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.

How do I file taxes if I worked in two different states?

If both states collect income taxes and don’t have a reciprocity agreement, you’ll have to pay taxes on your earnings in both states: First, file a nonresident return for the state where you work. You’ll need information from this return to properly file your return in your home state.

Is income tax based on where you live or work?

The easy rule is that you must pay non-resident income taxes for the state in which you work and resident income taxes for the state in which you live, while filing income tax returns for both states.

Where do I file state taxes if I Live and work in different 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 you have to pay state taxes if you work from home?

While you may have adapted to working from home by now, your remote employment may be creating a challenge you have yet to face: If you’ve been working across state lines, you could be ensnared in a mess of complicated tax rules. But getting ahead of this issue now may spare you from unpleasant surprises come next April.

What happens if you pay taxes to one state but work in another?

The taxes you pay to your work state are effectively subtracted from any taxes you owe to your home state so you won’t take a double tax hit. Some states recognize the extra tax headache it can create for working families who live in one state but work in another, so they’ve created “reciprocal” or “reciprocity” agreements with each other.

What happens if you work in a different state than your home state?

What happens if you work in a different state than the one you call home? In most of the country, you’ll have to file a nonresident return in the state where your company is located (if you’re an employee who receives a W-2, your employer probably withholds taxes throughout the year).