Filing Multiple State Tax Returns: A Comprehensive Guide

multiple state tax returns

Many individuals who have lived or worked in two or more states in the past year may be required to file multiple state tax returns. It's important to understand that filing taxes in two states or more doesn't affect your federal return but can impact your overall tax liability.

Are you wondering how to file taxes in multiple states? The short answer: Hire Multi-State Tax Specialists. Even if you get professional help, it's still a good idea to understand how multiple state tax filing works and when it applies, which we cover in this blog.

When Do I Have to File Taxes in Two States?

You live in one state and Work in Another State

Common scenarios where you have to file two or more state taxes include:

1. You Live in One State and Work in Another State

If you make money in one state while residing in another, you should anticipate having to pay income tax for the state where you live. On the other hand, if you reside in one of the nine U.S. states that do not tax income, filing a state tax return may not be necessary. These states include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

2. You Moved to a New State

If you relocate from one state to another during the taxation year, you must submit tax returns to both states. Either you’ll submit a part-year resident or non-resident return after the move depending on the relevant state laws. You will owe taxes to both states but not on the same income twice; each state will prorate your taxes based on the amount you earned in the state where you're filing.

3. You Conduct Business in Other States

filing taxes in two states

Although states have a different income tax, sales tax, and property tax rates, the type of income your business earns in each state must still be reported to that state. Additionally, certain states require special tax filings for companies in multiple states. This complicates things, so we recommend hiring a tax practitioner if you do business in numerous states.

4. You Own Rental Property in Another State

Real estate owners who profit from a rental property in another state must file a non-resident return with the state where the property is located and pay state income taxes to that particular state. In addition, the rental income must be declared on the resident state tax return and the federal income tax return.

5. You and Your Spouse Work in Different States

filing multiple state tax returns

The Military Spouse Residency Relief Act eliminates the dual taxation problem for servicemembers and their spouses. However, for other spouses, such as newlyweds, separated spouses, or those who commute to other states to work, filing state tax returns can still be complex as they may be required to file returns in multiple states and include their and their spouse's income.

Understanding Reciprocity Agreements

An agreement between two states regarding reciprocal state taxes allows individuals who reside in one state to work in the other state and only owe state income tax in their state of residence. This agreement prevents double taxation (paying income tax to two different states on the same income). It creates a favorable outcome for workers employed in one state and living in another.

States with Tax Reciprocity

You can find the necessary tax forms on state websites (below). And remember, the amount of taxes you pay is based on the geographic location where you physically do your job. It doesn't matter if your out-of-state employer is located elsewhere as long as you don't travel to that location for work.

StateReciprocal Agreement StatesForms Required
ArizonaCalifornia, Indiana, Oregon, VirginiaForm WEC
Withholding Exemption Certificate
District of ColumbiaAll nonresidents who work in the district can claim exemption from withholding for the District of Columbia income tax.Form D-4A
Certificate of Nonresidence in the District of Columbia
IllinoisIowa, Kentucky, Michigan, WisconsinForm IL-W-5-NR
Employee’s Statement of Nonresidence in Illinois
IndianaKentucky, Michigan, Ohio, Pennsylvania, WisconsinForm WH-47
Certificate Residence
IowaIllinoisForm 44-016
Employee’s Statement of Nonresidence in Iowa
KentuckyIllinois, Indiana, Michigan, Ohio, West Virginia, Wisconsin, VirginiaForm 42A809
Certificate of Nonresidence
MarylandDistrict of Columbia, Pennsylvania, Virginia, West VirginiaForm MW 507
MichiganWisconsin, Indiana, Kentucky, Illinois, Ohio, MinnesotaForm MI-W4
Employee's Michigan Withholding Exemption certificate
MinnesotaMichigan, North DakotaForm MWR
Reciprocity Exemption/Affidavit of Residency
MontanaNorth DakotaForm MW-4
Montana Employee’s Withholding Allowance and Exemption Certificate
New JerseyPennsylvaniaForm NJ-165
Employee’s Certificate of Nonresidence In New Jersey
North DakotaMinnesota, MontanaForm NDW-R
Reciprocity exemption from withholding for qualifying Minnesota and Montana residents working in North Dakota
OhioIndiana, Kentucky, Michigan, Pennsylvania, West VirginiaForm IT-4NR
Statement of Residency
PennsylvaniaIndiana, Maryland, New Jersey, Ohio, Virginia, West VirginiaForm REV-419
Employee's Nonwithholding Application Certificate
VirginiaKentucky, Maryland, District of Columbia, Pennsylvania, West VirginiaForm VA-4
Employee's Virginia Income Tax Withholding Exemption Certificate
West VirginiaKentucky, Maryland, Ohio, Pennsylvania, VirginiaForm WV/IT-104
West Virginia Employee Withholding Exemption Certificate
WisconsinIllinois, Indiana, Kentucky, MichiganForm W-220
Nonresident Employee's Withholding Reciprocity Declaration

How to File Taxes in Two States or More

1. Write Down all Places You Lived This Year

Writing down all the places you lived is essential when filing multiple state tax returns, as it can help you accurately calculate which states will collect income tax from you. Certain credits may also be available to you based on where you lived at certain times, so it is important to have those dates written down in case you are ever audited.

2. Determine Your Residency in Each State

how to file taxes in two states

Depending on the state, you may have different tax liabilities if you're a resident versus a non-resident. In some states, residents can be taxed on their income from all sources, both inside and outside the state.

