Moved from HI to VA, and lived in a hotel in DC for two months while looking for a home. Do I have to file state taxes for those two months, and if so DC or VA?

[Demoz]

I moved from Hawaii to Virginia last year, to transfer to a job in DC.   I stayed in a hotel in DC for two months while I looked for a permanent home.  I wasn't sure which state I would end up permanently living in, and looked for homes in DC, VA, and MD.  I have three W2s from the federal government, my employer.  One shows HI and VA state wages, taxes and tips, as well as HI and VA taxes withheld.  The other two have only DC state wages, taxes and tips, and no state taxes withheld.  One or both of the two DC W2s is related to reimbursement for my moving expenses. I'm not sure if  one is for the income for the two months I stayed in DC.  My question is:  Do I have to pay state taxes for the wages I earned during the two months I was living in a hotel in DC searching for a permanent residence?  If, so which state do I pay it to:  HI, VA, or DC?

Edit: corrected this year to last year.

[DanielV01]

When did you finally settle in Virginia?

[Demoz]

@TurboTaxDanielV Arrived in DC end of June. Closed on and moved into our house in Virginia end of August.

[DanielV01]

It depends.  Your situation is not clear-cut.  This FAQ on state residency provides some guidance that can guide an acceptable answer (click on resident examples inside of the FAQ, and especially the third example):  https://ttlc.intuit.com/replies/3301816

So we need to find the definition of a DC part-year resident.  Here it is, according to the DC tax instruction booklet (p.25 of following link:  2016 D-40 and D-40EZ Booklet:( 

"You are a part-year DC resident if, during the year, you moved out of DC with the intent to permanently leave or moved into DC with the intent to permanently stay.  (Italics added)

"A DC taxpayer present in DC for 183 days or more and not domiciled in DC during the tax year is a part-year resident for the period present in DC.

"A DC taxpayer domiciled in DC during the tax year, is a full-time DC resident unless he or she changes domicile during the tax year. In such case, he or she will be a part-year resident for the period not domiciled in DC.

" 'Domicile' is where a person has his or her permanent home. To change domicile, you have to abandon the previous domicile and establish a new one in another state with the intent to remain. (Italics added)."

Using this definition, and your facts and circumstances, you did not move into DC with the intent to permanently stay, and you were not domiciled in DC either (hotel is not a domicile, whereas an apartment usually is).  You were not in DC for at least 183 days.  You did leave to Virginia and establish residency there.

Again, this is not clear-cut, but the DC definitions above make you a DC nonresident, which means your income is not taxed in DC (DC does not tax nonresidents).  You may file a DC reciprocal return to have all of the DC taxes returned to you.

However, the income is taxed somewhere.  Again, facts and circumstances must be used, but this can be very cloudy here.  In this situation, I would split the DC portion between both VA and HI, and put your move date halfway in between the two, and allocate half of the DC income to HI and half to VA.  Then, fill out part-year returns to each state based on that information.

If you feel more strongly, however, that the DC income should either go only to Hawaii or only to Virginia, there is probably good arguments there as well.  Again, it is not clear-cut.  But you can avoid doing three part-year returns because you can state that you do not fit the definition of a DC part-year resident.