hi Joann,
Your employer doesn’t have to incorporate in Wisconsin, but she will need to file paperwork to do business there–like paying payroll taxes. And she doesn’t feel like doing that.
Technically, you are a Wisconsin employee. So that’s what she should do.
Now, if she wants to make you a 1099 contract laborer–then she would have to gross up your wages to cover the amount of self employment tax you would need to pay. (Just sayin’.)
So really, she should be withholding Wisconsin payroll tax, but I do understand her side. If you’re the only out of state employee, it is a hassle.
On the other hand, if she gets audited for calling employees 1099 contract labor–well that’s a much bigger hassle. The choice is hers.
If you do become contract labor–do make sure that your income is grossed up. For example: if as an employee you make $100, then you have $6.20 cents taken out of your paycheck for social security and $1.45 for medicare. In addition to that, your employer also pays an additional $6.20 plus the $1.45 for her share of the social security and medicare taxes.
What this means is that when you pay your income taxes as a 1099 contract laborer, you’re going to pay an addtional 15.3% taxes on the contract labor income. Now half of that you normally pay anyway with your withholding. But 7.65% of that you need to add to your income to make yourself whole. So at the very least, if she’s going to convert you to 1099 contract labor–then you need to raise your pay by that much. Take what you make and multiply it by 1.0765–that’s the minimum increase you need to ask for to make yourself whole.
Now, there may be other benefits you lose by becoming contract labor so you’ll need to consider all that too. And remember you’ll need to file quarterly estimated tax payments.
The upside to all this is that you’ll be able to deduct all of your business expenses-like your home office and any other job costs you have on your tax return.
Hey Jan,
I’ve been scouring the internet for several hours and haven’t found a clear answer on this.
I moved to WI from IL in May and am now a perm. resident of WI working remotely for my Illinois employer. My employer says she recently spoke to her accountant and he told her that in order for the reciprocity between WI/IL to apply, I would need to commute to Illinois regularly, which I don’t (maybe once every 2-3 months). As a result, she said her only options were to incorporate a new office in WI (not an option for her) or switch me from W2 to 1099 and treat me as an independent contractor.
Can you let me know if there actually is any tax regulation regarding the act of commuting from one state to another in order for reciprocity to “count?” I haven’t been able to dredge this info up on the internet. I have a feeling she may be trying to switch me to 1099 to save money. Thanks for your help!
-Joann
Hi Aaron,
You do not physically work in Illinois. You should not pay Illinois income tax. What you will do is file an Illinois non-resident income tax return. You will show on it that you earned zero dollars in income for 2014 and they will have to refund your withheld taxes.
Now, technically, your employer should not be withholding Illinois taxes, but I understand where she’s coming from. The states are getting really cranky about “employees” and withholdings so I’m thinking she may have had her wrist slapped about that. (Or people she knows at least.)
Jan,
I recently took a job for a company based in Illinois. I live in Texas and work for this Illinois company from home. I was informed by their HR department that I have to pay Illinois state income taxes throughout the year and then file a return for a refund. However, I see conflicting information when I’ve done research. Since I do not physically work in Illinois, and am a resident of Texas, should I be paying Illinois state income?
Also, my first pay period check and signing bonus I received on Friday had Illinois state income withheld. If I indeed should not be paying Illinois state income taxes, what is the process I should go about to get the amount withheld for Illinois returned to me?
Thank you much for your time and comments!
Hi Robin,
I think you’re being smart. You’re thinking everything through. Here’s what you do–take the job because you want it and it’s a good career move for you. File a New York non-resident return and then take a credit on your Minnesota taxes for your New York taxes. You already knew that from your research.
So how can you tell if the withholding will be okay or if you need to make estimated tax payments to Minnesota? Here’s what I would do–
First, just because the tax rate listed is higher in Minnesota than in New York (and that seems really odd, but hey, that’s how it goes) it doesn’t mean that the tax really is higher. For example. Missouri’s tax rate is 6% while Illinois is 5%, but I’ve often got people working in Illinois and their entire Missouri income tax is covered.
Why? Because even though Illinois has a lower tax rate, Missouri allows so many deductions that our taxes are usually lower for most people. You may or may not have a similar situation.
So how can you test it?
That’s actually going to be kind of easy for you. Take your last income tax return that you filed (for Minnesota.) Use all the same numbers, but claim the income as non-resident income for New York, and then do a Minnesota tax return claiming a credit for tax paid to NY on it.
