State taxes from another state

janderson2143 · ‎April 4, 2022

I live in South Dakota and have for all of 2021. My old job in Minnesota from 2020 paid out my PTO in 2021, so I have a W2 from them. How do I file this?

ErnieS0 · ‎April 5, 2022

File a nonresident Minnesota tax return and report your paid time off as MN income.

It's taxed by MN because you earned the money while working in MN, even though it was not paid out until you moved to South Dakota.

How Minnesota Taxes Nonresident Income

South Dakota has no income tax so you don't have to file a SD tax return.

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Hal_Al · ‎April 5, 2022

The general rule is: your report all your income on your home state return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state. Your home state (SD) not having an income tax does not get you out of paying tax to the works state.

@ErnieS0 's comment "It's taxed by MN because you earned the money while working in MN" is generally correct and most states take the attitude that severance pay and bonuses paid after the employee left the state is still considered as earned in the work location state. However, that is not a hard and fast rule, for example, if you had already moved while being paid for time off. If you got a W-2 for that income and MN is in box 15, with the amount in box 16, then you should probably file for MN.