Handling taxes for more than one state can be a stressful situation for those people who work or live in more than one states. In this situation, the person has to file multiple tax returns to satisfy the rules of each country. You may be eligible to file part-year nonresident or occupant returns in different states. Part-year occupants have to follow the rules of every nation. Numerous states tax income earned on their land, but others may calculate taxes on total revenue as a resident. The situation of nonresidents is different from other taxpayers. They pay tax on the income that they have earned from their job in a state and on revenues received from multiple sources in the same country.
Commuting to Other Country for Work
People who commute to another country for work have to file a tax return as a resident in the home state and as a nonresident return to work state. On occupant tax return, you have to include your whole income. Many states tax the income of a resident from different sources. On a nonresident tax return of a working state, it is essential to include the wages that you have made in work state. Many states allow you to take tax credits on occupant tax return for taxes that you have paid to work state.
Many states acknowledge the additional tax burden on working families and create reciprocal agreements. These agreements allow a worker to work in a tax-free neighboring state. If you are working and living in two countries that have this agreement, you will pay taxes only to your native state. Make sure to file your exemption form with the employer to avoid withheld taxes for a work state.
Employment with Out-of-State Employers
There is a common misconception about country taxes that you will pay income taxes of a state as per the location of your employer. For instance, Julia works and lives in Idaho for an organization situated in California.
It doesn’t mean that Julia owes income taxes of California. The locality of your company headquarter is not related to income taxes of your state. A nonresident who doesn’t physically work or live in a country may create a tax liability, but working for a foreign company doesn’t generate any tax liability for state or the taxpayer.
Travel to a New State During a Tax Year
A person who is moving to another state during a tax year must be handling taxes for more than one country. He/she must file two part-year tax returns. One return will be for the former state, and the other one is necessary for a new country. On every return, you can divide your deductions and income between both nations.
Spouse Working in the Different States
Military families typically live in different states, and members of these families get tax exemption from residency states and pay taxes to the state where they are living. Before 2009, the spouse of military officers was not exempted. It means that every spouse has to pay taxes for both states. After Residency Relief Military Spouse Act passed in 2009, this problem is solved.
Spouses of civilians have to pay taxes for both states. You must own taxes to each state where you live and generate income. This rule is same for every spouse unless you are living and working in countries that have reciprocal agreements.
If a wedded couple finds that they have to file a return in two or more states, you can jointly file for the tax returns of your country. On every return, you have to include the income that you have earned in this particular state. The return must be filed under the names of both spouses.
For handling taxes for more than one state, it is essential for you to understand the rules of each country. If you want to avoid any trouble in your life, you should share accurate information regarding your income. Understand the waiting period of your state for non-residents for the payment of taxes. The waiting period may be beneficial for non-residents to earn income in a new country for a particular period before subjecting your earnings to taxation.
