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gur1
Level 2

Multi state tax -Capital Gain

Request inputs on below ..

I  have been a resident of Illinois for the past three years. I was renting an apartment. In May 2024 I moved to Michigan and working remotely for a job in Illinois. I still have a rented storage in IL. In 2024 my total stay in Michigan will be more than 180 days . In 2025 I might have to move back to IL state.


I have question on how state tax will be deducted

  • If I sell stocks lets say in Nov 2024 while I am staying in Michigan then do I need to pay tax state tax on stock gain to only Wisconsin  or to both states  ? Can tax softwares like turbo tax can differentiate which  state should tax stock gains ?
  • Same question for Interest earn on Bank interest .
  • Does  it matter for which state I am holding driving license ? For example if I am residing in Michigan but still holding driving license of Illinois .I will be considered resident of Michigan  or Illinois
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1 Reply
JotikaT2
Employee Tax Expert

Multi state tax -Capital Gain

It sounds like you will be a resident of Michigan when you sell your stock in November, 2024.  You will report the gain on the stock sales based upon your state of residence. I'm not sure why Wisconsin would factor into this.  Please provide more details as to how Wisconsin factors in so we can address that if it in fact a state you have a question about. 

 

When you prepare your tax returns for each part-year state resident tax return, you will be prompted in the state interview questions for an allocation of which state the gain or loss would be allocated to.  Pay close attention when answering the state questions to ensure you allocate the capital gain or loss to the correct state that you resided in when the stock was sold.  The bank interest would be allocated between the states depending upon the time you resided at each residence.

 

On a side note, it's also important to note that both Michigan and Illinois have state reciprocity.  This means while you reside in Michigan but work in Illinois, all of your wages are only reportable in Michigan so you do not have to file an Illinois state tax return for wages from Illinois sources while you reside in Michigan.  (However, based upon your specific circumstances, you will still need to file 2 part-year state returns for 2024 because you resided in Illinois for the first few months of the year before moving to Michigan.)  Please see this link for more details.

 

As far as residency, typically states look at your intent.  If you intend to stay in Michigan or have lived in the state for at least 183 days during the year, your domicile will be considered to be Michigan.  Illinois also uses intent in determining which state you are considered a resident of.  Please see the following links for more details as it relates to each state.

 

Michigan residency defined

Illinois residency defined

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