Filing state tax return on unemployment payed by one state while living in a different state.

It depends on the amount of unemployment income you received.  For Arizona taxpayers; if you are Single, Married Filing Separately or Head of Household and your Arizona Adjusted Gross Income (AAGI) is at least $5,500 or your Gross Income (GI) is at least $15,000 you must file.  If you are Married Filing Jointly and your AAGI is at least $11,000 or your GI is at least $15,000 you must file. 

If your unemployment meets the filing requirements above, you will file a non-resident Arizona tax return Form 140NR.

For Illinois taxpayers:  Who must file an Illinois tax return?

If you were an Illinois resident, you must file Form IL-1040 if

• you were required to file a federal income tax return, or 
• you were not required to file a federal income tax return, but your Illinois base income from Line 9 is greater than your Illinois exemption allowance. 
• For tax years beginning January 1, 2016, it is $2175 per exemption. If someone else can claim you as a dependent and your Illinois base income is $2175 or less, your exemption allowance is $2175. If income is greater than $2175, your exemption allowance is 0.

Resident State:  All income worldwide is required to be reported on your resident state return.  Any money that is also taxed in a nonresident state allows you to use "credit for taxes paid to another state" when you complete your resident state return.  Your resident state does not want you to pay tax twice on the same income.  The credit will be the amount of tax charged by the nonresident state or the tax that would have been charged by the resident state, whichever is less. 

File the AZ return first, if applicable, then file the IL return, if applicable, and use the credit for only the unemployment income.

So I don't have to file a state return with Illinois, even though I was living in Illinois already while receiving the unemployment from Arizona.

@sari.head4 The answer has been updated to include the IL filing requirements as well.

So am I understanding this right, I have to file a non resident Arizona for the unemployment I received and then a part year Arizona for the wages earned while living there and a part year Illinois for the Arizona unemployment I received while a resident.

@sari.head4 That's correct.  It's the way it has to be done and an unusual situation.

Do I file them in that order? I know they have to be filed in a certain order but want to make sure that's correct.

Nonresident first, then part year resident returns. I would do IL last (where you live now).

Ok great, thank you so much for all your help!

You bet, you're welcome!

But why is the unemployment income earned in another state (in this case New Jersey) being considered income in the state where I live (New York)?  Isn't that double dipping? I am being taxed on that amount twice, once in each state.

In 2015, the Supreme Court decided that people should not be taxed twice. Therefore, you get a credit from your resident state. Here is how it works.

1. First, prepare your non-resident  return. This creates your tax liability for the non-resident state.
2. THEN prepare your resident state 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.

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.

Hi,

Similar question - but still a bit confused.

Was in WI working, moved to MN to work and moved back to WI (all within 2019) and received unemployment benefits from MN after moving back to WI (so those should be taxed by MN, right?).

Do I need to file a nonresident form or can i just do a part year MN and part year WI and file WI after MN? If the latter, I think I did it correctly, but the starting date on the part-year MN form keeps auto-filling to 1/1/19

An important question- Did you change domicile or did you go to Minnesota to work with no intention of staying there? 

 

See Domicile (Residency) for Individuals and Legal Residence/Domicile

 

@s3

Hi!  I am moving from California to Nevada and collecting unemployment from California.  Nevada has no state income tax...so how does that work?  When you mentioned a credit that makes sense when both states charge state income tax but in this case I would be moving from a state that has income tax to one that does not.  Thank you!

You will simply file a part year CA return and will only report the income received while a CA resident.  CA unemployment is no longer taxable to CA once you move ... make sure to change your residence properly like change your DL and insurance and voter's registration, etc. 

I lost my California-based  job in mid Dec 2019 and officially moved to North Carolina that same month. I have been collecting unemployment from California since January 2020. Will I need to file a California state tax return and North Carolina return or only for NC? 

 

Thanks

Hi! So clarifying that we do not have to continue to live in California to collect California unemployment?

I can attest to the that fact. You do not have to live in CA to receive California unemployment benefits. However, my question is whether or not you have to file taxes in CA for those payments if you did not live in California for any of that calendar year.

I wanted to confirm the same thing - if I receive unemployment in CA after I change my domicile to TN (no state income tax), will I need to pay state income taxes to CA on 1) my unemployment income; and 2) additional household income earned by my wife in TN?  

 

Another twist, we're selling an investment property in CA that closes in March, so we will have two months' of passive loss on that property + capital gain that will be exempt because it qualifies for the 2 out of 5 primary residence rule (i.e. we lived there before renting it out).  We know we need to file a CA return.  Just wondering if this additional connection to CA changes anything.

 

Basically, my base concern is that potentially accepting unemployment from CA for a couple more months could trigger tax liabilities on my wife's income.  If that were to be the case, I'd decline the unemployment payments because that income would exceed the tax liability.

No, you will not need to file a California non-tax resident tax return for unemployment purposes. This is verified in the following link. 

 

Regarding your sale of your investment property, this should have no effect on your overall return and does not trigger additional questions about your connection to California.

 

So I also am confused.

 

I got unemployment from NY (because my job was previous located there) but for no part of the time I was receiving unemployment benefits living there. I was a resident of another state. TurboTax asks if the income is attributable to that state. Is the NY unemployment attributable to NY (and I pay that and receive a credit in my home state). Or do I just pay any taxes in my home state?

And I guess the follow up question is if NY unemployment is attributed to NY when I don’t live there, can the payment amount be separated bet state and fed so that the amount received from state is NY source and the amount received from fed ($600/week bonus) is paid to my home state?

New York taxes nonresidents on any income derived from New York state sources.  

 

If I am understanding your questions correctly, your unemployment was from a business within New York.  If this is correct, you will need to file a Nonresident Income Tax return for New York.

 

New York Nonresident filing information

 

In regards to your next question, if some of the unemployment is from sources outside of New York, then you are correct.  You will only report the amount applicable to New York that is from New York sources on your New York Nonresident return.  

 

You will need to report the full amount of unemployment compensation on your home state tax return, but you will be able to claim a credit for any taxes paid to New York on any income taxed twice by both states.  This will ensure you only pay taxes one time on that particular income.

 

When completing your return in TurboTax, be sure to complete the Nonresident New York tax return first in order to ensure the credit for taxes paid to another state, pull into your resident state tax return correctly.

 

I have a similar question. I received unemployment in Arizona starting in January 2020. I moved to North Carolina at the end of 2019. Do I file unemployment in AZ or in my state of residence NC?