How To File Tax Returns In Two States


If you generate your income between two states, then you will have to file your state income taxes for both states. This is extremely important because each state has their own rules and rates for filing income taxes. If you do not split up your income properly, then you might be paying too much or too little in tax. Eventually, the state you did not file in will find out that you made income there and demand that you file a return in that state and pay your taxes.

Determine Your Status

If you are filing income taxes in two states, then you would be a resident in one state and a non-resident in the other. Some states also refer to non-residents as part-time residents, but it means the same thing.

You will have to contact each state’s department of taxation to determine whether or not you are a resident. Each state has their own rules and some states, such as New Jersey, have complicated rules for determining residency. Unfortunately, it is not as easy as saying that state you spent the most time in is your resident state. You will need to get the rules for each state and determine your residency status for each.

Separate Your Income Sources

If you receive W-2 forms from the companies you work for, then that can help you to separate your income by state. For some states, the amount of money you made in that state for the year helps to determine your residency status. Your W-2 forms should indicate both the location of your companies, and the states in which you generated income.

If you are self-employed, then you should have kept detailed records on where you generated your income. In some cases, you will get 1099 forms that will indicate what states you worked in. But it is always a good idea to have your own records to fall back on.

Determine If You Made Enough

Some states do not require you to file an income tax form if you do not meet their minimum threshold for income. Check with each state’s department of taxation to see if your income meets the minimum requirements for filing a tax return.

Make Sure You Have To Pay Taxes In Two States

Some states have agreements with other states that eliminate the need for you to file two sets of tax returns. For example, if you work in Maryland and Washington, D.C. but you live in Maryland, you can request that your Washington D.C. taxes are taken out of your pay and you would only have to file in Maryland.

After you have determined your status as a resident and made sure that you have to file a tax return in two states, the rest of the process would involve filling out the proper forms for each state. Some states have different rules for people filing jointly or single, so be sure to get all of the details about how you are supposed to file before sending in your forms.