I have split my income between two states but it keeps saying that my taxable income in each state is my total income, how do I split my income between states?

[usernamenotfound]

When I am splitting my income between states, my total income keeps being the amount taxed by each state. I split the income at the step to split when it comes up, but then when the state review comes up it says that my full income is being taxed.

[BillM223]

It depends on which two states you are filing in. Generally, you enter the non-resident state first, then the state of your residence. 

Then in many cases, the tax is calculated for the non-resident state, and that tax is carried back to your resident state as a credit, so that you are not paying two on the income twice. That is, instead of allocating your income, it allocates your state tax.

But it really depends on which two states. So which two states and which one is your state of residence?

[Mike9241]

what states.   most likely you can only do it once you get to the states.  I assume that you answered that you lived in state x at the end of the year and state y from the beginning of the year to some date before 12/31.  then under each sate there should be a form it might be labeled NR or PY which you should get to once you finish the federal and start on the states.  you should see the states listed and see that each is marked part-year resident.  if a state does not have a personal income tax you won't see it. 

[SteamTrain]

And even for a part-year tax return, it can depend on what states are involved.   For part year residents, a few state have you file as either a full-year resident (taking credit for taxes paid to the other state) or as  a full year non-resident, reporting just the income from when you were in-state.    SO that can be confusing too.

[usernamenotfound]

I moved from Montana to New York State. 

[DaveF1006]

it depends. Try the steps below. When you have both resident and non-resident income, you must fill out the tax forms in a special order. Your resident state may tax all income but gives a credit for income taxed by another state.  Please carefully follow these directions. 

1. First, prepare your Montana State return first. This creates your tax liability for the non-resident state.
2. THEN prepare your resident state return and it should generate a credit for your income already being taxed in the non-resident state.
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.

The point it, it may appear you are being taxed for all your income in both states but if the income is allocated correctly, you will receive credit for taxes paid in Montana in your resident state. 

[wyatt206]

I am in a similar situation where I worked in MT for the first half of last year and WA for the second half, a state without an income tax. Turbo tax is calculating my entire income earned as if it was earned in MT even though I specifically called out what amount was earned in MT. Since I don't file WA income tax how do I get that correction?

[LenaH]

To clarify, which state did you live in during 2021? 

@wyatt206

[wyatt206]

Hi Lena, I lived in Washington during 2021. 

[LenaH]

Nonresidents of Montana are taxed on their Montana sourced income. However, this tax is first calculated based on taxable income determined as if the taxpayer was a resident, and then apportioned to the amount of Montana source income included in Montana Adjusted Gross Income. This apportionment is determined using the Nonresident/Part-Year resident Ratio Schedule. I put a screenshot of the schedule below.  Therefore, it may appear as if you are being taxed on your entire amount of income, but you really are not. They are allocating your income towards the end of the return. 

To specify, your nonresident ratio (which is your Montana income divided by your total income) is calculated on Form 2, page 8. You will then see your tax liability for your Montana income on Form 2, line 18. 

@wyatt206