topic Re: Filing State in State tax filing

Filing State

JLGII — Sun, 07 Mar 2021 13:45:09 GMT

My son who is 25 is a 2nd year medical student in Iowa, but he is claimed by his parents who live in Ohio. My son worked in Iowa and must file a state tax return ... Since he is claimed by his parents in Ohio, does he have to file a Ohio or Iowa State Tax Return? All money earned in 2020 was from the stat of Iowa ...

Re: Filing State

Hal_Al — Sun, 07 Mar 2021 14:06:41 GMT

He files both.

The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state. You will have to file a non resident IA state return and pay IA tax on the income earned there.. You will also file a OH full year resident return and calculate tax on ALL your income. OH will give you a credit, or partial credit, for the tax you pay IA. So, there will be little or no double taxation, but you have the cost and hassle of filing two state returns. Do the nonresident state return first.

State filing requirements:

https://ttlc.intuit.com/questions/2903200-do-i-need-to-file-a-state-return

Ohio has a wishy washy filing requirement. Unofficially, you do not need to file an Ohio return, If your federal adjusted gross income is less than $13,200 ($15,550 Married filing jointly or $10,850 if you are someone's dependent).

Re: Filing State

KathrynG3 — Sun, 07 Mar 2021 14:40:28 GMT

@Hal_Al is correct. However, as a second year medical student, if your son's permanent residence is Iowa, and he lived there all 12 months of 2020, then he would only need to file in Iowa and not Ohio.

If he voted in Ohio, has a driver's license from Ohio, and uses your address for official mailings, then he would file in Ohio and get credit to the extent of the Iowa income taxes paid.

Specifically, he would be adding Ohio first in TurboTax and completing the Ohio interview before adding Iowa. The sequence is important to properly allocate the income. The residency on December 31 should be added last.

Keep in mind, Ohio may consider him a resident and Iowa may consider him a nonresident. TurboTax will capture the details through the interview. Residency is an important distinction when completing the state returns.

For more information, see:

Income - Ohio Residency and Residency Credits-see Question/Answer #5 and #6.

Are you a resident of Iowa for Tax Purposes?

How do I file a nonresident state return?

Re: Filing State

Hal_Al — Sun, 07 Mar 2021 15:09:22 GMT

I originally missed the fact that the student is 25. He may not qualify as his parent's dependent.

There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit and student status test, a relationship test and a residence test.

He is too old to be a QC. So, now there is an income test to be a dependent. A person can still be a Qualifying relative dependent, if not a Qualifying Child, if he meets the 6 tests for claiming a dependent:

Closely Related OR live with the taxpayer ALL year
His/her gross taxable income for the year must be less than $4300 (2020).
The taxpayer must have provided more than 1/2 his support

In either case:

He must be a US citizen or resident of the US, Canada or Mexico
He must not file a joint return with his spouse or be claiming a dependent of his own
He must not be the qualifying child of another taxpayer

A QC would have to be considered an OH resident, because living with the parent is a QC rule. However, a qualifying relative does not have to reside with the parent, so as @KathrynG3 said, there are circumstances where he could be considered an IA resident.