College student with military parents doing a remote internship

[crabbygirl02]

Hi All,

Just finished my daughter's federal tax return and trying to figure out where we need to file her state. My husband is USAF AD and we are TX residents (no state income tax, yay!). We have not filed a state return for our daughter (college student that we claim). She had an internship (headquartered in DC) and made $7,300. She also worked at her University and made $675 (SC). She entered school out of VA, but we live in IL right now (temporary, headed back to VA this summer). She listed this as her address for 1099 and W-2 purposes, but has never lived here. Where are we paying state taxes to? She also has a little investment income. Help!!  

[KrisD15]

A student is treated as a resident of the same state as their parents. 

If needed, the student would file a non-resident return for the DC income and also the same for Virginia. 

The "Standard Deduction" for dependents is figured on a worksheet, depending on their income. 

If the student made 7,300 in DC and 675 in VA, there would be NO filing requirement for either state. 

DC worksheet page 21

[crabbygirl02]

So does she maintain Texas residency for filing taxes since we are TX residents? She is 20 and we claim her as a dependent. There is no state income tax in TX (so no filing). That is kind of what I have been using each year, but we have never had multiple states and the $7,300 internship. I just want to make sure we are paying whoever we need to. Thank you for the answer. 

[BillM223]

Your daughter will be a Texas resident until she changes her domicile to another location. Your domicile is where you live, where you have a drivers license, where you receive mail, where you have your phone, and where you are registered to vote.

As you can see, this is not a cut-and-dried definition, but one way of looking at it is - where do you tell your friends that you live? And where is the place you are returning home to?

As Kris said, it is common for college kids to maintain their parents' domicile, until such point as they  go somewhere to "stay" - it does not have to be permanent, but to change your domicile requires an effort on your part.

As for filing other states, a young woman in her situation might file a nonresident DC return in order to recover her withholding - your (I mean, her choice).

[crabbygirl02]

No withholding, so I am thinking we will just not file anywhere and I will make notes on our copy of the return as to why. If I divide it out over states she wouldn't owe much either. If they really want it, I guess they can figure it out. Thank you both for replying and giving me some insight. Happy tax season!