Whether you just accepted a job offer across the country, retired somewhere warmer, or started splitting your time between two homes, state taxes are one of those things that can sneak up on you fast. The rules are not the same in every state, and the IRS is only part of the picture. Here’s what you need to know about taxes across state lines.
Key Points
- Moving mid-year means you may need to file part-year resident returns in both your old and new state, plus nonresident returns in any state where you earned income.
- Your domicile, not just the number of days you spend somewhere, is what most states use to determine where you owe taxes as a full resident.
- States like California and New York actively audit residency claims, so updating your license, voter registration, and financial ties promptly after a move is essential.
Why State Taxes Get Complicated After A Move
The federal government taxes your income no matter where you live. We all know that. But what catches people off guard is that states have their own income tax systems, and when you move mid-year or live in multiple states, you may owe taxes to more than one of them.
JBS provides tax services to individuals and families navigating exactly these situations. Whether you relocated for work, bought a vacation home, or have been working remotely from a different state than your employer, the tax implications are real and worth understanding.
Domicile vs. Residency: What’s The Difference?
Two terms come up constantly in multi-state tax conversations: domicile and residency.
Domicile
Your domicile is your permanent home, the place you intend to return to even when you are away. You can only have one domicile at a time. It is the state that considers you a full-year resident for tax purposes, meaning you owe taxes there on all of your income, regardless of where it was earned.
Statutory Residency
Even if your domicile is elsewhere, some states will tax you as a resident if you spend enough time there. New York, for example, has a rule that if you maintain a permanent place of abode in the state and spend 184 days (or more) there in a year, you may be treated as a resident for tax purposes. This is called statutory residency, and it can result in being taxed as a full resident in two states at the same time.
Understanding the difference matters a lot. If you moved to Florida (which has no state income tax) but still own a home in New York and spend significant time there, New York may still want its share.
Moving Mid-Year: Part-Year Residency
If you moved from one state to another during the tax year, you will typically file as a part-year resident in both states. Each state will tax the income you earned while living there.
How Part-Year Filing Works
- You allocate income based on when and where you lived during the year.
- You may also need to file a nonresident return in states where you earned income but did not live.
- Some states have reciprocity agreements with neighboring states, which can simplify things. For example, if you live in one state and work in another that has a reciprocity agreement, you generally only file in your home state.
It sounds straightforward in theory, but allocating income correctly, especially for things like bonuses, stock compensation, or self-employment income, can get complicated quickly. Our team helps individuals sort through exactly this kind of situation; you can learn more about our individual tax services here.
Splitting Time Between Two States
Snowbirds, remote workers, and people with multiple properties often find themselves in a gray area. Spending part of the year in Arizona and part in Michigan, for instance, raises real questions about which state can tax you and on what.
Key Factors States Look At
States that want to establish you as a resident will look at a variety of factors beyond just how many days you were physically present. These can include:
- Where your driver’s license and vehicle are registered
- Where you are registered to vote
- Where your primary bank accounts and financial relationships are located
- Where your doctors, attorneys, and accountants are located
- Where your family and social ties are centered
- Where you spend the most time
The more of these that point to a particular state, the stronger that state’s claim that you are a resident. If you are trying to establish residency in a lower-tax or no-income-tax state, you need more than just a lease agreement. States like California and New York are known for aggressively auditing domicile claims, so documentation matters.
The 183-Day Rule
Many states use a threshold of 183 days (more than half the year) as a benchmark for residency. That said, this rule works differently depending on the state. Some states count any partial day spent in the state; others have more nuanced standards. Keeping a detailed record of where you are throughout the year is good practice if you split time between states. A travel log, credit card statements, and phone records can all support your position if a state ever questions your residency status.
No-Income-Tax States: What To Know
Nine states currently have no state income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. Moving to one of these states is a popular tax strategy, but it only works if you genuinely establish domicile there. Simply buying a condo in Florida while maintaining your home, job, and lifestyle in New Jersey is unlikely to hold up if New Jersey audits your residency claim.
For more context on how your overall tax picture can shift based on where you live and how you earn income, visit our blog for additional resources.
What To Do Before And After You Move
Before The Move
- Research the tax rules in your new state, including income tax rates, any reciprocity agreements, and residency thresholds.
- Talk to a tax professional about the timing of your move, especially if you have significant income events like a bonus or property sale planned.
After The Move
- Update your driver’s license, voter registration, and vehicle registration promptly.
- Notify your employer of the change so withholding is updated correctly.
- Keep clear records of where you lived and worked throughout the year.
- Be prepared to file in more than one state for the year of the move.
How JBS Can Help
Multi-state tax filing is one of the more nuanced areas of individual tax preparation. The rules vary by state, the stakes can be high if you get it wrong, and the documentation requirements are real. JBS provides tax services to individuals and families across the country, including those who have recently relocated, own property in multiple states, or work remotely for an out-of-state employer.
If you are unsure how a move or dual-state lifestyle affects your taxes, book a consultation with our team. We are happy to walk through your specific situation and make sure you are filing correctly and not paying more than you owe.
For the most current state-by-state rules and federal guidance, the IRS website is a reliable starting point, though state revenue department websites are the definitive source for each state’s specific rules.
Note: This article is for educational purposes only and does not constitute tax advice. Tax rules, figures, and percentages are subject to change and this article may not be fully up to date; visit IRS.gov for the most current information and consult a tax professional for guidance specific to your situation.
