If I lived in two states (6 months in one and 6 months in the other) but only earned money in one state, do I file two part-time resident returns?

[WinooskiWinter]

I've been stuck in paperwork hell since I filed my tax forms via turbotax this year, and am still trying to figure out what went wrong.

I lived in New Jersey from Jan 1 to June 30. I lived in Vermont from July 1 to Dec 31. I earned money in New Jersey from Jan 1 to Dec 31, and earned no money at all in Vermont.

Turbo Tax printed two NJ state tax returns for me: a resident state tax return with half of my yearly salary listed, and a non-resident state tax return with half of my salary listed. Is that right? Or should I have just filed one partial-year resident return?

[SweetieJean]

Did you have any income of any type while in VT? Did you telecommute for the NJ company?

[WinooskiWinter]

No VT income. I worked remotely for an NJ company.

[maglib · Accepted solution]

If it was a permanent move to VT, you file in both states as a part year resident.  You will have to allocate income.  Did you notify your employer that you moved to VT, did you intend on it being permanent?  You will get a credit in VT for taxes paid on the 2nd half year of income paid to NJ.  Depending on income levels.  You will have to file 2 returns in NJ.  http://www.state.nj.us/treasury/taxation/njit26.shtml  one as resident and one as part year resident, see link.

NJ taxes telecommuting. CONVENIENCE VS. NECESSITY

In New York, Pennsylvania, Delaware, New Jersey and Nebraska,  all wages earned from an employer in any of those states are allocated to that state unless by necessity the nonresident’s work must be performed from his or her out-of-state location. This rule has been enforced by the taxing authority in New York, legally challenged and upheld.  So you will still owe taxes for non-resident NJ while living in VT.

If this was a temporary move and you intended always on returning to NJ you may qualify as a full year resident of NJ and a non-resident of Vermont.  You would still owe taxes to both states.  you would file full year resident of NJ and Non-resident in VT.  Each state has different rules and you get credits for taxes paid to other states during period of residency in that state.   YOU MUST finish the NON-resident return prior to doing the resident return!!!

VT law:  

PART-YEAR RESIDENT

If you were a Vermont resident for only part of the tax year, you must do the following to determine whether you must file a Vermont income tax return:

• Calculate your income for the part of the tax year you were a resident of Vermont.
• Calculate your income earned during the part of the tax year you were a nonresident of Vermont.

Add the calculations resident and nonresident. If the sum is more than $100, you must file a Vermont income tax return.

I am not a TT employee. Please ask additional questions if this was not clear.

[SweetieJean]

<a rel="nofollow" target="_blank" href="http://www.koscpa.com/newsletter-article/state-tax-consequences-telecommuting/">http://www.koscpa.co...>

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.thetaxadviser.com/issues/2010/feb/apractitionersguidetothetaxationoftelecommuting.html">...>

[WinooskiWinter]

But the question is: is there any case in which turbo tax should have filed TWO different types of returns for me in one state?

[maglib]

See my answer above. You have to determine where you permanently resided.  If you did not intend to stay in VT and it was temporary you may not have to file in VT. Otherwise you have to file as part year resident in both states.

[WinooskiWinter]

I'm not sure you're understanding me. According to Turbotax, I filed as a part year resident in Vermont, a nonresident in New Jersey (for half my salary), AND a Resident in New Jersey (for the other half of my salary). Does it ever make sense to file TWO different types of return in ONE state?

[WinooskiWinter]

I understand that making money in one state and living in another one means I have to file and pay taxes in both states. My question is whether Turbotax messed up when it made me file two state returns in New Jersey last year.

[maglib]

No.  you are a part year resident in NJ and VT.  You do owe taxes to NJ as a telecommuter for the whole year.  I updated answer above for NJ telecommuting rule.  You will get a credit in Vt. for the half of the year you telecommuted to NJ for taxes paid to NJ.  2 state returns in NJ and 1 VT.

[maglib]

How did TT mess up?  You were a part year resident in NJ and you should have filed in NJ as such and you owed taxes in NJ for the half of the year you were not there as a non-resident.  In VT you also owed taxes for half the year you lived there.

[WinooskiWinter]

Turbo tax generated two NJ state tax returns for me, one resident and one non-resident, each listing my salary for half of the year.

[WinooskiWinter]

(along with a VT state part-year resident return)

[maglib]

Im fixing  NJ Income Tax – Part-Year Residents. If you became a New Jersey resident of New Jersey or you moved out of the State during the taxable year, you are considered a part-year New Jersey resident. ... In this case you will file both a part-year resident return and a part-year nonresident return.