Tax Filing When Moving to a Different State

If you relocate from one state to another in the middle of the year, you may have to pay two sets of income taxes. Not all states have a state income tax. Those that do usually expect part-year residents to pay at least some tax for the year.

Place of Residence

Moving for a few months of work or for college may not change the state where you have your legal domicile, the Andrew Mitchell legal firm says online. If you're registered to vote and have a driver's license in a state, you're domiciled there, even if you're living somewhere else. When you apply for a license and voter registration in another state, you've changed your domicile.

Suppose you move from Virginia to California at the end of April, changing your driver's license and voter registration to your new home state. You file a Virginia income-tax return for whatever you earn in the first four months of the year and a California tax return for the remaining eight months. The same principle applies no matter which states you move to and from.

If you don't change your domicile, your former home may continue taxing you as a state resident. Virginia, for example, says anyone domiciled there for more than 183 days of the year is a tax-paying resident, no matter where they actually live. If, say, you're domiciled in Virginia while working in Florida five months of the year, Virginia will still tax all your income.

Where You Work

Even if you're not domiciled in a state, the efilecom tax site says, you may have to pay state income tax if you work there. States typically expect you to pay tax on anything you earn in their jurisdiction. Say you move from Virginia to North Carolina in May, but you still work in Virginia. North Carolina will tax your income from May through December. Virginia will tax your income for the entire year.

You shouldn't end up paying double state income tax on the same earnings. For example, if you live in Massachusetts but paid tax on your wages to another state, you can claim a Massachusetts tax credit for the out-of-state tax. Some states have tax agreements with other states that save you having to double-file. Marylanders who work in Virginia, for example, don't have to pay Virginia tax. Research your state's tax department website for information. Otherwise, you could end up paying more tax than you need to.

Filing Returns

Each state that levies income tax has its own set of forms and rules. As a part-year resident, you may need a different income tax form than year-round residents use. Look for the right form on the tax department website.

Watch for Problems

Some states are grudging about letting go of a taxpaying resident. CNN says California and New York, for instance, may aggressively insist that you're still a taxpaying resident after you move, if they can find any justification. The safest bet is to change your domicile as soon as possible. Get your car registered in your new home state, apply for a driver's license andregister to vote. These all prove your intent to leave your old domicile behind.

If you're working for the same employer in both states, the company may continue taking out withholding for your old state's tax even after you move. Look at your pay stubs after the move to confirm everything's as it should be.

Tips

  • If you start a new job after you move, you may be able to write off moving costs on federal taxes. There are multiple requirements, including working full-time for most of the year after the move. If you meet the IRS standard, you can write off moving costs even if you don't itemize. Instead, you deduct them on your Form 1040.