Posted by Income Taxes and Bookkeeping LLC

Having Ties to Multiple States: How to File

Having Ties to Multiple States: How to File

State Income Tax tip

The best way to get the answers on the tax requirement for each state is to contact a tax professional or visit the tax authority website for each state.

 

Military Personnel Stationed Outside their Home State 

Military persons will usually list their Home of Records as their enlisted state. Ideally, military people are classified as a resident of the specified homes of records. Based on Federal laws, other states cannot tax the wages of nonresident military members positioned in their state, 

For instance, a Texas military transferred to New York will have his Home of Records as Texas, while the Duty Station will be New York. Thus, while Texas may tax the military wages, New York wouldn’t. However, if such military personnel take another job not related to the military, such wages are not protected by Federal Law. Thus, judging by the example above, if while in New York, such military personnel takes a job at a grocery store, the wages from such job will be taxed by New York. As a result, such a person will need to file a nonresident New York tax based on the income. 


I am a Military, but My Spouse is not…

Military spouses are allowed to claim a domicile state like their military partner. It can also be the same Home of Records with their military partner or another one. The essential thing to note is that a nonmilitary spouse needs to establish residency in the state that will be their home of Records.

 

Resident, Nonresident, or Part-year Resident

The resident and nonresident status seems like an easy one, so we shed light on it first. 

Residency is where your home is located and the place you planned to stay when you are back from a vacation or a temporary business trip. As long as your main house is in a state, you are classified as a resident of such a state. 

Example 1: You lived in South Dakota during the year because you have a home in South Dakota; however, you had a three-month vacation in Hawaii. Your resident form will be filed for South Dakota. 

Example 2: You landed in South Dakota sometime around February and June, and you lived in South Dakota for the rest of the year, which was more than six months. Your resident form will be for South Dakota. 

You are classified as a nonresident of a state if you didn't dwell in the state any time of the tax year even though you had some income from such state because:

  • You worked in such a state even though you didn't live there

  • You had income from various sources in such state  like a business, rental properties 

  • You got income as a beneficiary of a trust or estate from sources in such a state. 

Example 3: You live in Hawaii, and your mum died, leaving her Farm in Idaho, which was in operation until it is eligible for sale. Your resident form will be filed for Hawaii, while a nonresident form will be filed for Idaho. 

However, if your situation is not as straightforward as any of the examples above, you might be a part-year resident. The following explores how to determine if you are a part-year resident.


How to know if your time in a state was Temporary or Permanent 

It is important to establish if your time in each state was temporary or permanent as your decision influences the tax form you will fill for each state, alongside the calculation of taxes for the state.

  • People who made a permanent move from one state to another are classified as part-year residents of each state. 

  • You might work temporarily in one state and have permanent residency status from which you left for work; you are classified as a nonresident of the other state.

One major factor in determining the nature of the move is the intent behind the move. As a result, the following needs to be clear

  • Was your intention to move permanently 

  • What was the duration of your stay in the other state?

  • Are you moving with your family?

Whatever your intentions are, your actions must back them up. 


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