You’ll only get a credit for the actual tax you are liable to NY for, so the withholding doesn’t matter. If your Minnesota return shows a balance due–then you’ll need to make estimated payments to Minnesota. You can set that up for 2015 when you file your 2014 tax return. If your Minnesota return doesn’t have a balance due, then I wouldn’t worry too much about it.
Enjoy your new job.
I live in MN and have been working remotely from my home for 10 years first for an IL company and second at small NY company. I have always been taxed only MN, as that is where I live and work.
I have recently accepted a position with a larger NY company. Still working remote from my home. The new company claims that regardless of where I physically work they consider my work site as Lockport NY. And will withhold for for NY. I don’t agree with this but it’s how they do it. It’s a great job in terms of salary benefits and title. So it would be hard to decline. Unless I will get double taxed. From what people have told me and what I have read, it will all even out. And I will not be double taxed.
For example, I talked another remote worker at my new company who lives OH. He stated that he files non-resident first than the credit applies to OH and it evens out. He did caution that NY would not withhold city tax but so far Ramsey MN has no city tax.
But I am still worried how this will play out come tax time. Not so much this year when I have 9 months MN and 3 months NY. I think it will be fine. But what about next year when I have 12 months of only NY withholding?
I check marginal tax rate for both states, MN is 7.35 NY is 6.5 so will plus $$$ the difference to match what MN would have withheld. But want to be sure that I am not going to be in trouble with MN. Will I pay penalties for this? Should I call the State?
Hi Jenn,
You are right, they are wrong.
Your company should only be withholding State income tax for Illinois because that is where you work. They should not be withholding for Indiana. That’s the way it is.
If they can’t understand that, then redo your Indiana W4s and claim 500 exemptions. That oughta put the Indiana withholding at zero and at least give them a document to stick in their file so they feel comfortable not taking the Indiana tax out. (I suppose 500 is a little extreme, but if you can’t get the to do the right thing the right way–there’s getting them to do the right thing the wrong way. 20 Exemptions should do the trick.)
Hi Jake,
What you need to do is show Missouri your tax return for Illinois. You are a Missouri resident who worked in Illinois and paid tax to Illinois. You need to show Missouri that you filed an Illinois tax return and paid the tax to them. They can’t do a CR without the Illinois return.
The reason for that is, you may have withheld $1500 to Illinois, but without the tax return, Missouri doesn’t really know what your Illinois tax really was. Illinois may have refunded the whole thing–then you’d owe it to Missouri anyway.
Call Missouri, explain the problem, and you send them the forms, don’t have them do it for you. They even let you email them in which is really easy.
You don’t need an appeal so much as you just need to get them the right documentation. They’re usually pretty understanding about stuff like this, so just talk to them and send them what they need.
Hi Jan,
Thanks so much for taking the time to talk with all of us. It’s much appreciated. Like many others here, I live and work in different states, and so does my husband. Here is my problem:
Both my husband and I live in IN, but work in IL (at the same company). We grew up in IN, moved to IL for a while when we got jobs in IL, and then recently decided to move back to IN and just commute to our IL jobs (sorry, didn’t care much for IL lol). We asked our HR dept if there was any paperwork etc. to be done regarding withholding of taxes due to the change. They said no, just update your address with the company. Well, as soon as we did, we noticed on our pay stubs that on every check money is being withheld for BOTH IN and IL, so we are currently paying 8.4% state tax alone on every check. I questioned them about it today, and they kept telling me IL and IN do not have a reciprocal agreement anymore, therefore we have to pay both simultaneously.
These accountants at our company are by no means experts either, they know nothing of tax codes etc. and we are the only employees they have commuting from a different state, and have never done this before. In fact, all the lady did was put our home address and work address in a program like Turbo Tax and b/c it showed we should pay 5% to IL and 3.4% to IN she assumes that’s correct even though those programs are not always accurate.
I understand the reciprocal agreement expired in 1997, however, in the 2000s, well after the agreement expired, between the 2 of us, we have worked in IL and lived in IN about 4 times and this has NEVER happened. None of our IL employers before this company withheld taxes for both IN and IL simultaneously. We always got taxed by IL, then dealt with IN when it came time to pay our taxes. We know of several other people currently working in IL right now, but living in IN who are not being double taxed like this too.
