Does a college student that did a summer internship need to file taxes in both the work state as the home state?

[rset]

My son attends college in Michigan, but his home address/driving license is still in NJ, and he worked over the summer in 2023 in Chicago. In 2022, he worked in a remote internship from home in NJ and filed NJ taxes. We no longer take any educational credits, deductions etc for him. He also has some minimal investment income (probably a few hundred dollars) from investment/bank accounts in 2023, which I presume will be counted as NJ-source unearned income.  For 2023, will he need to file both NJ-resident and Illinois non-resident taxes, or can he simply file in Illinois? Does the fact that he filed NJ resident taxes in 2022 impose or trigger any special obligation/requirement to file again in NJ in 2023? Thanks.

[rjs · Accepted solution]

What he filed for 2022 does not create any requirements for 2023. But as long as he remains a New Jersey resident he must file a New Jersey resident tax return. All of his income is subject to New Jersey tax, no matter where the income is from.

For 2023 he must file both an Illinois nonresident tax return and a New Jersey resident tax return. The income from working in Illinois is subject to Illinois tax because that's where he worked, and also to New Jersey tax because he is a New Jersey resident. He will get a credit on his New Jersey tax return for part or all of the tax that he pays to Illinois.

[rset]

Thanks !!

[Hal_Al]

For the poster's situation, I agree with @rjs  answer.

For others reading this:

Q. Does a college student that did a summer internship need to file taxes in both the work state and the home state?

A. Simple answer: yes.

This is the general rule: The income is work state (WS) source income since it was earned there. Resident States (RS) tax all their resident's income, regardless of where earned. You will file a non-resident tax return for the WS and report the WS income. You will file a full year resident return for the RS, reporting all your income. The RS will give you a credit, or partial credit for any tax paid to the WS.

For state filing requirements, the WS does not, usually, go by what you earned in their state but by your total income . For example, if WS has a $10,000 filing requirement and your total income for the year was $15,000; you would be required to file even though you may have had only had $300 of income in that state. But if your total income was $9,000 you would not need to file.

State Filing Requirements: https://ttlc.intuit.com/questions/2903200-do-i-need-to-file-a-state-return

If you have a reciprocal state situation, the answer is different. You would, normally, not have to file a WS return.  See https://ttlc.intuit.com/questions/2895760-which-states-have-reciprocal-agreements