DanielV01
Expert Alumni

State tax filing

It depends.  First, it is important to identify that you are a statutory resident of DC.  You had an apartment (maintained an abode or a dwelling), which is one of the elements to the definition of a statutory resident, and you state that you had a detail in DC for 183 days, which appears to be a second element. But the true definition of a DC statutory resident requires that you are physically present in DC.  Likewise, for Alabama to tax your income, you needed to be physically working in Alabama.  (Alabama does not tax telecommuters working "at home" from outside of Alabama, for instance).  It seems difficult to believe that both of those conditions are true.  It is very possible, in fact, that you may have to prorate or allocate your actual income to Alabama based on the amount of time and work you physically performed there.  Alabama cannot tax all of your income unless it was all earned there.

 

Having said that, let's say that you do meet both conditions of the test.  If you do, then you may technically need to file three "state" returns:  An Alabama nonresident return for all income you earned in Alabama, then a DC resident return on all of your income (on which you will claim a credit for income earned in Alabama), and then a Pennsylvania resident return on all of your income.  Since PA is your domicile state (where your main home is located), then Pennsylvania also has the right to tax all of your income.  In this case, Pennsylvania would give you a credit for tax paid first to Alabama, and then to DC on this income that is being taxed there.  Still, since PA law includes some items as taxable which are not taxable Federally (and likely not taxed in Alabama and DC), it is still possible that you could owe PA tax as well.

 

If that sounds complex, it's because it is.  What you present is not an every day resident situation.  And you may be able to simplify it by either determining that you were either not a DC statutory resident for 2020, or, if $0 was earned within Pennsylvania borders, whether you are justified in stating that your tax home for 2020 was not Pennsylvania so you wouldn't be "required" to file a tax return there.  Three returns might be safe, but if you file just two, keep documentation that will back you up in case the "state" you choose not to file with should later ask why you didn't.

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