Full-Time Resident

The time you spend in a specific state determines your residency status. If you stay in one state for more than six months (183 days) or longer, you are likely considered a statutory resident and may be subject to taxes in that state.

To be considered a full-time U.S. resident by the IRS, you must have been physically present in the country for at least 31 days in the current year and a cumulative total of 183 days spread across the current year and the two preceding years. This comes out to the current year's days, 1/3 of the days spent in the second year, and 1/6 of the days spent in the first year.

Part-Year Resident

Part-year residents live in the U.S. for part of the year but not for the entire period. As such, they may be subject to different tax regulations than full-year residents. Part-year residents have two categories: dual-status taxpayers and non-resident aliens with U.S. income sources.

Dual-status taxpayers are taxed as both resident and non-resident aliens during the year, requiring two separate tax returns, while non-resident aliens with U.S. income sources are only taxed on their U.S.-sourced income and must file one tax return reflecting this.


Non-resident aliens must only pay taxes on income earned in the U.S. or from an American source. For instance, an Italian entrepreneur operating a company in Italy and the States will only be taxed on the latter's income. Investment profits accrued in America that are not from a domestic origin are usually taxed at a rate of 30%.

3. Understand State Tax Laws

when do i have to file taxes in two states

Before you file taxes, research the residency rules of all the states you were present in for at least 183 days during that year. For part-year residents, review the rules for each state to determine what income you must report for taxation; usually, earnings from interest, dividends, and pensions must be declared on taxes in the current state of residence.

Depending on your residency, you may be required to report all income regardless of your resident status. Some states require your income to be divided between states before they collect income taxes.

4. Collect Your Income Documents

Documents such as W-2s, 1099s, and other income documentation are required to accurately report income and determine the amount and types of deductions you may be eligible for, such as the Earned Income Tax Credit (EITC). You should also keep records of your receipts for certain expenditures, including medical bills, donations to charity, and business costs.

5. File Tax Returns

multiple state tax returns

How to File Taxes if You've Lived in Two States

If you have lived in two states, your tax filing will depend on your income sources, which state you are living in, if you have changed jobs, and if those states have a reciprocity agreement. You will need to file part-year resident returns in both states. You must file separate state returns if you've had wages, self-employment, or property income in both states.

Before you begin, check the residency rules in each state, as requirements can vary. Some states consider you a full-year resident if you are present for at least 183 days, while others require you to split your income between two states before calculating your tax. We recommend completing your part-year or non-resident return before beginning on the resident return, making the process easier.

How to File Taxes for Multiple States When You Work Across State Lines

If you work and live in different states and there is no reciprocity agreement, you may have to file state income taxes in both states. Begin by filing a non-resident return for the state where you work. This requires information that will be used for the return to your home state.

After filing the non-resident return, file a resident return for your home state. This state will generally offer a credit for taxes paid to the other state to prevent double taxation. Before preparing your taxes, check the rules in both states, as they can differ.

Key Takeaways

how to file taxes if you lived in two states
  • Know your residency in each state: This will determine which forms you must file and how you calculate your state taxes;
  • Gather all of your income documentation: This includes your W-2s, 1099s, and other forms showing your income;
  • Be aware of state tax deadlines: Each state has filing deadlines, so be sure to file your returns on time;
  • Use tax software or a tax professional: Filing multiple state tax returns can be complex, so using tax software or a tax professional can help ensure your returns are filed correctly;
  • Keep good records: Keeping good records of your income and expenses for each state is important, especially if you are audited.

Get Expert Help From a Trusted CPA!

Filing multiple state tax returns can be complicated and challenging, particularly if you need to know which form(s) to complete or the best way to apportion your taxes. To ensure you are compliant and get the best results, hiring our expert Chicago CPA firm is advisable. We have a strong track record of helping clients nationwide! Contact us today if you need to pay state income taxes.

FAQs About Multiple State Tax Returns

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What state will I be taxed in if I work remotely?

As a remote worker, you must usually file your taxes in the state where you live and work, even though your employer is located elsewhere. However, exceptions can occur when you work in another state for over 30 days a year, in which case you might also be required to file taxes there.

I work remotely from a state that doesn’t collect income tax. My employer is located in a state that collects income taxes. Do I owe someone money?

You don't have to file a state income tax return if you live and work in Alaska, Florida, South Dakota, Nevada, Texas, Washington, or Wyoming. This includes when your employer's physical headquarters are in a state with high-income tax rates. If your employer has withheld taxes to another state, you may need to file a tax return to receive a refund.

When is the deadline to file my tax return?

According to the IRS, the filing deadline is April 18 for most taxpayers, but automatic six-month extensions to file are free to everyone.

What happens if I don’t file my nonresident state tax return?

If you do not file a required nonresident state tax return, you may be subject to penalties and/or interest on the unpaid taxes. The state also has the right to audit your returns and assess additional taxes and penalties if you have not filed a required return. Depending on the state, you may be barred from filing refund claims for a certain period.

Do nonresident aliens have to file a tax return in the US?

If you are a nonresident alien, you do not need to submit a tax return to the US unless you have earned any of the following types of income: income from a business or trade conducted within the US, wages, salaries, or other compensation for services you performed in the US, FDAP income from US sources (such as dividends, interest, rents, royalties, etc.), or gains from the sale of US real estate.

If you choose to submit a formal written protest, include the following information:

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