Do we really have to give up 8.4% of every paycheck all year long? Can we just have IL taken out since that’s where we work, and deal with IN when it’s time to file? If so, how do we get them to stop taking money out of our checks for IN? B/c that is a huge amount of money between the two of us, and even if we can get some of it back at the end of the year (b/c there’s no way I should have to pay both states the full amount in taxes given I don’t spend all my time in either one, that would be outrageous), we could really use the money now. If IN residents working in IL really have to pay 8.4% like that I can’t imagine many people would bother doing this, and there are a LOT of people who work in Chicago and live in Northwest Indiana… If they have to double tax us right now, how do we go about getting some of the money back when we file our taxes (and who would we be trying to get the money from? IL, or IN?)?
Any advice you can give on this would be helpful and so appreciated b/c if we really have to pay 8.4% on every check like this, we’ll have to start looking for new jobs in IN….
Thanks!
~Jenn
Hi. Last year, I lived in Missouri and worked in Illinois. The company I work for is based in Missouri, however. So my W2 came, addressed from Missouri, to Missouri. I filed my taxes using HR Block online software, and ended up receiving a letter in the mail from the Missouri Department of Revenue Taxation Division, saying that I owe them $1,500. I remember filling out the form online for being a non-resident worker, but apparently Missouri didn’t see it as such. I called the division office and some with a woman who told me to simply send in my w2 and she would file for the MO-CR for me. I emailed a copy of my w2 on April 15, thinking everything was handled, and went about my business. Now it’s August 15, and I just got a letter in the mail demanding the amount that they previously stated, plus interest and fees. It also says that my right to appeal has expired, even though I had already sent in my W2 as an appeal. Is there anything I can do?
Hi Laura,
You live in Memphis and work in Memphis so you would only be subject to Tennessee income tax (if Tennessee had a state income tax.)
Now, you’ve got the couple of days you will spend in Maryland. Usually, since that’s such as small amount of time, it probably won’t even be recorded as you being in Maryland. That’s more like a couple of short business trips. (If I had to prepare a state tax return for every state my husband did a business trip to in a year, I’d be pulling my hair out!)
At the worst, if your company does decide to tax you for the time you spend in Maryland you would only pay tax to Maryland on the income that you earn while you are in the state, not in Tennessee.
Hi Steve,
congratulations on your marriage.
Here’s what I’m seeing–your wife’s employer did not make a mistake on the W2–they made a mistake by not withholding. That’s different.
You see, if there was a mistake on the W2–they’d fix that. They can’t correct it because they just didn’t withhold. H&R Block says they can’t file because they think there’s a mistake on the W2–but that’s not the case. So go ahead and file–but there’s probably going to be a balance due because of no withholding.
Sorry. I’m thinking that’s not what you wanted to hear.
Hi Beth,
There is an order to how to prepare multi-state tax returns. First you prepare your federal return, then you do the state that you don’t live in, which in your case is Illinois. Then you prepare the state you do live in, which is Indiana.
Illinois will look at the whole federal income, but they will only tax you on the Illinois income. Indiana will give you a credit for the tax that you pay to Illinois–not that you pay with your return, but all the tax. What you’re looking for is the tax liability.
I live in Memphis, Tn and am thinking about taking a job for a company in Maryland. In this position I will work remotely from my home in TN. I will probably work in Maryland for 12 to 15 days per year. How will the state income tax work. Will I have to pay Maryland state tax on my whole income?
Hi JC,
California is very aggressive in its tax collection policies, but your husband never set foot there. Clearly, it looks like the employer filed something saying your husband did work in California.
I would have him write a letter and attach a copy of the tax return showing he lives and works, and performs the service he provided, in the state of Minnesota.
As much as California’s rules are different from everybody else’s, I’m pretty sure they’re not going to tax you on income you earned living and working in Minnesota.
Here’s the link to the California Department of Revenue website to back me up: https://www.ftb.ca.gov/individuals/fileRtn/Nonresidents_PartYear_Residents.shtml#BusinessIncome
They only tax you on the income you earn within the state of California.
Hi Colleen,
So you are going to do the long term commute? Right? You’re going to rent something in Wisconsin to live in while you are working, but then come home on the weekends to Illinois right? And this is going to be a “forever” type situation?
I say forever because your plan in Illinois has closed down so this isn’t a temporary job. That makes all the difference here.
So as things stand–your resident state is still Illinois, and your non-resident state is Wisconsin.
You will pay taxes to Illinois, as your home state and then you will take a credit for taxes paid to Wisconsin against your Illinois taxes.
Because your situation does not appear to be temporary, then your Wisconsin residence is not tax deductible. Neither is your mileage to the Wisconsin location. (You might be able to claim the mileage if you can persuade your company to require you to have a home office and work from home some days–don’t possible for everyone, just a thought.)
