Multi-State Taxes: A Plain-Language Guide
When your life crosses state lines, your taxes often do too. Living in one state while working in another, moving in the middle of the year, or earning income from several places can mean filing more than one state return. Here is how it generally works.
By Lilian Oyama, Tax Preparer, FounderReviewed 7 min readThree kinds of state filers
| Status | Who it usually describes | What is generally taxed |
|---|---|---|
| Resident | You lived in the state for the full year | Your income from all sources, often with a credit for tax paid to other states |
| Part-year resident | You moved into or out of the state during the year | Income earned while you lived there, plus certain income sourced to the state |
| Nonresident | You lived elsewhere but earned income in the state | Income earned in or sourced to that state |
Each state sets its own residency rules, so the details vary. The table describes common patterns, not the rule for every state.
Avoiding tax on the same income twice
Many states give residents a credit for income tax paid to another state on the same income. For example, a New Jersey resident who works in New York generally files a New York nonresident return and a New Jersey resident return, and New Jersey may allow a credit for tax paid to New York.
Some neighboring states have reciprocal agreements instead. New Jersey and Pennsylvania have one for wages, so many cross-border commuters pay income tax on wages only to their home state. Other types of income may still be treated differently.
Remote work and moving mid-year
Remote work has made state taxes more complicated. Some states tax remote employees based on where the employer is located, while others focus on where the work is physically done. If you moved during the year, you may file a part-year resident return in each state, with income divided by the dates you lived in each.
Common multi-state mistakes
- Filing only in your home state when a nonresident return was also required.
- Leaving your employer withholding for the wrong state after a move.
- Missing the credit for taxes paid to another state.
- Forgetting income earned in a state you only visited for work.
