W2 Address Change

[GauchoOwlDad]

Doing my daughter's taxes.  She moved from PA to NC in December 2021.  She told her employer to change her address to NC, but they did not get it changed until after her first paycheck.  Now she has both PA and NC state taxes on her W2, but she lived in NC for all of 2022.   How do I handle this?  Do I need to file a return in both states?

[PattiF]

Yes, she will have to file in two states. She will file as a non-resident for Pennsylvania to claim a refund of the state taxes that were withheld. And then file a return as a resident for North Carolina. 

Here is a TurboTax Help article about filing as a non-resident.

[GauchoOwlDad]

Thank you. 

So when I file the NC return, am I including the combined Gross Income of the 2 states and then paying what should have gone to NC for that 1 paycheck?

[ErnieS0]

North Carolina starts with federal income but allows part-year residents to only report the amount they made while living and working in NC. 

Your daughter won’t claim a credit for double-tax income on the NC return because she is filing a non-resident return to get back all her PA withholding.

On the Wages Allocation screen, enter the amount of income earned in PA as Not NC Source Income. This will be subtracted.

To get a refund for PA, follow the instructions in "I am a resident of a reciprocal state working in PA. How do I receive a refund of the PA state tax ...

The procedure is generally the same.

[GauchoOwlDad]

Ok so I'm confused.  She was not a part-time resident in NC.  She lived and worked all of 2022 in NC, it was just a timing issue with her employer changing her address to NC.  Thus, her first pay of the year in 2022 had PA withholding and income, but it should have been for NC.   So I am saying, her W2 has appox $3K income for PA and approx $70K for NC, but NC should have been $73K.   So I file PA state return to get a refund of the withholding, but do I file NC for the $70K which is what was on her W2 or the $73K that it should have been on her W2? 

[MaryK4]

You have to enter the North Carolina source income so $73,000.  The W2 State wages are not necessarily the state source income, it is the amount the employer based the withholding on, so if they made an error you cannot rely on the W2 amount. @GauchoOwlDad