Posted by Fred Lake

How To File Multi-State Tax Returns

How To File Multi-State Tax Returns

Filing multi-state tax returns can be a bit complicated for people who have lived or worked in multiple states throughout the year. Depending on your circumstances, you may find yourself: 


•Filing returns for each state where you lived or worked

•Filing "part-year" resident tax returns for multiple states or

•Filing "part-year" nonresident tax returns for multiple states


Here's how these work.

Filing State Tax Returns if You Commute Out of State for Work 

If you're a resident of one state and are commuting to another for work, you would have to file two returns: a resident state tax return for the state where you live and a nonresident state tax return for the state where you work.

As most states require that residents pay taxes on all income earned, on your resident state tax return, you'd list income earned from both states. On your nonresident state return, you'd only list income from the state where you worked. Keep in mind you may qualify for a tax credit on your resident state return for taxes paid to the state where you work.


Reciprocal Agreements 

Filing multi-state returns can put extra pressure on a person's finances, especially individuals with families to support. For this reason, many states have adopted reciprocal agreements that permit people who live in one state to work in another without having to pay taxes in their work state. This not only simplifies filing for taxes, but reduces the financial pressure for taxpayers with families. Don't forget to fill out a tax exemption form for your employer in your work state so taxes aren't withheld from that paycheck.


Filing State Tax Returns if You Move During the Year

If you move to another state during the course of the year, you'll need to file two "part-year" tax returns -- one for your old state and one for your new. Your income and deductions should be distributed between the two returns.


Filing State Tax Returns if Spouses Work In Diverse States

Unless you live and work in states with reciprocal agreements, you may have to file multi-state tax returns and pay taxes in various states if you and your spouse work in different states. Both of you would be liable for paying taxes to your resident and work states. 

If both of you are residents of one state and work in totally different states, filing for state taxes could get complicated and confusing. Filing jointly could help alleviate the confusion. If you file jointly, both of your names should appear on all tax returns. For each return you file, however, you should only list the income you received in that particular state. 

Filing multi-state tax returns can be a challenge, to say the least. Working with a professional accountant from Fletcher Accounting & Tax Service will simplify this task and ensure your taxes are completed accurately and efficiently. Our personalized accounting and tax preparation services can take the stress out of tax season.  Contact us today for all your tax preparation needs.

Fred Lake
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