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I'm a CA resident and am employed in CA. I temporarily moved to Hawaii for 6 months since I am able to work from home. Will I pay double state taxes to both CA and HI?

Went to Hawaii during Covid since I can work remotely. Hoping to make sure I wouldn't owe twice as much state taxes this year. Thanks!
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2 Replies

I'm a CA resident and am employed in CA. I temporarily moved to Hawaii for 6 months since I am able to work from home. Will I pay double state taxes to both CA and HI?

Some states have issued guidance for  this situation, indicating you do not need to file or pay state for a temporary stay. Hawaii, so far, is not one of them. Reference: https://www.hodgsonruss.com/assets/htmldocuments/Telecommuting_5.22.20.pdf  

 

Technically, you are required to file a HI return,  but "nobody" does. See http://money.cnn.com/2013/06/28/pf/taxes/business-traveler-tax-threat/  

 

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 HI state return and pay HI tax on the income earned there.. You will also file a CA full year resident return and calculate tax on ALL your income. CA will give you a credit, or partial credit, for the tax you pay HI. 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.

I'm a CA resident and am employed in CA. I temporarily moved to Hawaii for 6 months since I am able to work from home. Will I pay double state taxes to both CA and HI?

Hawaii taxes non-residents only on Hawaii-source income.  See this reference for Hawaii's definition of Hawaii-source income:  

https://files.hawaii.gov/tax/legal/taxfacts/tf97-4.pdf

 

As @Hal_Al pointed out, you may claim a credit on you CA resident tax return for taxes paid to HI on the portion of your income that is taxed by both states.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

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