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Multiple State Tax Filing

Some taxpayers will need help with multiple state tax filing. If a taxpayer has income from more than one state, he or she may be required to pay state tax in multiple states. Filing multiple state income tax returns is not difficult but it gets more expensive the more states the taxpayer has to file state tax returns for. When there is a possibility of multiple state tax filing, the taxpayer needs to look into the residency requirements and state tax filing requirements for each state he or she is tied to in any ways such as income or residency. Before filing any state tax return or even purchasing any tax software to help you file tax returns, you should check to see if you meet the minimum filing requirement of each state that you may need to file tax return for.

When would multiple state tax filing be necessary?

If a taxpayer has moved in the tax year or work in a state other than where he or she lives, he or she may needed to file an income tax return for that state. These state income tax return forms outside the taxpayer's home state are often referred to as out of state returns.

Multiple state tax filing residency requirements

To file a state income tax return it is necessary to determine the followings:

  1. Your residency status in each state.
    • You may be a:
      • full year resident,
      • part year resident, or
      • nonresident.
    • You may in certain cases be both a part year resident and a nonresident in the same year.
    • Your residency status is important in deciding which state tax return form to use. Some states have separate tax forms or residents, part year residents and nonresidents.
  2. Income you have for each state that is taxable and the state that it is taxable to.
I live in one state but work in another, am I required to file tax returns for both states?

Generally if you received income from a state which you live, you are taxed by that state. If you live in one state but have wages in another state, you probably are subject to income tax in both states. Usually if you earn income in a state, you are subject to tax by that state.

Differences between state tax returns and federal income tax returns

Some areas in w which state returns tend to differ from the federal return are:

  • child care credit
  • pensions
  • capital gains
  • moving expenses
  • active duty military income and military retirement income
  • social security
  • itemized deductions
  • depreciation