Filing in two states but only lived in one of those for 2 months

[krn42]

We are trying to file our taxes and have two states to enter in (PA and DE). We only lived in PA for two months, however, it is showing that we owe for a full twelve months. The biggest area of concern is for our two home office expenses (ESL tutor and another for working from home full-time). We have very few expenses for the two months of being PA residents and would really like to keep that portion to a minimum, if we can. Any advice is welcome. Thank you!

[Cynthiad66 · Accepted solution]

@krn42

When filing multiple state returns you should enter the home state on December 31, 2021 last.  That affects how the state taxes may translate.  Also important to file your state return as Part Year Resident for each State.  That should trigger the correct translation of state taxes.

Instructions for Non-Resident and Part Year PA Taxpayer

Part-year residents are subject to PA personal income tax on all income earned, received and realized from all sources when residents of PA. Part-year residents are not subject to PA tax on ordinary interest, dividends, gains, intangible property or gambling and lottery winnings from PA sources while a nonresident.

Example:  you lived in NY for 10 months then move to PA.  You enter the NY return first then enter the PA return

Home office expenses you can Pro rate for the length of time in each location or take the Simplified Method for Home Office Deduction.  See below

Simplified Home Office Deduction

[krn42]

Do you know how it works for our home office expenses? I don't really see expenses coming up within that link. We are finding that by putting in our credits, it messes up the state portion. It asks for everything in full detail for PA, however, it also shows those credits for DE. We really only want to claim those credits in DE since we were not using the home offices in PA for those two months.

[DawnC]

It depends on whether your home office expenses are from being self-employed or from being an employee.   When you prepare part-year state returns, you have to allocate the income and expenses between the two states.   

If you had $200 of  expense for the year and lived in each state for 6 months, you could allocate $100 to each state return.    Each return will show the full amount on your federal return and you enter in the amount you allocate to each state which total to the full deduction.   If none of the expense belongs to that state, enter 0 and then enter 100% of the expense on the other state return.    

If you are self-employed, home office expenses go on Schedule C.   Here is how to enter multiple home offices if you are self-employed.

Employees working at home for an employer cannot deduct these expenses on the federal return.   DE doesn't allow the deduction on the state return but PA does.   So, if you are claiming office expenses as an employee (not self-employed), only the expenses in PA can give you a tax deduction.