Is income earned in your state of residence if it was earned in another state

[danmalandro]

does income earned in another state get added to NY State return?W2 

[ChristinaS · Accepted solution]

Your home/ resident state taxes 100% of your income, earned anywhere. You get a credit on your home state return for taxes paid to the state that you work in.

Inside Turbo Tax, work on the return of the state that you work in (but do not live in) first.

If you live in NY, yes, your NY return should show all of your income. Do you have a more specific question?

[danmalandro]

So, an additional tax return will need to be filed to the state worked in which will require another TurboTax software purchase, is that correct?

[ChristinaS]

Another state purchase, yes.

[danmalandro]

A follow-up - Only $1,000 was earned in the state worked, which is CA. Is there a minimum income requirement in CA for filing purposes or I still have to file regardless of the amount?

[ChristinaS]

You probably have to file CA. As with most states, your income anywhere also impacts your requirement to file CA, even if CA source is low.
<a rel="nofollow" target="_blank" href="https://www.ftb.ca.gov/forms/2016/16_540nrbk.pdf">https://www.ftb.ca.gov/forms/2016/16_540nrbk.pdf</...>
See the chart on Page 3. Your CA gross/ adjusted gross is essentially a federal number, just might be more or less due to CA differences. If, for instance, you are single with no dependents.. you would have to file if CA AGI is $13,728. If your federal AGI is $40,000, the CA AGI won't likely be that much different.

[tbychkov]

My daughter lived in CA until August, and them moved to CO. I did her CA state return first and then CO. Now I don't see a credit for the tax paid in CO on CA return. How do I change it?

[hauptda]

My daughter earned all of her income in the state of  Montana but did not change her residency because she traveled the entire year.  I did the Montana return first and then the Michigan return and Turbo Tax taxed her if the full amount as if the income was earned in Michigan.  Why would she be taxed twice?

[AmyC]

Your resident state taxes all income but gives a credit for income taxed by another state.  Please carefully follow these directions to prepare the states in a special order. You may need to delete both states and begin again.

1. First, prepare your non-resident Montana return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. Then prepare your resident state MI return and it will generate a credit for your income already being taxed in the non-resident state.
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state, if they have a higher tax rate.

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.

@hauptda