Q. If I were to move to Montana in 2023. In early 2024 when I file my taxes, would I complete one non-resident return for the income i earned in NC and one resident return for the time I lived in Montana, and then i would just pay the difference in whatever the taxes were?
A. Yes, essentially. But, not exactly. For 2023, you would file a part year resident return for each state. For 2024 and beyond, you file resident MT and nonresident NC.
If you do not live in NC and do not physically work there, technically you do not owe any NC tax on the income (except for the part of the year you physically worked there). But your employer, doesn’t know that and will continue to withhold NC tax. Technically, you should claim a refund of that portion of the NC withholding when you file your part year, or nonresident, NC return, instead of claiming a credit on your MT return.
My opinion is that your employer is being unreasonable, in not accommodating you. All they have to do is not withhold for any state (stop withholding for NC) and let you deal with MT taxes. They have no legal obligation to withhold MT tax. After the 2023 move, you would not need to file NC for 2024 and beyond (unless you occasionally work there).