The relocation package may or may not be considered income depending upon how the company handles it. If they reimburse you for moving costs, or pay the movers directly, then it’s not taxable to you. If they pay you a lump sum “relocation fee” that may be taxable. Of course, you’d be writing off the moving expenses as job expenses on your tax return–but depending upon how things work out, that might not be a good deduction so you are much better off if your company pays actual expenses rather than just handing over a check to you.
Hi. Quick question. I currently reside in Illinois where I own my home. My company is transferring me more than 100 miles away to a Wisconsin location because they are closing the facility in Illinois. Because of this, I will need to rent something during the week, then plan to come home on weekends. What state would I be considered a residence of? Wisconsin or Illinois? Will my rental housing in Wisconsin be tax deductible. They are providing a small relocation package. Will that be considered income?
Hi, my husband is a sole proprietor in MN. (Living and working 100% of the time in MN) We just got a letter from the state of California for tax year 2012. He worked for a company that has its home base in California. He was hired by a employee of that California company living and working MN. He worked for them for about 120 hours. The state of California is saying he needs to pay income taxes to them. He never worked in California and he paid taxes to MN on all money he made. Does he owe money to California?
Hi Eric,
You’re absolutely right, I am going to say you need to seek out the assistance of a tax professional. If you’ve had the same problem for years–you’re doing something wrong.
I have two guesses, the first is that you’re missing this important form: http://dor.mo.gov/forms/MO-NRI_2013.pdf
But I really can’t believe you’re missing that.
My second guess is that you are not attaching the copy of your Illinois return to your Missouri return. If you’re e-filing, the software should do it for you, but in reality I’ve had trouble with that attachment myself.
This is not actually a third guess, but something that may be triggering the other two things–if you’re using tax software, check your very beginning screens where you put your name and address stuff. Does it have a “resident state” box? Some software programs auto fill that–others leave it blank. Your software may be making a Missouri resident assumption-and that could be triggering the problem.
Bottom line, your wife’s income is not taxable in Missouri.
Every year I fight with Missouri because they are always trying to tax my wife’s income. My wife and I live in Illinois. She works in Illinois. I work in Missouri. It has been an ongoing battle because we file joint returns both federal, and state (MO and IL). Every year Missouri says we owe more than what I figure because they are always taxing my wife’s income. I know that you won’t be able to help me because even the automated software and calculating PDF forms won’t allow for this provision. You will say “you need to seek out the assistance of a tax professional.”
Thanks!
Hi Grant,
You live in NC but you sold a property in Colorado. You would pay tax on the gain to the state of Colorado, and take a credit on your NC return for the taxes you paid to CO.
Hi Marina Lin,
Oh my, you do have a head scratcher. New Mexico is a community property state and North Carolina is not.
I had a question similar to this for a different community property state and they were fine–it was okay to file separately and separate the income because they lived in two different states.
New Mexico is not like that. New Mexico has very specific rules about how to file–even when the spouses live in two different states.
It’s probably a good idea to get some professional help in New Mexico to make sure you get it right.
Hi Guru,
Generally, the credit for taxes paid to another state are only for as much as the tax would be in that state. So in your case, it looks like the Missouri taxes are higher than the Kansas tax so your credit is only good for as much as your Kansas tax. So yes, a zero balance makes sense.
Even though your employer is located in New Jersey, your office where you work is located in Kansas City so yes, you need to pay the Kansas City city tax. Sorry.
Hi Jennifer,
I’m guessing that you’re preparing the Kansas return and it’s starting off counting your husband’s income. But you’re right, Kansas won’t tax him. It should only tax your income, you are filing as a non-resident. Since your husband did not earn any income in Kansas, none of his income will be taxed. If you have a big tax bill for Kansas–there’s a mistake.
Hi William,
It sounds to me like you earned all of your income in Missouri, so yes, there should be wages in the Missouri box but not in the Kansas box. And–it also sounds like your company withheld Kansas tax for you as well. That’s a good thing.
You didn’t earn wages in Kansas, but you had Kansas taxes withheld–this is good.
Before preparing your Kansas return, you need to file a Missouri return–then you’re going to claim a credit for taxes paid to Missouri (based upon what’s on the tax return, not the withholding on the W2) on your Kansas tax return. That should solve the $1000 balance due.
Hi Ackmondual,
1. You need to file state taxes based upon where you live and/or where you work. The state that your company is headquartered in usually does not matter in determining which state you file your taxes in. So, I know you worked in Illinois, but I do not know your other state of residence.
