What to know about filing taxes in more than one state

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In a Nutshell

If you’ve earned income in multiple states, tax time can get tricky. Here are some common reasons you might need to file multiple state returns and how to do it right.

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Filing taxes in more than one state sounds intimidating, but it doesn’t have to be.

If you’ve earned income in more than one state, or live in one and work in another, you may need to file more than one state tax return.

While needing to file doesn’t change your federal tax return at all, it can still make tax time a little more stressful. As a result, it’s important to know when you might be required to file multiple state tax returns and how to do it.


Four reasons you might be filing taxes in more than one state

A few situations may require you to file taxes in more than one state. Common scenarios include the following.

You moved

If you moved from one state to another during the year and both states withhold income taxes, you might need to pay state taxes on a prorated basis depending on how long you lived and worked in each state.

You live in one state and work in another

If you or your spouse — if you’re married filing jointly — work in a different state from the one in which you reside, you may have to file more than one state tax return. But you generally don’t have to pay taxes to both states.

Rather, you’d pay taxes to the state in which you worked, unless the two states have a reciprocal tax agreement. In that case, you can pay taxes to the state in which you reside.

“A state reciprocal tax agreement is an agreement whereby one state agrees not to tax employee compensation, subject to employer withholding of the other reciprocal state,” says Brian Thompson, a CPA and tax attorney. “These agreements apply to employee compensation only.”

Note, however, that this doesn’t apply if you live in one state and work remotely for a company headquartered in another state. Instead, you would only need to file a return in the state in which you live and work.

You own income-producing property in another state

Any reportable income that you earn from an out-of-state property or other source may require that you file a tax return in that state. You should also report the income on your resident return.

You’re a business owner who works in multiple states

“If a self-employed taxpayer works in multiple states, there is no effect on his federal income tax obligations,” says Thompson. “However, such a taxpayer may have to file tax returns and pay state income taxes in multiple states.”

As a result, things can get complicated fast with the more states in which you do business, and you may need to enlist help from a tax professional to make sure you do everything correctly.

 

Filing a nonresident state tax return

Each state has different criteria for determining your residency status. For example, the state of Maryland considers you a resident in two ways.

  • Your permanent home is or was in Maryland.
  • Your permanent home is outside Maryland but you maintained a residence for more than six months during the year, and you were physically present in the state for at least 183 days.

For your resident state, you’ll typically file the normal tax return for that state, if it requires one. But if you need to declare income in another state, you may need to file extra forms.

For example, the state of Utah requires that nonresidents who earned Utah income for the tax year file a normal state tax return with all the income earned from all sources plus an extra schedule to report which portion of the income came from Utah sources. (Though Utah makes exceptions for income solely from a partnership, LLC, S corporation or trust.)

How filing multiple state returns impacts your federal return

The short answer is that it doesn’t. Your federal income tax return is separate from your state tax returns. You report your federal return to the IRS and your state return to the state’s entity, such as a department, commission, board or state treasury.

While you may use some of the specific information found on your federal tax return on your state returns, it likely won’t go both ways.

FAST FACTS

State and District of Columbia taxing authorities

Alabama Department of Revenue

Kentucky Department of Revenue

North Dakota Office of State Tax Commissioner

Alaska Department of Revenue — Tax Division*

Louisiana Department of Revenue

Ohio Department of Taxation

Arizona Department of Revenue

Maine Revenue Services

Oklahoma Tax Commission

Arkansas Department of Finance and Administration

Comptroller of Maryland

Oregon Department of Revenue

California Franchise Tax Board

Massachusetts Department of Revenue

Pennsylvania Department of Revenue

Colorado Department of Revenue Taxation Division

Michigan Department of Treasury

Rhode Island Division of Taxation

Connecticut Department of Revenue Services

Minnesota Department of Revenue

South Carolina Department of Revenue

Delaware Division of Revenue

Mississippi Department of Revenue

South Dakota Department of Revenue*

District of Columbia Office of Tax and Revenue

Missouri Department of Revenue

Tennessee Department of Revenue*

Florida Department of Revenue*

Montana Department of Revenue

Texas Comptroller’s Office*

Georgia Department of Revenue

Nebraska Department of Revenue

Utah State Tax Commission

Hawaii Department of Taxation

Nevada Department of Taxation*

Vermont Department of Taxes

Idaho State Tax Commission

New Hampshire Department of Revenue Administration*

Virginia Department of Taxation

Illinois Department of Revenue

New Jersey Department of the Treasury, Division of Taxation

Washington Department of Revenue*

Indiana Department of Revenue

New Mexico Taxation & Revenue Department

West Virginia State Tax Department

Iowa Department of Revenue

New York State Department of Taxation and Finance

Wisconsin Department of Revenue

Kansas Department of Revenue

North Carolina Department of Revenue

Wyoming Department of Revenue*

*State has no personal income tax for individuals.

Bottom line

If you have reason to believe that filing taxes in more than one state is required, it’s better to be safe than sorry. Contact each state’s tax entity to check their respective requirements.

While Credit Karma Tax®, a free online tax-filing service, can help you with your single-state tax return, it doesn’t support multistate filings. But you may be able to file multiple state tax returns on your own by visiting each state’s tax website and filling out each state’s tax return. Many allow you to file electronically through the state website.

If you hit a snag or aren’t sure if you’re doing it right, it might be worth reaching out to a tax professional who can help you file any state returns required of you, to help you avoid potentially costly mistakes along the way.