What a difference a year makes. Just when you thought you had a handle on all things taxes, a pandemic swoops in and changes everything. Did you have to move to another state this year because of the coronavirus? To find work, to take care of an elderly parent, to work remotely? Or, did your job change prompting the move? Whatever the case may be, there may be tax implications because you left your home state.
"It's very important to select the right tax professional. After all, people trust them with their most sensitive personal and financial information. No matter who prepares it, the accuracy of a tax return is ultimately the responsibility of the taxpayer," says the IRS.
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Multi-State Filing
If you had to move out-of-state, then one of the more pressing questions you may have is, 'do I have to file taxes in all the states where I lived?' The answer is, it depends. It can get tricky when you had to live in more than one state in any year. According to the IRS, if you spent more than 183 days in a state that's not your home state, you may have to pay taxes in both places. Answer these questions:
- How long did you live in the other state
- Were you self-employed, an employee when you earned your income?
- Do the states where you lived have a reciprocity agreement? (an agreement between states that exempt workers from being taxed on income from one state while living in the other.
- Did you change jobs or keep the same job?
- Were you a part-year resident? Did you only had residence in the state for part of the year?
- Were you a non-resident? Did you earned income in the other state, but you did not have a residence there?
You will have to check with the states' guidelines on providing a tax credit if you live in two states for part of the year. Often, states that are side-by-side will offer some slack if you have to move. Yes, it can be complicated. Let Laveniir help you figure it all out.
Also, there are a few states that do not assess a state income tax. Even so, you may have to file a non-resident tax return if you worked in a state that does. Earning income through real estate, investments or inheritance is another factor to consider.
Laveniir experts have more than 10 years' experience in this space, so you don't need to fret. We can help. You can Start Now in three easy steps by completing your forms and arranging a free consultation with a Laveniir expert. Don't go this alone.
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