Live in Missouri, Work in Kansas: How to Handle Your Taxes

Individuals residing in Missouri but commuting to work in Kansas often encounter complexities regarding their state income tax obligations. This article clarifies the tax intricacies involved, providing guidance on navigating filings and understanding local tax considerations for this interstate work arrangement.

Understanding Missouri and Kansas State Income Tax

When an individual lives in one state and works in another, both states may assert a claim to the individual’s income. This dual claim arises because the state of residence typically taxes all income earned by its residents, regardless of where it was generated. Concurrently, the state where the income is earned generally taxes income sourced within its borders by non-residents.

Missouri and Kansas do not have a tax reciprocity agreement. Consequently, income earned by a Missouri resident working in Kansas is subject to taxation by both the state of Kansas, as the source state, and the state of Missouri, as the resident state.

Kansas, as the work state, will tax all income a non-resident earns within its geographical boundaries. Missouri, as the state of residency, claims the right to tax all income of its residents, irrespective of the income’s origin. This overlapping tax authority necessitates careful attention to filing requirements in both jurisdictions to prevent double taxation.

Navigating Your State Tax Filings

Individuals living in Missouri and working in Kansas must file tax returns in both states. This typically involves preparing a non-resident income tax return for Kansas and a resident income tax return for Missouri. The Kansas non-resident return, such as Form K-40, will report only the income earned from Kansas sources.

Missouri residents file their resident income tax return, Form MO-1040, which includes all income, regardless of where it was earned. To prevent double taxation on the income earned in Kansas, Missouri provides a credit for income taxes paid to another state. This credit offsets their Missouri tax liability by the amount of income tax paid to Kansas on the same income.

To claim this credit, Missouri residents must complete Form MO-CR. On the Kansas non-resident return, the taxpayer reports their Kansas-sourced income. The tax calculated on this income is eligible for the Missouri credit. When preparing the Missouri resident return, the taxpayer reports total income, including Kansas earnings, and uses Form MO-CR to apply the credit for taxes paid to Kansas. The credit cannot exceed the tax Missouri would have imposed on that income.

Once both the Kansas and Missouri returns are completed, they must be submitted to their respective state revenue departments. Both the Kansas and Missouri Departments of Revenue offer electronic filing options through their portals or commercial software. Taxpayers can also mail paper returns. The general tax filing deadline for both states is April 15th of the following year.

Adjusting Withholding and Local Tax Considerations

Proper adjustment of state income tax withholding is important to manage tax liabilities throughout the year. For Missouri residents working in Kansas, this involves ensuring that the correct amount of Kansas tax is withheld from their wages. Employees can typically adjust their withholding by submitting a revised Form K-4, Kansas Withholding Tax Form, to their employer. This form directs the employer on how much state income tax to deduct from each paycheck for Kansas.

Careful withholding adjustments can help prevent a significant tax balance due or a large refund at year-end. Over-withholding ties up funds that could be used throughout the year, while under-withholding can lead to penalties for underpayment. It is advisable to review withholding periodically, especially if there are changes in income or deductions, to align it with the anticipated tax liability in both states.

Beyond state income taxes, individuals may also face local tax obligations, particularly if their workplace is within the Kansas City, Missouri, city limits. Kansas City, Missouri, levies a 1 percent earnings tax on all salaries, wages, commissions, and other compensation earned within the city. This tax applies to both residents of Kansas City, Missouri, and non-residents who work within the city’s boundaries.

Employers located within Kansas City, Missouri, are generally required to withhold this 1 percent earnings tax from their employees’ paychecks. If the earnings tax is not fully withheld by the employer, non-resident individuals working in Kansas City, Missouri, are responsible for filing a separate earnings tax return, Form RD-109, with the city’s Revenue Division. As of January 1, 2025, all Kansas City, Missouri, taxes, including the earnings tax, must be filed electronically. This local tax is distinct from state income taxes and requires separate consideration and compliance.