What State Do I File Taxes In If I Moved?

When you relocate to a new state, your tax obligations are split based on where you lived and earned income. You must understand how states define residency to determine your filing requirements. The goal is to report your income accurately to each state you lived in, meeting the legal requirements of both your former and new homes without overpaying taxes. This requires dividing your financial information based on your move date.

Determining Your State Tax Residency Status

Your residency status determines your state tax obligations. States use two concepts to determine if you owe them income tax: domicile and statutory residency. Your domicile is your permanent home, the place you intend to return to after any absence. You can only have one domicile, and states consider factors like your driver’s license, voter registration, bank accounts, and family location to determine it.

You can become a “statutory resident” by spending a significant amount of time in a state, even if your domicile is elsewhere. Most states with an income tax have a “183-day rule,” meaning if you spend more than 183 days in the state during a tax year, you are considered a resident for tax purposes. This rule prevents people from claiming domicile in a low-tax state while living and working most of the year in a higher-tax one.

In the year you move, you are considered a “part-year resident” of both your old and new states, which means you have filing obligations in both. If you earn income in a state where you are not a resident, such as from a rental property, you are a “nonresident” and must file a nonresident return for that income.

State tax agencies may challenge a change of domicile, especially if you move from a high-tax to a low-tax state. They can conduct residency audits, requiring you to provide evidence of your intent to establish a new permanent home. This can include the sale of your former residence, the purchase or lease of a new one, and moving significant personal items.

Gathering Information for Each State

You must gather and allocate your financial data for the year, sourcing income to the correct state and dividing income and deductions based on your move date. This requires documents like pay stubs, bank statements, and investment records.

The source of your income determines which state can tax it. For wages and salaries, income is sourced to the state where you physically performed the work. Your Form W-2 should show separate state wage amounts, but if you worked for the same employer, you may need pay stubs to calculate the income earned in each location.

Investment income like interest, dividends, and capital gains is allocated to your state of residence when it was received or when the asset was sold. For example, if you sold stock while living in your old state, that capital gain is sourced there. If you received a dividend after moving, that income is sourced to your new state.

Income from a business or rental property is sourced to the state where it is physically located. If you own a rental property in your old state, you will continue to report that rental income to that state after you move. For self-employment income, you must calculate the amount earned while you were a resident of each state, which may require analyzing bank deposits.

The Filing Process for Movers

When you move between states with an income tax, you must file two separate state tax returns: a part-year resident return for the state you left and another for the state you moved to. Each return will report the income you earned while a resident of that specific state.

To prevent the same income from being taxed twice, you can use the “credit for taxes paid to another state.” Your new state of residence will allow you to take a credit for taxes you paid to your old state on income that is taxable in both places. This credit prevents you from being doubly penalized for the same earnings.

To claim this credit, you should complete the tax return for the state you left first. The tax liability from that return is used to claim the credit on the return for your new state of residence. You will need to attach a copy of the first state’s return to the second as proof of the tax paid.

Tax returns can be submitted electronically or by mail. E-filing is faster and provides confirmation that your return was received. After filing, keep copies of both state returns and all supporting documentation for your records.

Special Filing Scenarios

Moving to or from a No-Income-Tax State

The filing process is simpler if your move involves a state with no personal income tax. These states are:

• Alaska
• Florida
• Nevada
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Washington imposes a 7% tax on certain long-term capital gains over $262,000. If you move from a state with an income tax to a no-tax state, you only file a part-year resident return for your old state, covering income earned before you moved.

If you move from a no-income-tax state to one with an income tax, you only need to file a part-year resident return for your new state. This return will report the income earned from the date you established residency until the end of the year.

Working Remotely After a Move

If you move to a new state but continue to work remotely for an employer in your old state, you may face “convenience of the employer” rules. These rules state that if you work from home for your convenience, not your employer’s requirement, your income may still be taxed by the state where your employer’s office is located.

This can lead to owing taxes to both your new state of residence and your former state where the job is based. The credit for taxes paid to another state can help with this double taxation, but it may not cover the full amount if tax rates differ between the states.

Military Spouses

Federal law provides residency protections for military spouses who move to accompany a service member on military orders. The Military Spouses Residency Relief Act (MSRRA) allows an eligible spouse to keep their original state of domicile for tax purposes while living in a new state. This means the spouse’s income is taxed by their state of legal residence, not the state where they are stationed.

To qualify, the spouse must be in the new state solely to live with the service member under military orders. A 2022 law change gives military spouses more flexibility. An eligible spouse can now choose to use the service member’s state of legal residence, their own, or the state where the service member is stationed.

The spouse can file a withholding exemption form with their employer to prevent state income tax from being withheld in the new state. This protection applies only to wage income and not to other income, such as from a rental property located in the new state.