Filing taxes in two states

[Cymbalgirl21]

What's the difference between filing a tax return in both California and New York in one year, vs just new york? Will I make less money if I file in two states? Like if I live in California and work in New York will I make less money? Also if I technically qualify as homeless, would that be better for taxes? Thank you so much for your help, you're incredible!!

[Corrlich44]

Hi Cymbalgirl21,

Filing multi-state tax returns is a requirement based on where the income was earned (if any) and may be subject to different state income tax rates by state.

In the long-run, you would be paying the appropriate tax rate where the income is being earned, but not subject to double taxation.

And sorry to hear about the homelessness part.

That will unfortunately not impact the calculation of income tax on the actual earning of income, above any standard deduction write-off the IRS or the states would provide you first.

[Cymbalgirl21]

Awesome, thank you so so much for your amazing answer!! That means a lot. Basically my permanent address is in California but I haven't lived there for a long time and have been on and off again homeless. But currently I'm working as a live-in nanny in New York. So if my address is in California but I'm working in New York is that going to cost me extra money during taxes? Thanks so much again and hoping you can answer just so I know for sure, I'm really nervous about having to pay more taxes.

[Corrlich44]

Hi Cymbalgirl21,

Thank you for your thoughts and I wish you the best as well, moving forward.

If you have a legal address in California, which includes a driver license, voting rights and bank accounts, California is your legal home, if you have an address you can use.

This would imply you would have to prepare and pay NYS income tax ONLY, of which you would receive state tax credit for the tax possibly owed to the State of NY and not subject to NYC tax, since your legally a non-resident of NYC, regardless of where you were working.

If you do not, the residence of your NY home would be your tax home and only pay NYS (and NYC) tax, and not California, as if you had moved during the time away from California.

[Cymbalgirl21]

Amazing, thank you so much, you're incredible!! Is it cheaper for my taxes to keep my California address, or change it officially to a New York address? Thank you so much again for the information and advice, it's so hard to find this information in a clear straight forward form, and it means a lot to me to have the information.

[Corrlich44]

California and New York State have the highest tax rates in the country.

The minimum residency issues have to be addressed first.

That is your guide. You won't have a choice in which state to SOLELY file a state tax return with.

You are either a RESIDENT of California and NON-RESIDENT of NYS based on existing voting rights and driver license or you are a RESIDENT of NYS and that's it

[Corrlich44]

If you do not have any legal ties to California (driver license, voting rights, bank accounts), you've effectively moved to NYS.