How to file taxes when there is part-year-resident overlap with wages?

March 2, 2015 10:28 AM

Most of the part-year stuff on Turbotax seems to assume a clean break - that you lived in one state, worked there, then moved and established a residence in a new state. But we moved, established a residence in a new state, and then while there, still had work income from the first state. How the hell do we show this on tax returns?

I would like not to go to jail through accidentally misfiling my taxes, and also, not to pay an assload of tax that I don't have to just because I can't seem to figure out how to do this. Please help!

posted by corb to Law & Government (11 answers total)

This is likely not something TurboTax can easily handle by default. As someone who had income in four different states this year, I had to do forms for each state manually. However, the part-year residence forms should have a way to divide your income up correctly regardless of how long you actually lived there.
posted by tau_ceti at 10:33 AM on March 2, 2015

I have used Turbotax in partial-year residency situations, and unless they have changed in the last year, they assume that there was a single date in which you stopped being a resident of the old state and started being a resident of the new state. Do your fed taxes with turbo and your state taxes by hand.
posted by ubiquity at 10:39 AM on March 2, 2015 [1 favorite]

I would do it on paper. The instructions for each state will explain how to calculate the partial year taxes for that state. It's usually not that hard.
posted by smackfu at 10:46 AM on March 2, 2015

One of many reasons I use a CPA to do my taxes. This was a huge pain in the arse for me with TurboTax, as, while constantly employed in Massachusetts (and having to pay MA taxes), I moved to NH and then moved back the next year. The forms were crazy, and wrong.
posted by tckma at 10:56 AM on March 2, 2015

If it helps: in the four states I've had to deal with this with, it didn't matter what state the work income was from. Just residency. But I suppose this could vary by state.
posted by metasarah at 10:59 AM on March 2, 2015

I would like not to go to jail through accidentally misfiling my taxes

Maybe this was hyperbole, but this is extremely unlikely. If you screw this up, what will happen is that they will send you letters telling you what they think you should have paid, and you can respond to those. If you don't respond/don't pay, they will tack on penalties and start garnishing future refunds. Depending on the amount and your lack of response, they can and will garnish a portion of your wages. But this would take months and months and lots of stern letters before it gets to that point. You'll be fine.

TurboTax will ask you a lot of questions about which state you really lived in when you were working in [other state] to determine residency. Your situation doesn't sound that complicated honestly. If both states have income tax, you need to file in both states, unless they have reciprocal agreements (e.g. Wisconsin and Illinois). Let's say you worked in Wisconsin from January to August, but in June you moved to Montana. In September you got a job in Montana and continued to live there. Your June-August overlap is taxed by your state of residency - Montana - but you will need to provide proof to Wisconsin that you are paying taxes on the income you earned in WI.
posted by desjardins at 11:48 AM on March 2, 2015

If you screw this up, what will happen is that they will send you letters

Addendum: make very sure every tax agency has your current address and/or your mail forwarding is set up correctly. Generally they will only contact you by the last address they have on file, and it's a goddamn mess if you didn't get the letter they sent.
posted by desjardins at 11:50 AM on March 2, 2015

If you screw this up, what will happen is that they will send you letters telling you what they think you should have paid, and you can respond to those.

Although with a partial year situation, those will likely be very wrong, since they don't know you are a partial year resident. One state will consider you very under-withheld, and owing a lot of money, and the other state might not think you owe anything at all.
posted by smackfu at 11:54 AM on March 2, 2015

Every state has its own arcane way of figuring this on its paper returns. Having just moved this past year myself, I can speak to Massachusetts and Connecticut; both have ways of filing a tax return that accounts for income from that state during both resident and non-resident periods. However, the method is different in each case. It also gets tricky when you can deduct the taxes paid to one state from the taxes paid to another.

In your situation, I would go to the websites of the revenue departments for the states in question, download any form marked something like "return for non-residents" or "return for part-year residents" and their associated instructions, brew myself a pot of tea, and spend an afternoon carefully reading the instructions and figuring it out. But that's just me.
posted by Johnny Assay at 1:35 PM on March 2, 2015 [1 favorite]

Response by poster: In September you got a job in Montana and continued to live there. Your June-August overlap is taxed by your state of residency - Montana - but you will need to provide proof to Wisconsin that you are paying taxes on the income you earned in WI.

So I think the complicated part that honestly I'm having trouble figuring out how to deal with is that - taking that June-August overlap - we both worked in NYC, which specifically doesn't charge the personal income tax if you are a nonresident even if you earn it there. And the other complicated part is that my new state does not have income tax, so I'm not sure I could prove that I am paying taxes on that gap.

(also thanks re the puncturing fears - all I remember is lots of people in jail for tax evasion, but those are all vague memories and I didn't know how they got that way)
posted by corb at 3:47 PM on March 2, 2015

we both worked in NYC, which specifically doesn't charge the personal income tax if you are a nonresident even if you earn it there

This doesn't answer your main question, but as for this bit, my understanding was that while there's no "commuter tax" -- i.e., NYC charging its extra bit of citywide income tax for workers coming in from out of the 5 boroughs -- that doesn't mean the state doesn't collect state income tax for work done by non-residents within the state. But hopefully someone more knowledgeable will chime in about that?

(Here's a random advice column about a live-in-NJ/work-in-NYC scenario.)
posted by nobody at 4:54 PM on March 2, 2015