Living in NC, working in SC

[falalala]

My spouse and I live in NC. I have worked in NC for all 12 months. Spouse worked in NC for 9 months and now works for a company located in SC (last 3 months). However, she has hybrid work arrangement and works from home (NC) for 4 out of 5 days on average. It is clear that all my income, our taxable income (e.g., interest), and my spouses NC income from 9 months will go only on NC return only.

The question is around the income from the last 3 months. Should all of that income still go on SC return if she worked remotely (from NC) for 50 of those 60 working days? Thank you.

[Anonymous_]

@TomD8 

[TomD8]

Q:  "Should all of that income still go on SC return if she worked remotely (from NC) for 50 of those 60 working days?"

A:   No.  Only the income earned from work actually (physically) performed within SC is taxable by SC.

[falalala]

Thank you! How do we handle vacation time (PTO)? Is it NC or SC income? The vacation took place in neither of the two states.

Thanks again!

[TomD8 · Accepted solution]

@falalala --

Since you are residents of NC, ALL of your income is taxable by NC, regardless of where earned.  Income earned in SC is also taxable by SC.  PTO earnings from the SC employer should be pro-rated according to the days worked in/out of SC.

You may claim a credit on your NC return for the taxes paid to SC on the portion of your income that is taxed by both states, so you won't be double-taxed.

[NCperson]

@falalala if you are using turbo tax for both states income tax filings, Turbo Tax will automatically put the credit onto the NC tax return.