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State allocation of income

Av74O0OhzB — Wed, 03 Dec 2025 02:26:19 GMT

Hi, everyone.

I rented a truck when I moved from State A to State B. The company I rented from had a trailer that needed to be transferred to one of its facilities in State B, so they asked if I would tow it in exchange for a credit toward the cost of my rental. I agreed and received the credit in the form of a partial refund. In other words, I paid in full for my rental before leaving State A and then received a partial refund after I delivered the trailer to its destination in State B. I think I should report the amount of the credit as "other income" on my tax returns. For purposes of my state returns, to which state should I allocate it? Because the facility where I picked up the trailer and the facility where I dropped it off are owned by the same company, it isn't clear to me which state was the "source" of the income.

Thank you for your help!

Re: State allocation of income

Opus 17 — Tue, 02 Dec 2025 22:30:36 GMT

Discounts are not taxable income, even if paid as a rebate. Ignore it. It would only be taxable income if the fee was more than the rental cost so you netted some positive cash on the deal.

Re: State allocation of income

Av74O0OhzB — Wed, 03 Dec 2025 02:24:42 GMT

Thanks for your reply. Does it not matter that I received the credit in exchange for "work" I performed?

Re: State allocation of income

Opus 17 — Wed, 03 Dec 2025 05:22:40 GMT

@Av74O0OhzB wrote:

Thanks for your reply. Does it not matter that I received the credit in exchange for "work" I performed?

It's not really work in this situation. It would not meet the definition of "compensation" for services performed, for example, and would not allow you to claim EITC or make an IRA contribution if you had no other income. It might be different if you did this regularly, and your income exceeded the cost of any rental so that you made a net profit. But this is just a discount. Think of it as if you bought a sofa at a store that offered "free" delivery (really, built into the price) and you negotiated a 5% discount if you picked it up yourself.