What to know about filing taxes in multiple states

  •  Part-year resident tax returns are available in most states
  • Some states have reciprocity agreements allowing to withhold taxes
  • Taxpayers have until April 15 to file last year’s taxes on their income

(NewsNation) — Taxes will require a little extra planning for the thousands of Americans who have lived or worked in multiple states last year. 

Taxpayers have until April 15 to file last year’s taxes on the income they made. For those juggling several states, taxes will depend on the time lived in each state, earnings made while there and the state’s tax laws. 

What if I’ve lived in multiple states?

Those who’ve lived in different states need to file a part-year resident tax return in each resident state.

Each state will tax the income that was earned in that particular state.

Most states don’t tax the income earned in the other state, but for the ones that do, taxpayers will need to separate their income between the two state’s tax returns. 

Income from interest or dividends that were paid ratably during the year would be divided according to the number of days spent in each state. 

A few states require reporting all income for the year if you are living there at the time, even if it wasn’t earned there. In this case, taxpayers can claim a credit for tax paid to the old state on the same income.

That tax credit will offset the extra tax on the income that was reported to both states. 

It’s important to check the residency rules for each different state that a taxpayer has lived in as some states consider someone a full-year resident if they are present in the state for at least 183 days. 

What if I live and work in two different states? 

Many Americans live and work in neighboring states, which will also tweak the way they file taxes. 

The method of filing taxes will depend on whether the states have a reciprocity agreement, which allows withholding exemptions for nonresident states.  

A taxpayer who works in a different state may need to ask their employer to withhold taxes or make estimated tax payments to the state they live in. 

If both states collect income taxes and don’t have a reciprocity agreement, a taxpayer will have to pay on earnings in both states. 

In this case, they would need to file a nonresident return for the state they work in. Information from the nonresident return will be needed to file their return in their resident state.

They then will file a resident return for the state where they live. To prevent double-taxing, the residence state will usually give a credit for taxes paid to the nonresident state.

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