I Temporarily Lived in a Different State During Coronavirus. What Does That Mean for My Taxes?

Tax Tips Temporarily lived in a different state, tax tips

This year has certainly created new challenges for everyone. Not only do many families have to deal with coronavirus, but they also have to cope with financial fallout. 

Having to Move to a Different State During Coronavirus

It could be because of a job loss or a drop in hours, where a new job or career pivot is necessary to stay financially afloat. 

With the offices closed in certain areas and remote work the default, some families are moving closer to their relatives either for emotional support or to save some money if they were living in an area with a high cost of living.

One area of concern for many is how the move will affect their taxes, especially when dealing with different states. If you’re not familiar with how it works, it can be a bit stressful. 

Today I want to break down a few key things you need to know to be better prepared and know what to expect with your taxes! 

Do I Have To File Taxes In Multiple States?

Taxes can be a bit more involved if you’ve lived and/or worked in more than one state. Generally, if you spent more than 183 days in a state that isn’t your home state you may be on the hook for taxes in both states. Some factors to consider when determining your taxes include:

  • How long you were in another state 
  • Where and how you earned your income (through an employer, real estate, or self-employed)
  • Whether or not there’s a reciprocity agreement between the states
  • Whether you kept the same job or if you changed jobs

Another key factor is whether you are a part-year (think of it as a part-time) resident or a nonresident. 

As a part-year resident, you had a residence in that state – such as an apartment or a house – for only part of the year. For example, you may have moved from your home state to another state with the plan to make that your new residence.

To be considered a non-resident, you may have earned income or resided in the state temporarily but you didn’t have a residence in that state. For example, you may live in a town right on the border of another state. You may live in one state, but commute each day to work at a job right over the state line. 

Again, you need to check with the states involved to see if they have a reciprocity* agreement. If they do have one, your state may offer a tax credit for taxes you have to pay another state. 

Please keep in mind that even if you are a resident of a state that does not assess state income tax (like Florida for example) you may be required to file a non-resident tax return if you worked in a state that does assess state income taxes. Also, if you earn income through real estate, investments, or inheritance, these are all factors you have to consider when filing your state taxes. 

*Reciprocity is an agreement between two or more states that exempt workers from being taxed on income from one state while living in another. 

Figuring Out How Much You Owe

Don’t worry about knowing whether or not you have to file two state tax returns. TurboTax will ask you simple questions about where you earned money and determine how much of your income counts in each state. TurboTax will also figure out whether you were a part-year or a nonresident. Better yet, if your state has a reciprocity agreement TurboTax will figure out your credit so you’re not double taxed if you’re eligible! 

If this seems a bit overwhelming, using a tool like TurboTax can make things easier by guiding you through the process and figuring out if you need to file your taxes in two different states.

You can also use the TurboTax Live feature to speak with an expert about your particular tax situation. This can give you peace of mind knowing that it’s been reviewed by a qualified tax expert. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your entries. If you have questions, you can connect live via a one-way video to a TurboTax Live tax expert with an average 12 years experience to get your tax questions answered. You can even connect virtually with a dedicated tax expert who will prepare and file your tax return in entirety with TurboTax Live Full Service. TurboTax Live tax experts are available in Spanish and English, year round and can even review, sign, and file your tax return. 

This year has not been what you imagined at the start of it, but I hope these tips help you prepare and make filing your taxes easier! 

 

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