DavidS127
Expert Alumni

Investors & landlords

You typically are required to file a nonresident tax return when you have a business or rental property in a state where you do not reside.

 

But, the nonresident tax return should only calculate taxes on the income related to that state.  And, you typically get a credit on your resident tax return for the tax you pay to the nonresident state on "the same dollar of income".

 

When you complete the nonresident return, you'll be asked which income is related to that nonresident state, and only that income will be used in the tax calculation.  But, depending on the state, sometimes the nonresident state will calculate tax based on your total income, and then "pro-rate" the tax based on the percentage of nonresident income to your total income.  So, it sometimes looks as if you are being taxed on your total income in the nonresident state, until you get to the "pro-ration" calculation.

 

If your question is not resolved, more information about the states involved may help resolve your issue.

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