Q. My real question is why would the sum of my reported state incomes 30K and 32 (in your example) on the W2 be greater than the total earned income for Federal.
A. You employer has determined that a portion of your income is taxable to both states. For example, there was a period of time when you lived in one state, but worked in the other.
You report all your income on your resident state return, including the income earned in the other state. Your home state calculates tax on all your income, but gives you a credit, or partial credit, for tax you paid to the other state.
