I moved during 2024. How do I subtract income on the state return which was earned in my previous state that does not have state income tax?

[SharonD007 · Accepted solution]

TurboTax will guide you through allocating your income when you move from one state to another during the year. When you are preparing your part-year resident tax returns, you will allocate your income to the state that you were a resident of when you received it. 

If you've already entered your personal information, review your entries to help ensure that TurboTax will help you create the correct part-year tax returns. 

1. Open TurboTax and select My Info
2. A Personal profile summary screen will pop up
3. Select Revisit by your address
4. Scroll through the screens to help ensure that you have the correct answers for your state of residence and choose that you live in another state. A new section will appear asking for your previous state of residence. Select the other state that you live in.
5. Scroll down to Other State Income and select Edit
6. Check your answer for Did you make money in any other states? Answer the questions and select Continue.

After you complete your federal tax return and you move to the State Taxes sections, your part-year state return for the state that has as state tax will be listed.

Please visit this TurboTax Help articles How do I file a part-year state return? and How do I allocate (split) income for a part-year state return? for further explanation.

[deleonfamily6 · Accepted solution]

Thank you! I also have a fully online business with only clients from my previous state of residency (which has no state income tax) and that is where I am licensed. Will I have to pay state income tax in the new state I reside in even if all my clients are from a state with no state income tax? Or will I be able to exclude that?

[DawnC]

Yes, your resident state always taxes all of your income, no matter what the source.  But, if you do have to pay tax to another state, your resident state will usually give you a credit so you do not pay double tax.