Estimated Taxes and Moving
February 3, 2017 6:42 AM   Subscribe

If I move in the middle of the year from an income tax state to a non-income tax state and I pay quarterly estimated taxes, what do I do about my quarterly estimated tax payments for the part of the year that I don't live in the income tax state?

YANMAccountant, and I will, in fact, pose this question to my accountant when she's available. But I'm doing some total-year budgeting right now, and I'd like to get an idea about my cash flow.

I currently pay quarterly estimated federal and state income taxes. (I'm considered self-employed; I get a K-1.) We are expecting to move in late spring/early summer to a different state, one without an income tax. (My job will not change.) What do I do about quarterly estimated taxes for (a) the partial quarter when we move and (b) the quarters after we move? Do I just plan to pay an apportioned amount of estimated tax for the second quarter and no tax in the third and fourth quarters? Or do I prorate the second quarter's amount over the third and fourth quarters? Is my current state going to think I'm shirking my tax obligations if I don't pay any estimated tax in the third and fourth quarters?
posted by devinemissk to Work & Money (4 answers total)
You should check your state's laws because everywhere is slightly different, but every time I have moved between states, I pay income tax only in the state I am living in at that time -- so if I move from California to Ohio on July 15, I would pay California state tax from January to July 15 and then Ohio state tax from July 16- December. On Turbo Tax at least, it asks you the date you became a resident of the other state to calculate it.

Your current state will not "think" anything in that they're not going to come after you for tax payments until you submit your tax return, and at that point you'll have let them know that you became a resident of another state on whatever date. But, you would want to keep paying your federal quarterly taxes on schedule to avoid the penalty.
posted by rainbowbrite at 7:56 AM on February 3, 2017

I concur with rainbowbrite. I am not an accountant. For reasons, I have paid taxes to up to 12 states in a single year and the advice I received was to only pay estimates to the state in which you are living at the time the money was earned. Your current state, the one you are moving out of, will not notice or care until you file and then if you have paid your obligation already or within the safe harbor, your state will say thank you very much and focus on someone else.
posted by AugustWest at 8:17 AM on February 3, 2017

I would add, if you move out intra-quarter, for example on Feb 15th, you would still need to make a partial estimate payment to the original state. It is a clean break if you move on March 31st or June 30th. Otherwise partial payment. I repeat that that was what i was advised and what worked for me. YMMV.
posted by AugustWest at 8:57 AM on February 3, 2017

AugustWest - OK, so if we move mid-2d quarter, I'd pay my 1st quarter estimated tax payment on April 15, and then what ever pro rata portion of my 2d quarter estimate corresponds to the amount of time I lived in State 1 in the 2d quarter on June 15, and that would be it - no more estimated tax payments to State 1 for the rest of the year. And as long as my estimated payments are within the safe harbor, I'll be good until I file my partial year return, at which point I'll pay any additional tax I owe for the part of the year I lived in State 1 (or get back any overpayment).

That is a HUGE relief.
posted by devinemissk at 9:47 AM on February 3, 2017

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