topic How do I allocate unearned income when reporting in two states? in Get your taxes done using TurboTax

How do I allocate unearned income when reporting in two states?

edselby — Thu, 06 Jun 2019 15:16:32 GMT

I see apparently conflicting answers to similar questions, so I would like some clarification. We are reporting partial years in two states, CO and MT. We moved mid-year from CO to MT. We have rental properties in CO and we have mineral royalties from CO. I believe both are taxed solely in CO, but reported to MT where credit is given for the CO taxation. That effectively makes them solely taxable in CO. As we are retired and our only other significant income is from Social Security, that makes the MT taxes minimal. Am I on the right track?

The general rule of thumb for state taxes is: you pay st...

MaryK1 — Thu, 06 Jun 2019 15:16:34 GMT

The general rule of thumb for state taxes is: you pay state tax on state source income (from working or rental property) in the state the income originated, if you do not live in that state you file as a nonresident. You pay state income tax on all income, regardless of source to your resident state. To avoid double taxation on income at the state level, your resident state will give a credit for any tax you paid on income in another state.

For a part year resident, you allocate the income exactly the same way, just using the dates to determine your resident/nonresident status. You are correct, you will file as a Part Year Resident for both CO and WY (technically for CO you will initially determine Colorado taxable income as though they are full-year residents then subtract out the retirement/social security you received after you moved to WY.) WY will include retirement/social security you received after you moved to WY and the rental/royalties, but you will receive a credit for the tax you paid to CO for the time you were a nonresident.

Re: The general rule of thumb for state taxes is: you pay st...

StAndrew2009 — Tue, 19 Jan 2021 18:14:48 GMT

How would you handle this scenario for allocating two states with part-time residency?

Employed in Oklahoma through all of Jan-March by Oklahoma based daughter company (first W2 with OK Withholdings).

Accepted offer to work for NY based parent company end of March, and remained in OK until 6/18 (second W2 with all NY withholdings).

Moved into NY apartment 6/22.

Surrendered OK license and Received new driver license and vehicle registration 9/28.

First W2: Jan - March

Second W2: April - Dec

Re: The general rule of thumb for state taxes is: you pay st...

MarilynG1 — Thu, 21 Jan 2021 23:53:15 GMT

@StAndrew2009 From 1/1/20 to 6/22/20, you were an Oklahoma resident. You will pay Oklahoma tax on income you earned while living there with a Part-Year Oklahoma return.

Since you were paying New York taxes from your income from April through June 22nd, you underpaid Oklahoma and will probably owe some OK state tax.

You will file a Part-Year Resident return to New York, for income earned from 6/22 through end of the year.

Since you paid tax to NY for April, May and part of June, you overpaid New York and should get that amount refunded.

Click this link for info on How to File a Part Year Resident Return.

Re: The general rule of thumb for state taxes is: you pay st...

StAndrew2009 — Fri, 22 Jan 2021 02:47:17 GMT

thanks, how would you allocate this? by percentage or number of days?

Re: The general rule of thumb for state taxes is: you pay st...

MarilynG1 — Fri, 22 Jan 2021 20:59:19 GMT

@StAndrew2009 The State interviews in TurboTax may ask how many days you lived in each state. If you only have one W-2, it will do the calculations for you.

You can adjust the amounts calculated by TurboTax.

This link give more info on Allocating Income for a Part-Year Return.

Re: The general rule of thumb for state taxes is: you pay st...

tax6666 — Sat, 21 Mar 2026 00:32:40 GMT

Thank you, for the unearned income (Interest, Rental, Dividends etc.) since I am a part year resident or two states (for example NC and NY) and am just using the number of days I was in each state to get the fraction to multiply for each one (Interest, Rental, Dividends etc.) instead of figuring out which state I was actually in when I earned the income because that would be very difficult to find I think.

Does that work?

Re: The general rule of thumb for state taxes is: you pay st...

AnnetteB6 — Sat, 21 Mar 2026 15:59:30 GMT

Yes, that works. Or you could even use the number of months in each state to simplify the math even more.

The TurboTax help article shared above and here will give you more details:

How do I allocate (split) income for a part-year state return?

@tax6666