Hybrid Work State Tax Filing

[k2254]

I've been working in State A (permanent address) and State B (office location) as a hybrid worker this year. However, my W-2 lists State A and State C (company HQ location), and I was taxed for State C only.

In my case, which state taxes should I be filing - A, B, or C?

[DMarkM1]

You will need to clarify which states equate to A, B and C.  Each state has unique rules for these circumstances including any potential reciprocity agreements with other states and pandemic rules. 

Normally you would be taxed by state A, your resident state on all income from all sources.  Next you would also be taxed by state B for work actually performed in that state.  State A would give a credit for taxes paid to the other state on your resident return. 

However, due to the pandemic expanding the work from home occurrences some states have changed their rules on remote worker tax and withholding which could lead to state C taxing you. 

Once you post which states are involved someone will be able to give specific advice for your circumstances. 

[k2254]

Hello, thank you for your reply!

State A is New Jersey

State B is New Hampshire (no state income tax anyway)

State C is South Carolina

[DMarkM1]

First, since New Hampshire, as you note, does not tax wages, you will not need to file there. 

Next with NJ as your resident state you will file a resident return there for all income and all sources. Since nothing was withheld for NJ you will owe taxes there.  

Finally, SC law states employers will not change withholding due to a worker temporarily working from home outside of SC.  Further SC will not change it's taxing of workers who were normally working in SC but temporarily now work outside of SC from home due to the pandemic.  Here is the SC tax letter and then an extension letter through Dec 2021. 

What that means for you, assuming you did not physically work in SC pre-pandemic, you would not need to pay SC taxes.  However since they withheld taxes, you will need to file a non-resident return there to get a refund of those taxes.      

It appears SC should not be withholding, but NJ should.  You would need to change that with your employer.  In the future you would only need to file in NJ as a resident there.  

To generate the SC non-resident return go to "My Info" and scroll down to the "Other State Income" topic.  Indicate you earned income in another state and select SC.

NOTE:  You will not be eligible to claim a credit for taxes paid to another state on your NJ taxes since you will not be paying any taxes to another state (getting full refund from SC).  

[k2254]

Thank you so much, that's very helpful!

One more quick question - should I be requesting a corrected W-2 from my company since I was taxed for SC but not NJ?

Thanks again!

[RaifH]

No, you would not request a corrected W-2. That money has already been withheld and sent off to South Carolina. That is why you will have to request a refund from them and file your NJ return to pay NJ taxes. 

You would want to file a new W-4 with your employer to make sure they are withholding for the correct state going forward assuming that you will continue to reside in NJ. 

[k2254]

That makes sense, thank you for your help!

[Parthshah1985]

I am residing in Arizona but have to travel to Oregon for 1 or 2 weeks in a month

How will my state income tax be calculated? Will it be for Arizona since I am residing in AZ and spent most of the time in this State in that year? Or will I have to pay the Oregon State tax for the weeks that I worked in OR as well? 

[BillM223]

The general rule is that you owe taxes to the state where you live and to the state(s) where you work.

You owe tax on the income that you earned IN Oregon to Oregon on a nonresident Oregon return. Please see page 5 on the 2022  Oregon Income Tax Form OR-40-N and Form OR-40-P Instructions. 

You owe tax on the income to Arizona that you earned IN Arizona on an Arizona resident return. Did you work any while in Arizona? If so, then you will be taxed on that income on the 2022 Arizona Form 140.

In TurboTax, you will:

1. Enter your Oregon data first for your Oregon nonresident return. This will calculate your Oregon tax.
2. Then you will enter your Arizona data. Your Oregon tax should appear (automatically) on AZ form 309 as a "Credit for Taxes Paid to Another State or Country" - this is how you avoid taxes from multiple states on the same income.

Just to clarify, you will report ALL of your income on your Arizona return, but since you will report a tax credit on your AZ return equal to the tax on income earned while working in Oregon, you will not be double taxed on the same dollars.

@Parthshah1985