How to File Taxes If You Moved States

Moving to a new state introduces new considerations for your annual tax filing. Your change in location affects your state tax obligations, and you will need to determine where you are considered a resident. You must also learn how to correctly report your income to each state to ensure you meet all filing requirements.

Determining Your State Residency Status

Your tax obligations to a state are tied to your residency status, determined by domicile and statutory residency. Your domicile is the one place you consider your permanent home, the place you intend to return to whenever you are away. You can only have one domicile at a time, and it does not change until you take actions to establish a new one, like registering to vote or obtaining a new driver’s license.

Statutory residency is a classification based on a state’s specific rule, most commonly the 183-day rule. If you spend more than 183 days in a state during a tax year, that state will likely consider you a resident for tax purposes, regardless of your domicile. This rule prevents individuals from claiming a home in a low-tax state while spending most of their time and earning income in another.

For the year you move, you will most likely be classified as a part-year resident in both your old and new states. This means you are taxed as a resident only for the portion of the year you lived in each state. For example, if you moved on July 1st, you are a part-year resident of your old state from January 1st to June 30th and a part-year resident of your new state from July 1st to December 31st.

It is also possible to be a nonresident for tax purposes. This status applies when you earn income from a state where you do not live. For instance, if you moved but continued to receive rental income from a property in your old state, you would file a nonresident return for that state.

Required Information and Documentation

You will need to gather all income-related documents, such as every Form W-2 from your employers and any Form 1099s for freelance work, interest, or dividends. Each W-2 should clearly indicate the state where the income was earned and the amount of state tax that was withheld, which is a starting point for allocating your earnings.

Organize your income records based on the date of your move. Pay stubs are particularly useful for this, as they show your earnings period by period. This allows you to accurately separate the income earned before you moved from the income earned after to report correctly to each state.

You must also have records that substantiate the exact date of your move and your intent to change your permanent residence. Documents like a new lease agreement, mortgage closing papers, utility bills in your name at the new address, or a new driver’s license serve as proof of your change in domicile.

Allocating Your Income Between States

You must allocate, or source, your income to the correct state. For wages and salaries, the income is generally allocated to the state where you physically performed the work. Your W-2 forms will show state-by-state earnings, but you should verify these figures against your own records, especially if you worked in one state while living in another.

Investment income, which includes interest, dividends, and capital gains from selling stocks, is typically allocated to your state of residence at the time you received the income. For example, if you sold stock and realized a capital gain in May while still living in your old state, that gain is sourced to your old state. If you received a dividend payment in August after you had moved, that dividend is sourced to your new state.

Income from a business or rental property is generally sourced to the state where the business or property is physically located. If you moved but retained a rental property in your old state, the rental income it generates continues to be sourced to and taxed by that state, requiring you to file a nonresident return there.

Some states require part-year residents to report all income earned throughout the year, from all sources, and then calculate a tax that is prorated based on the income earned in that specific state. Other states only require you to report the income specifically earned while you were a resident there.

The State Tax Filing Process

The tax filing process when you have moved between states follows a specific order. You must complete your federal tax return first, as information from it, such as your adjusted gross income (AGI), is required to complete your state tax returns.

After your federal return is done, you should prepare the tax return for the state you moved from. You will file a part-year resident return, reporting only the income you earned while you were living in that state.

Next, you will prepare the part-year resident return for the state you moved to. On this return, you will report the income you earned from the date you moved to the end of the tax year.

To avoid being taxed twice on the same earnings, you can claim a credit for taxes paid to another state. This credit is typically claimed on your new, current resident state’s tax return. You calculate the credit based on the amount of tax you paid to your old state on income that is also being taxed by your new state.

Updating Your Tax Records

Formally update your address with tax authorities to ensure you receive future correspondence. The IRS updates a taxpayer’s address of record when you file a tax return with a new address. You can also notify the IRS directly by filing Form 8822, Change of Address.

You should also directly notify the state revenue departments of both your old and new states of your address change. Each state has its own procedure for this, which can typically be found on their department of revenue website.

Finally, be aware of potential local tax obligations. Some cities and counties impose their own income taxes, which are separate from federal and state taxes. When you move, investigate whether your new locality has such a tax and if you have new filing requirements.