JeffreyR77
Expert Alumni

State tax filing

You are not paying double taxes.  You are paying at the tax rate that your income would be if your income were all taxed by the one state. 

 

For example:  For a couple that earned $90,000 in  Maryland and $50,000 in New York, New York will begin with their total income of $140,000, less allowable deductions in this case coming to $120,000 in taxable income. 

 

The tax on $120,000 for their filing status is then multiplied by the percentage their New York income was of their total income, in this case $50,000/$140,000 or 35% to come up with their NY tax liability.  

 

Maryland will do something similar, only  using the Maryland  income as the base number to come up with the tax percentage.  

 

This relationship is why it is important to navigate through TurboTax state returns in the order of part-year states first and completing your end of  year resident state return is completed last to ensure the lowest tax liability is computed.

 

While many states apply this methodology, Maryland and Virginia have reciprocal agreements than make moving between the states easier.