Unemployment From WV, Resident of Virginia

[drchris17]

I am really confused about filing my unemployment on my state return(s) because I worked in one state, receive unemployment from that state, but live in another state.  This is also my first time dealing with unemployment.  Here's the situation.

• I worked in the state of West Virginia until August 2020.   
• When I became unemployed, I moved and became a resident of Virginia in August 2020 from West Virginia. Technically, I'll be a part-time resident in both states on my taxes according to TurboTax. 
• I started receiving unemployment benefits from West Virginia in September 2020.

I am trying to figure out where I file my unemployment benefits and which state they are taxable in, if at all. 

[JotikaT2 · Accepted solution]

You will report them in Virginia.

Virginia and West Virginia have state reciprocity.  This means that you only have to pay taxes on income from the other state within your resident state.  Since you lived in Virginia when you started receiving your unemployment income, it will be taxed within Virginia.

State reciprocity

You will still need to file two part-year resident tax returns as you did reside in both states.  Be sure to only report the income you earned in West Virginia on that state tax return while you were a resident of West Virginia.  

Unemployment compensation is taxable.

Unemployment taxes

[drchris17]

Ok, this makes sense and it is what I thought was correct.  So this leads to my next question(s) on how to enter on TurboTax.

The Virginia State Return for the Part-Year Allocation says "Enter the portion of the following items you earned or received while a Virginia resident."  This is where I would enter my unemployment since it all came to me while I was in Virginia.  I will then file my Virginia Tax Return even though they do not tax Unemployment Benefits because it still has to be counted there. 

The West Virginia State Return has a question that says "Select the part-year information for West Virginia that applies to you, and enter the date of your move."  Which option is the correct one?

• I  Moved out of West Virginia and had WV Source Income During my Period of Nonresidency?
  • It says to "...enter your West Virginia part-year income allocations and adjustments to income. You will need to enter amounts for the income earned while you were a resident including West Virginia source income you earned while a nonresident. Enter a zero, if none."
  • If I choose this option and enter my WV unemployment as "West Virginia Income While Nonresident", it appears that WV is taxing the unemployment amount and decreasing my refund. 
• I Moved out of West Virginia and had no WV Source Income During my Period of Nonresidency?
  • If I choose this option, my unemployment is not taxed in WV and my refund stays the same. 

I am not sure which I choose since unemployment is taxed in the state I was a resident (VA) even though VA doesn't tax it when I received it or do I still pay taxes in WV on it.   Any help would be appreciated. 

[MaryK4]

You should select-

"I Moved out of West Virginia and had WV Source Income During my Period of Nonresidency".

Unfortunately, West Virginia taxes unemployment to nonresidents if they worked in West Virginia to qualify for the unemployment. 

@drchris17

[drchris17]

Thank you so much! I’ve never had this situation and have been so confused.