WhEN YOU MOVE TO ANOTHER STATE BUT STILL WORK IN THE ONE YOUR MOVING FROM, WHICH STATE TAXES ARE YOU TO PAY?

Question

IM MOVING IN ABOUT A MONTH AND I INFORMED MY EMPLOYER. WELL MY EMPLOYER TOLD ME TO LET'EM EXACTLY WHEN THIS CHANGE HAPPENS FOR THEY WILL HAVE TO MAKE CHANGES IN MY CHECKS FOR ME TO PAY THE NEW STATE TAX. AND I WOULD HAVE TO DO BOTH STATES WHEN I DO MY YEARLY TAXES THIS SEASON COMING. IS THIS TRUE? IS THAT HOW IT WORKS OR ARE THEY LEAVING SOMETHING OUT THAT WOULD HELP ME UNDERSTAND ENTIRELY WHAT THEY MEAN?

Answer 1

When you live in one state and work in another, you file returns with both states, but you do not pay double tax on the same income. You report the income on both returns, but you take a credit on one of the returns (probably the state where you live) for the either the tax paid to your home state on income also taxed by the the state where you work or the tax paid to the state where you work on income also taxed by the state where you live, whichever is less. It is very complicated, but you do not pay more than if you just paid tax on everything to whichever state has the higher tax rate.

In the year when you move from one state to another, you have to keep track of what income was from before you moved and what income was from after you moved. This does not just apply to income from work. You are supposed to keep track for all your income, even interest on a checking account. You file returns with both states. You only pay tax to each each state on the income that either (a) was earned in that state or (b) was earned while living in that state. However, some states require you to report (but not pay tax on) your other income, and then go through some weird math to calculate that tax on that amount, what % of income is or is not taxed by that state, what % of the tax that you originally calculated you should pay, etc.

Answer 2

traci a actually gave you the only correct answer. No idea why 3 people gave it thumbs down! You live and work in PA so that is the State where you pay State income tax. Where your employer is located is irrelevant. If you lived in PA and actually performed the work in another State that would be a different story -- you'd file in both and pay the higher of the 2 States' rates -- but since you live and work in PA, that's the ONLY State where you will pay State income tax.

Answer 3

You would probably have to file part year returns in each state. Most adjacent states have agreements so if you are taxed both places on the same income, then what you paid to one of the states can be subtracted from the other.

Answer 4

Ok, I live on the boarder of NY and NJ. We live in NY my husband works in NJ. At the end of the year our tax guy does taxes for the state of NY AND the state of NJ. You will always have to pay taxes to the state you live in and the state you work in. Your employer will be able to fix your W2 so that it is correct so no worries there just let them know when you move, and talk to your tax guy in April when you have the anual ones done.

Answer 5

You pay state taxes in all the states you worked. You work in both, you pay in both.