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Dual State Residency
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State tax filing
You are generally a resident of only one state.
When you complete the Personal Interview:
- Select Colorado as your state of residence on December 31, 2016;
- Answer "No" when asked if you "Lived in another state in 2016?" That question only applies if you changed your state of residence in 2016.
- Answer "Yes" when asked if you "Earned money in another state?", that state would be California.
The program will prompt you to prepare a resident Colorado tax return and a non-resident California return. Prepare the California return first.
You will pay CA tax on your CA income. CO will also want to tax that income, but will give you a credit (against CO tax), for the amount paid to CA on the same income.
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State tax filing
Your answer specifically referenced 2016.
Is this still the case in 2019?
I am a resident of CO but am moving to NC for part of the year, but will be moving back to CO for remainder of year.
I wish to maintain my CO residency.
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State tax filing
Basically, yes that still applies. NC charges a flat tax rate on NC-derived income. NC's is 5.25%. CO has switched from a flat 4.63% tax rate to one that gradually increases starting at income level $150,000 up to 6%. You would prepare the NC return first and then claim a credit on your CO return against the NC tax. You would probably not get a full dollar-for-dollar tax credit as the credit is capped against what you would owe CO on that same income.
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State tax filing
@cmcb2019 There is another wrinkle with regard to NC. NC will regard you as a resident (and tax ALL your income) if you are "present within NC for more than 183 days during the tax year." https://www.ncdor.gov/taxes-forms/individual-income-tax/individual-income-filing-requirements
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State tax filing
This idea that you can only be a resident of one state is not a federal law (if it were, simply provide a citation), but rather a myth perpetuated by TurboTax because the software doesn't support dual state residence.
You can absolutely be a resident of two state: for example, you could be domiciled in State A, but have spent 183+ days and have a house in State B. Both states would consider you a resident.
There are many court cases to this effect: example: https://www.aprio.com/new-[product key removed]ds-double-taxation-of-dual-resident-on-investment-inc...
Here's a good article by a large tax firm: https://www.bakertilly.com/insights/[product key removed]ency-can-result-in-dual-taxation
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State tax filing
"...but rather a myth perpetuated by TurboTax because the software doesn't support dual state residence."
First, you're commenting on an almost 5-year-old thread. Second, no one at TurboTax has ever denied that dual residence is possible. A taxpayer can certainly be both a domiciliary resident of one state and at the same time a statutory resident of another. The TT software isn't set up well to handle dual residency, but TT isn't "perpetuating" any "myth" about it.