Filing your taxes in one state can be complicated enough, but what if you need to file in two? There are plenty of reasons why you might need to file in multiple states. Maybe you moved in 2021 or you work in a different state than you live. Whatever the reason, you want to ensure that you file your tax returns correctly. That’s where ABC Payroll comes in with our expert tax preparation services. Here’s what you need to know about filing tax returns in multiple states.
Resident vs. non-resident returns
First, you need to know what kind of returns you need to file: resident or non-resident. The difference is pretty self-explanatory. If you lived in a state, you file a resident tax return, and you file a non-resident return if you didn’t live there. Non-resident returns are different from part-year resident returns (more on that later).
Non-resident returns are usually required for people who live in one state and work in another. These returns are usually reserved for people who commute and physically work in another state, but there are some exceptions for remote workers.
If you and your spouse work in different states, a non-resident return will need to be filed for the spouse who works out of state. Things get even more exciting if you and your spouse work in two different states than you live in. For example, if you live in New Hampshire, but you work in Massachusetts and your spouse works in Maine, you will need non-resident returns for both states. Complications like this are why tax preparation services are a lifesaver!
Part-year resident returns
If you moved to a new state, you will file two part-year returns, one for each state. How you need to report your income can change depending on the states you lived in. Some states only require you to report the income you made in the state. Other states require you to report your income for the entire year, regardless of how much of the year you resided in that state.