2. If your company left the state income tax blank, I’m guessing that they didn’t withhold any state income tax for you. Is your resident state a no tax state like Texas? That would be the situation. But do check with them to make sure they haven’t just left off your Illinois tax by accident.
3. If you’re using tax software, usually it will carry the figures over for you. You’ll just need to indicate that you earned the wages in Illinois. Bottom line, the dollar amount from the W2 that you received the the work you did in Illinois is what will go on line 5 column B–that’s probably the only thing that will go on your Illinois NR return for income.
Hi Tess,
For your situation, you will need to file as an Illinois resident and a Missouri and Kansas non-resident. You will do the federal return first. Then the Missouri and Kansas. You will prepare the Illinois return last, claiming a credit for the tax that you pay to Kansas and Missouri.
Hi Kelly,
You’ve got a common problem for folks along the Illinois/Missouri border. Technically, what you “should” do is file a part year return for each state, claiming a credit in Illinois for the taxes you paid to Missouri for that time period. TECHNICALLY!
But your computer software won’t handle it, and neither will the state tax software when you file it.
Since you have a Missouri address, and all of your income was earned in Missouir–just file a Missouri resident return. Forget Illinois. The next effect would most likely be the same anyway. It will make your life easier, and it will make the lives of the Illinois and Missouri department of revenue people’s live’s easier too.
Hi Alex,
The only way to be only taxed in one state is to live and work in the same state. Your situation is that you live in New Jersey and work in Pennsylvania–so you are taxed as a Pennsylvania non-resident and a New Jersey resident.
So, your W2 is correct, your company is withholding for both states. You will receive a credit in New Jersey for the taxes that you pay to Pennsylvania, but technically you are taxed in both states. Sorry.
Hi Jan,
I got married in February 2013, so this is the first year filing jointly. I lived in Virginia until the wedding and my current wife lived in Washington, DC. After the wedding we moved to Maryland together. I work in VA, she works in DC, and her work made a mistake on her W-2 and only witheld DC taxes for the whole year, neglecting to account for her time in MD. We realized this late in the game and ended up filing an extension for our DC and MD taxes, while filing the federal and VA taxes on time. Her work says that they cannot give her a corrected W-2 at this point and say that we just need to file in DC and Maryland. We tried to get help from H&R Block, who said that they need a corrected W-2 to file the MD and DC returns.
How should we file our DC and MD taxes? Is it necessary to get a corrected W-2 before this is even possible? Thanks very much for helping with our complicated tax year!
Hello!
I live in indiana and worked in Indiana for majority of the year. In September I changed employers and now I work in illinois. I have already filed my federal and Indiana state tax returns. I am working in the IL-1040 and the Schedule-NR right now. My question is do I include my wages that I earned from my Indiana job on the IL-1040? I am very confused about that.
Thanks,
Beth
I am a full time resident in North Carolina. I sold a house in Colorado. To what state do I have to pay taxes on my capital gains of the sale. Thank you.
Here is a very complicated arrangement for you. My husband lives and works in new mexico all year in the past three years while I live and work in NC. We usually file fed tax returns married/ jointly, then file separate state tax returns with a mock fed return (married but file separately)created respectively for the purpose. It went well until we got mail from NM tax office this year saying we got it all wrong. (they did not offer solution) I consulted an AARP tax preparer who said NM is a community state. So we have to file NM state tax return with me in it too claiming non-resident status. We use turbo tax software for preparation; I checked the detail and found out the state tax return did not separate the total incomes, doesn’t this mean NC resident pay tax into NM? Same is true when I tested for NC tax return. Thanks a million.
Hello.. Thanks for the very helpful info. I have couple of questions. I live in KS and work in MO (Kansas CIty, MO) so my employer withholds for MO.. I am filing my 2013 returns now and see that this time my KS tax < (is less than) my MO with holdings < (is less than) my actual Missouri tax. And software is showing that I owe the difference (MO actual tax – MO with holdings) to MO and $0 to KS.
1. I understand there is no reciprocal agreement b/w 2 states so does that mean I can take the Credit from MO only for KS tax amount and I will not get any refund from KS/MO?
2. My employer doesn't withhold any amount for Kansas City, MO city tax (which is 1%) and my employer's address in W-2 is of New Jersey so it doesn't talk about any thing related to Kansas City. So do I still need to pay Kansas City, MO tax?
