Multiple states

[jack_2035]

For the year 2020, I lived in NH (tax-free state) for the Jan-2020, and for the rest of the year, I was in IL. 

So, my question is all the capital gains which I had made in 2020, do I have to pay the taxes in IL for all the 12 months or will it be pro-rated for 11 months? 

e.g. If I had made $12,000 in capital gains in 2020, do I have to pay the IL state tax for the entire year or pro-rate the amount to 11 months that will become $11000 and pay taxes on it.

[Hal_Al · Accepted solution]

Simple answer: You  have to pay the IL state tax for the entire year.

It goes by where you lived when you received the income (realized the capital gain).  So, if you sold the investment in January, the gain is NH income.  If you sold it after your move, it is IL income.

[jack_2035]

Thank you for your reply @Hal_Al 

So, in case if I had made $3000 in Jan-2020 (NH Income) and $9000 (IL Income) for the rest of the year as capital gain, then I have to pay IL taxes only on $9000. Is it correct understanding?

[DanielV01]

Correct.  However, keep in mind that while New Hampshire is generally a tax-free state, they do tax interest and dividends above a certain level.  Make sure that the capital gains are not classified as dividends if this is the case, as those would be taxable in New Hampshire.

[jack_2035]

Thank you  @DanielV01 for confirming and also sharing the details on NH taxation rules.

Yes, I am well within the limits for NH.

Cheers,

Jack

[DanielV01]

You are very welcome @jack_2035