Relocating to a new state during the year can be an exciting experience, but it also brings additional responsibilities when it comes to filing your taxes. Moving across state lines usually means you will need to file taxes in both your old and new state of residence. Each state has its own rules about taxation, residency, and income sourcing. If you’re unsure how to file after a mid-year move, this detailed guide will walk you through everything you need to know about filing state income taxes when you have lived in more than one state during the tax year.
Understanding State Residency for Tax Purposes
Each state determines residency differently, but generally, you are considered a resident of the state where you maintain your permanent home, spend the most time, and intend to stay. When you move, your residency typically switches to the new state as of your move-in date. For the year of your move, you’ll likely be considered a part-year resident in both states.
Key Definitions
- Resident: You lived in the state for the entire tax year or established domicile.
- Part-Year Resident: You moved into or out of the state during the tax year.
- Nonresident: You didn’t live in the state but earned income there.
Do You Have to File in Both States?
In most cases, yes. If both your old and new state collect income taxes, you’ll need to file a part-year resident return in both states. Each state taxes the income earned while you were a resident, and possibly any income from sources in the state after your move. If one of the states has no income tax—such as Florida, Texas, or Nevada—then your filing will be simpler, possibly only requiring a return in your old state.
Step-by-Step Guide to Filing After Moving States
Step 1: Determine Your Dates of Residency
The first step is to pinpoint the exact date you moved. Most states require you to report income based on the period you were a resident. Use this date to divide your income and deductions appropriately between the two states.
Step 2: Gather All Income Documents
Collect your W-2s, 1099s, pay stubs, and any other income documentation. Make a note of which income was earned before and after your move. If your employer uses the same payroll provider, your W-2 may show total income, but not a breakdown by state—so you’ll need your pay stubs or statements to do the allocation manually.
Step 3: Allocate Income Between States
You will need to allocate income between the two states based on when and where it was earned. Some common methods include:
- Calendar method: Divide income based on the number of days in each state.
- Actual earnings: Use actual pay stubs or earnings for the time spent in each state.
- Employer reporting: Some employers issue multiple W-2s for each state worked in.
Step 4: File Part-Year Resident Returns
Most states have a specific form or section on their regular income tax return for part-year residents. You’ll report total income on your federal return but divide the applicable portions between the two state returns. Each state will tax only the portion of income earned while you were a resident or from sources within that state.
Special Case: Income from Other States
If you earned income in a state other than your old or new residence—for example, rental property or remote work—you may also need to file a nonresident return in that state. However, many states offer credits for taxes paid to another state, which helps prevent double taxation.
Claiming a Credit for Taxes Paid to Another State
In cases where you are taxed by both your former and new state on the same income (e.g., during a transition period or due to overlapping rules), you can typically claim a credit for taxes paid to the other state. This is done on your resident state return and helps you avoid paying double tax on the same income.
What If You Moved to a No-Income-Tax State?
States like Florida, Texas, Washington, and Nevada do not have state income taxes. If you moved to one of these states, you generally won’t need to file a return for that state unless you have specific business or filing obligations. You’ll only need to file a part-year return for the state you left.
Common Mistakes to Avoid
- Incorrectly reporting residency dates: Always use official move-in and move-out dates, supported by lease agreements, driver’s license changes, or utility bills.
- Not allocating income correctly: Don’t assume the same income split for every source—use precise amounts wherever possible.
- Filing as a full-year resident in both states: This could result in double taxation. Make sure you’re filing as a part-year resident unless otherwise required.
- Missing out on credits for taxes paid to another state: These can save you money but require accurate documentation.
Special Considerations for Remote Workers
If you work remotely and moved during the year, it’s essential to determine which state the income was sourced from. Some states have aggressive rules about sourcing income based on employer location or physical work location, which could create dual-tax situations. In these cases, working with a tax professional may be the best course of action.
Do You Need to Amend Past Returns?
If you realize after filing that you reported your move incorrectly or failed to file a required return, you should amend your return using Form 1040-X and the corresponding state amendment forms. File as soon as possible to reduce penalties and interest.
Using Tax Software or a Tax Professional
Most major tax preparation software programs handle part-year and multi-state filings. However, filing correctly can be tricky if you have multiple sources of income, complex residency issues, or overlapping deductions. If you’re unsure, it may be wise to consult a tax professional who is familiar with multi-state filings.
Conclusion
Moving to a new state during the year doesn’t have to complicate your taxes—if you understand the rules and take the right steps. By filing part-year resident returns, allocating income properly, and claiming any available credits, you can stay compliant and avoid double taxation. Keep accurate records of your move, understand each state’s rules, and don’t hesitate to seek professional help if your situation is complex. With the right approach, you can file accurately and with confidence after a mid-year move.
