W2 Box 15 Shows Multiple States: What to Do?

Receiving your annual Form W-2 is a routine part of tax season, but it can be confusing when you see more than one state listed. This document, officially the Wage and Tax Statement, reports your annual earnings and the taxes withheld from your paychecks. This situation is not uncommon and can arise from various work or life changes during the tax year. Understanding the information presented on the form is the first step toward ensuring you file your state taxes correctly and meet all your obligations without overpaying.

Understanding Your W-2 with Multiple State Entries

The bottom portion of your W-2 is for state and local tax reporting. Box 15 shows your employer’s state identification number, Box 16 reports the wages subject to that state’s income tax, and Box 17 details the state income tax withheld for that jurisdiction. If you earned income in more than one state, you will see a separate line of entries in these boxes for each state. This ensures that income is tracked and attributed to the correct taxing authority.

A common cause for multiple state entries is moving from one state to another during the tax year. Another scenario involves living in one state while commuting to work in a neighboring state. Additionally, if your job required you to work temporarily in different states for the same employer, each of those states may appear on your W-2, reflecting the income earned within its borders.

Determining Your State Filing Requirements

Your state tax filing obligations are determined by your residency status. If you moved during the year, you are considered a part-year resident in both your old and new states. This requires you to file a part-year resident return in each state, reporting the income you earned while living there. State laws use a “days” test, such as the 183-day rule, where spending more than half the year in a state establishes you as a resident for tax purposes.

For those who live in one state and work in another, you are considered a resident of the state where you live and a nonresident of the state where you work. This requires you to file a resident return in your home state and a nonresident return in your work state. An exception to this is a state tax reciprocity agreement, which allows you to pay taxes only to your state of residence, simplifying your filing process. If an agreement exists, you may need to file a specific form with your employer to prevent tax withholding in your work state.

Filing Your State Tax Returns

When filing your returns, follow a specific order to ensure you aren’t taxed twice on the same income. While no single federal law prevents states from taxing the same income, the tax system is structured to avoid this outcome through a system of credits.

The established procedure is to first file the tax return for your nonresident state or states, reporting only the income earned within those borders. After calculating your tax liability, you can prepare the return for your resident state. Your resident state taxes all your income, regardless of where it was earned. To prevent double taxation, you will claim a “credit for taxes paid to another state” on your resident return. This credit reduces the tax you owe your home state by the amount you already paid to the nonresident state. Most states require you to attach a copy of the nonresident state’s return as proof when claiming this credit.