Filing Taxes When You Live in One State and Work in Another

Woman filing with TaxSlayer on her work commute.

If you work in one state and live in another, you might be required to file more than one state income tax return. This is common for remote employees, but it also applies to employees who cross a state border to get to the office. Other circumstances, like moving during the year, could also affect which state you’ll file in. 

Here are some frequently asked questions and answers about filing in multiple states. 

Where do I file state taxes if I live and work in different states? 

If you earn income in one state while living in another, you should expect to file a tax return in your resident state (where you live). You may also be required to file a state tax return where your employer is located or any state where you have a source of income. 

Do I have to file taxes in two states? 

It depends. Some states have an agreement that says workers who live out of state only have to file in the state where they live. These states have what is known as a reciprocal tax agreement, or reciprocity. Learn more about states with reciprocity.

If your work state and home state do not have reciprocity, you should expect to file two state tax returns: one as a resident and one as a nonresident. 

It’s also important to note that if you live or work in one of the nine U.S. states that do not charge income tax, you probably won’t be required to file a return for that state. States that do not charge income tax include: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. 

What is a nonresident state return? 

Being a nonresident means you have not lived in a state where you earn income for any part of the year. You’ll file this form if you work in the state but you don’t live there.  

How can I avoid paying double taxes if I am required to file in more than one state?  

Federal law prevents two states from being able to tax the same income. If the states do not have reciprocity, then you’ll typically get a credit for the taxes withheld by your work state. See how this credit works with TaxSlayer

Where should I file state taxes if I moved during the year?  

If you permanently moved to another state, you will be required to file two state returns: one for each state you lived in during the tax year (assuming both states charge income tax).  

You may be able to claim part-year residence, which will allow you to divide your income between the two states instead of paying taxes twice. Note that each state has its own rules for determining residency and how you should indicate your status on the tax forms. Check with the Department of Revenue in each state to learn what is required for your situation. 

How do I file state taxes if I work remotely for an out-of-state employer?  

Different states have different tax rules. Your income tax liability may change based on the state you’re in, but you should expect to file taxes for both states: one return as a resident for the state where you live and a separate return as a nonresident for the state where you work. Learn more about filing taxes as a remote employee.

Can I still file jointly if my spouse worked in a different state than I did? 

Yes. For your federal income taxes, you can file jointly and report all the income you earned. For state taxes, you’ll report both of your incomes on your resident state return (if your state charges income tax). You’ll file a separate return for the state where you/your spouse works and report only the income earned in that state.  

What state do I file if I’m in the military and stationed outside of my resident state?  

Military choose a “legal domicile” or state of legal residence (SLR). This is where you will pay state income taxes. If you are stationed somewhere other than your SLR, you are exempt from paying taxes to that state unless you are earning civilian income in addition to your military pay. 

Military spouses may be allowed to claim the same state of legal residence as their partner, but they must meet certain requirements. For more information, read State Tax Filing Info for Working Military Spouses. 

The information in this article is current through tax year 2021 (returns filed in 2022).

 

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