State tax filing

TomD8 · ‎December 7, 2023

"Most states do NOT tax unemployment compensation paid to non residents."

I'm not sure that that statement is correct. What I've found is that many states (including Utah) don't specifically address the question. But when they do, unemployment benefits are invariably "sourced" to the state where the unemployment was earned, which means the benefits would be taxable to non-residents.

A few examples:

Colorado:

"Wages and unemployment compensation are Colorado-source income if the employee was physically present in Colorado when performing the work."

https://tax.colorado.gov/income-tax-topics-part-year-residents-nonresidents

Massachusetts:

"Nonresidents are subject to Massachusetts income tax on unemployment compensation that is related to previous employment in Massachusetts."

https://www.mass.gov/info-details/learn-about-tax-treatment-of-unemployment-compensation

Illinois:

"Unemployment compensation included in your federal adjusted gross income is taxable to Illinois if

you earned it while you were an Illinois resident or
you received it from the Illinois Department of Employment Security as a nonresident."

https://tax.illinois.gov/individuals/taxableincome.html

Kansas:

"Modified Kansas source income" means that part of a nonresident individual's Kansas adjusted gross income as set forth in K.S.A. 79-32,117, and amendments thereto, derived from sources in Kansas. Items of income including unemployment compensation, gain, loss or deduction reflected in Kansas adjusted gross income shall be considered derived from sources in Kansas to the extent that they are attributable to: (1) The ownership of any interest in real or tangible personal property in this state; (2) a business, trade, profession or occupation carried on in this state";

https://kslegislature.org/li_2012/b2011_12/statute/079_000_0000_chapter/079_032_0000_article/079_032...

Oregon:

"(e) Unemployment compensation. Total compensation includes unemployment compensation benefits to the extent the benefits pertain to the individual's employment in Oregon. If unemployment compensation benefits are received by a nonresident for employment in Oregon and in one or more other states, the unemployment compensation benefits must be apportioned to Oregon using any method that reasonably reflects the services performed in Oregon."

https://secure.sos.state.or.us/oard/viewSingleRule.action?ruleVrsnRsn=20198

In fact, I have yet to find a state that does not "source" unemployment compensation to the paying state. If I were to take the time to search, I'm sure I could find other examples. But the general principle seems clear.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.