You must pay taxes in the state in which you earn them. If you are fortunate to live in a state that has reciprocity with neighboring or other states, then halleluia. I am a engineering contractor. I have worked in South Carolina for 4 years. While working there, I rent a room. I claim those business expenses on my federal taxes. I pay income taxes to South Carolina on the money I earn there - and no taxes on other sources of income; e.g., retirement dollars. I have lived in North Carolina for 24 years and have a house and property there. North Carolina has reciprocity for those who pay South Carolina taxes. But I pay North Carolina the taxes due on other income sources. Complete your Federal tax forms first, then your South Carolina forms, then your North Carolina forms. Be sure you review your completed taxes and make sure that your SC taxes are forwarded onto the North Caroline Forms.
