Income in 2 states

Forum|Forum|4 years ago
February 24, 2022
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I reside in Virginia, but have non-resident income via K-1 in South Carolina. How do I apportion the income between the two states to avoid double taxes?

Best answer by HelenC12

TurboTax will allow you to allocate the income attributable to each state. Complete the SC nonresident income tax return first.

Allocating your income shouldn’t be too difficult, but it can involve some math. You'll need to determine if the income you're allocating is earned or unearned, as these are handled differently:

Earned income comes from employment, such as wages, salaries, tips, payment for services, and commissions
Unearned income comes from non-employment sources, such as interest, dividends, capital gains, social security, and IRA distributions

Unearned income allocations: Allocating unearned income is pretty straightforward: just allocate it to the state you were a resident of when you received it. Here are some examples:

You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma
You sold some stocks right after you moved to Iowa. Allocate the gain to Iowa.
You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California
- On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state.

For additional information, please see How do I file a nonresident state return?

HelenC12Answer

Level 15

TurboTax will allow you to allocate the income attributable to each state. Complete the SC nonresident income tax return first.

Allocating your income shouldn’t be too difficult, but it can involve some math. You'll need to determine if the income you're allocating is earned or unearned, as these are handled differently:

Earned income comes from employment, such as wages, salaries, tips, payment for services, and commissions
Unearned income comes from non-employment sources, such as interest, dividends, capital gains, social security, and IRA distributions

Unearned income allocations: Allocating unearned income is pretty straightforward: just allocate it to the state you were a resident of when you received it. Here are some examples:

You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma
You sold some stocks right after you moved to Iowa. Allocate the gain to Iowa.
You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California
- On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state.

For additional information, please see How do I file a nonresident state return?

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