I recieved a COVID settlement payout from Hawaii 2 years after moving to Washington. How do I file my taxes?

[Gumball]

Basically the unions sued the state for unpaid hazard pay, and both my husband and I received it. Hawaii did not account for the fact we now live in Washington, even though our addresses say Washington throughout their systems. What should we be marking this on the Hawaii tax form or can we do it on the Washington one? We're expected to get the second half of the payment in March.

[xmasbaby0]

If you have lived in WA for two years, you should already be aware that WA has no state income tax, so there is no "Washington one" to file.  You have not told us when the first payment was received.

It is not clear what the "payout" is that you will receive in 2025 but if it has to be entered on a tax return at all, it goes on your 2025 federal return.    You no longer live in Hawaii, so you are not going to file a Hawaii return.   Provide more details in the forum when you actually receive that payout and tell us what kind of document you get for it, so that we can be more helpful.     It sounds like you are not expecting that money until 2025.

[TomD8]

Temporary hazard pay derived from employment in Hawaii is likely to be considered "Hawaii-source" income and taxable by the State of Hawaii, even if you are no longer a Hawaii resident.  You should be receiving a W-2 for that pay at year's end, and it is likely that Hawaii income tax will be withheld.  So you may have to report that income on a non-resident Hawaii tax return.

https://governor.hawaii.gov/wp-content/uploads/2024/06/240610017.pdf