My husband and I live in Missouri. I work in Kansas and he works in Missouri. I am part-time make very little. I realize that Missouri gives credit to taxes paid to another state but can Kansas tax my husbands income along with mine? This always confuses me. I do not see how Kansas can tax his income if he did not earn it in Kansas. I am not sure how to do this.
Hi there,
Here’s my question about filing for two states. I live in Kansas and work in Missouri. On my w-2, under box 16 is blank for Kansas but my state wages shows only for Missouri. Under box 17 for state income tax shows totals from both states. When filing under Kansas while using hr block basic software, it asks to enter taxable wages for Kansas in which is blank, I will owe Kansas over a thousand dollars. If I use Missouri taxable wages earned Will owe very little. Did my job make a mistake on my w-2? It seems like I’m not getting credited for being a Kansan working out of state.
thanks.
Jan, to keep it brief, I have 3 questions I’d like to ask…
1) I worked in IL for 6 months, and eventually moved out of an Extended Stay motel and rented an apartment. However, my company is headquartered in VA. I take it I should be filing in IL and NOT VA?
2) My W2 from that company, #17 (State Income Tax) is blank. Is this right? Should I have them double check this?
3) I’m trying to fill out the IL-1040-schedule-NR form, and do not know what how to fill out “Column B Illinois Portion” despite the instructions. Some of them tell you to copy line-by-line from the respective spots on the federal-1040 (e.g. #8 on IL-1040-schedule-NR is what was used on the federal-1040 line #10). I’m still not clear on how to get the specific values for Column B. Any suggestions for more info?
Thanks ahead of time!
Jan,
Usuallly my husband and I do our own taxes, but time is running out and I’m not sure how we will tackle them this year. So, here is our problem:
January 2013 we moved to illinois (rented a house) I lived there while my husband was still working in Kansas until March when our house sold in Kansas. I worked in kansas from Jan 1-4th and then Jan 22 to current in Missouri
March-Decemeber- my husband stayed home, i worked in missouri, we lived in a rented home in Illinois
December 2013- purchased a house in MO (closed on December 4th), Our lease for the Illinois home is not up so we still have items there
Which will we file as our resident vs no resident state and which do we start with first?
Hi Jan,
I lived in IL through April 2013 and MO for the remainder of the year. I worked in MO the entire year. For the IL return, I understand to put only the income earned while I lived in IL as IL income. I’m a little confused then on how to complete the MO return. Am I supposed to report ALL income to MO and file a MO-CR for the tax I owe to IL, even though it was on MO source income? Thanks for your help!
Hi Jan,
I live in NJ but work in PA. It looks like my employer correctly took out NJ taxes (my W2 says NJ with a state wage and state income box number filled in). They also took out PA SUI.
I also got one where box 15 has PA is filled in, and the only other boxes completed are box 18 for local wages and box 20 locality name (upper merion).
How should I file (and in what state?) in order to only be taxed in 1 state?
Any help would be appreciated!
Hi Jason,
You live and work in Illinois so you definitely have an Illinois return. Now the issue is Indiana. You said that your company is in Indiana–do you own the company? Or is the company that you did work for in Indiana?
If you own a company in Indiana–even if you don’t work there–you need to file an Indiana return. But I’m thinking you mean that the company that issued you the 1099 is located in Indiana. If that’s the case–since you live and work in Illinois–you still only file an Illinois return.
Jan,
Thank you so much for your help.
Hi Ning Zhu,
You would only pay the amount of tax that you owe to that state. If there is no other income than your husband’s Georgia W2, then only file the Georgia return.
Hello I just wanna ask about filing taxes basically ..i live and work in Illinois but my company is located at Indiana …my 1099 misc form is in Indiana ..so my question is what state do i need to file?thanks you
Hi Jan,
I forgot to mention that I’m a housewife, and do not make any income. My husband still has a IL driver license. Sorry for the confusion.
Hi Jan,
Thank you very much for the quick response. Do you mean we need file joint or separate returns? My husband use the IL address for all of his accounts, such as W2, Pay check, Medical, etc. even though he works in GA. If we file that he is a GA resident, wouldn’t we be paying taxes to both states? Sorry, this is only our second year filing taxes in this situation.
Hi Ning,
If your husband has been living and working in Georgia for the entire year–then he should file as a Georgia resident. If he was working in Georgia at a temporary job for less than a year, he can claim his living expenses as an employee business expense.
My best guess is that you’re filing as an Illinois resident and Georgia non-resident and your husband is a Georgia resident and Illinois non-resident. This isn’t as crazy as it sounds–lots of families are in situations like that.