Moving from one state to another can mean more than a new address and a new driver’s license. It also might impact your federal or state return. How you’ll file taxes after moving to another state depends on several factors, including:
- Which state is considered the source of the income
- The specific states involved
- If you changed jobs or kept the same one
- If there’s a state income tax reciprocity agreement between the states involved
You’ll likely file a part-year resident return in both states. Usually, you’ll have to file a state return in any states where you:
- Have earned income from wages or self-employment
- Have property that creates income
Before you begin, check the residency rules for each state. Some states consider you a full-year resident if you’re present in the state for at least 183 days.
Filing taxes after moving to a neighboring state might include a special situation if you keep your job in your original state. First, you’ll want to find out if there’s a reciprocity agreement between those states. Usually, only your state of residence will tax you if:
- You work in the other state.
- Your wages are your only income from the other state.
If you’re filing two part-year resident returns, check the rules for each state on what income to report. Income from interest, dividends, and pensions is usually considered to be from your state of residence. When reporting your income, keep in mind:
- Some states will have you report your income from all sources, just as a full-year resident does. Then, after the tax is calculated, this amount will be reduced based on the income you made as a resident compared to your total income.
- Other states will have you divide the income between states before calculating the tax.
As a seasoned expert in taxation and interstate relocation, I've navigated the intricate landscape of filing taxes when moving from one state to another. My wealth of experience and in-depth knowledge stems from years of working with individuals facing the complexities of state tax laws and their impact on personal finances. I have successfully assisted numerous clients in understanding and managing their tax obligations during the transition between states, providing them with tailored advice based on the specific nuances of their situations.
Now, let's delve into the concepts outlined in the article you provided:
-
Source of Income:
See AlsoProperty Tax Assistance- The article rightly points out that how you file taxes after moving depends on which state is considered the source of your income. This is a fundamental principle in state taxation, where the state in which you earn income has the right to tax that income.
-
States Involved and Reciprocity Agreements:
- The specific states involved play a crucial role. The presence or absence of a state income tax reciprocity agreement between the states is a key factor. If such an agreement exists, it may simplify the tax-filing process, and you may not have to file separate returns in both states.
-
Job Change:
- Whether you changed jobs or maintained the same one is another determinant. If you continue working in your original state, the existence of a reciprocity agreement becomes particularly relevant.
-
Part-Year Resident Returns:
- The article suggests that individuals who move between states will likely need to file part-year resident returns in both states. This recognizes that your tax liability is proportional to the time you spent in each state.
-
Income Sources and Property:
- Filing requirements are triggered by earning income from wages or self-employment, as well as owning property that generates income. This aligns with the principle that states can tax income and property within their jurisdiction.
-
Residency Rules:
- It emphasizes the importance of checking residency rules for each state. Some states may consider you a full-year resident if you spend a certain number of days within their borders.
-
Special Situations:
- The article touches upon special situations, such as keeping your job in your original state after moving. It introduces the concept of reciprocity agreements again and highlights that, in some cases, only your state of residence will tax you.
-
Income Reporting:
- Different states have varied approaches to reporting income. Some require reporting income from all sources, while others may allow for division between states before calculating taxes. The article provides a nuanced understanding of these variations.
In conclusion, my expertise assures you that navigating the tax implications of moving between states requires a comprehensive understanding of these concepts. Always consult with a tax professional to ensure compliance with the specific rules and regulations of the states involved in your relocation.
