Non-Resident Requirements for Filing State Income Tax

by Jeffrey Nichols ; Updated September 11, 2015
Your tax paperwork increases if you earn money in a state as a non-resident.

Earning income as a non-resident of a state adds to the amount of work in your tax return preparation. Requirements including filling out tax forms for both the state in which you earn money and the state in which you live. You then receive a tax credit from your home state for the taxes you paid to another state.

Overview

Your tax paperwork increases if you earn money in a state as a non-resident.

Earning income as a non-resident of a state adds to the amount of work in your tax return preparation. Requirements including filling out tax forms for both the state in which you earn money and the state in which you live. You then receive a tax credit from your home state for the taxes you paid to another state.

Non-Resident Requirements

If you work in a different state from the one in which you live, you will owe income tax to both states unless one or the other has no state income tax. Your employer will withhold income from your earnings based on the withholding rules for the state in which you work. After determining your adjusted gross income on your federal tax return, you next must fill out a return for any state in which you earned income as a non-resident. Each state has a return process specifically for non-residents.

State of Residence Requirements

You next must fill out income tax information for the state in which you live. Your home state gives you a tax credit for payments to other states if you fill out and file the appropriate schedule, allowing you to avoid paying double taxes. You may still owe income tax to your state of residence for other income sources, such as bank interest, that factor into your federal return. The credit from your home state may not completely match the payment you made to another state if the other state has a higher tax rate.

Reciprocity Agreements

Many neighboring states have agreements that allow you to only file taxes for the state in which you live. If you work in one of these states, your employer does not have to withhold income for the state in which you work once you fill out a withholding exemption form. You should check with your employer to see whether it will agree to withhold income for your home state. If not, you may have to set aside money to make estimated quarterly payments to your state's treasury.

Military Personnel

If you are in the military, you owe tax only to the state you list as your home of record. You will not be required to pay taxes to another state in which you are stationed unless you take a civilian job in that state.

About the Author

Jeffrey Nichols has been writing and editing since 1997. His work has appeared in the "Manassas (Va.) Journal Messenger" as well as daily publications in Pennsylvania and Illinois, covering sports, recreation, health and fitness, along with business and finance. He has a Bachelor of Arts degree and enjoys writing everything from practical articles to fiction.

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