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New Member
posted Jun 5, 2019 11:06:27 PM

Moving states mid year, do I need to do anything in particular to prove residency and not get double taxed

I am moving states mid year and moving to a slightly lower income tax state (SC to CO) so I would like to take advantage of that. I am still working for the same employer in my prior state (SC), just working remotely. I will be updating my address with my employer and when I file I assume Turbo tax will ask me which state I lived in for which dates. Do I need to do anything else tax-wise? I saw an article recently about getting double taxed if you work remotely for an employer from another state. didn't make a lot of sense to me, but just want to make sure I'm not doing anything that would result in additional state taxes. I'm a bit late on updating my address with my employer because I'm waiting for my new house, but I assume that will all be reconciled by Turbo tax based on the dates.


Anything else I should be aware of? This is my first state move since entering the workforce. I've got a couple rental properties I own in SC if that makes any difference. 


Thanks very much for the assistance.

0 15 25142
1 Best answer
Level 15
Jun 5, 2019 11:06:30 PM

When you move to a new state, you become a legal resident on the day you begin living in your new domicile - your "permanent" home (whether owned or rented) - there.  (Temporary lodging such as a hotel room doesn't count.)  Until that day, you remain for tax purposes a resident of the old state.

The date on your new drivers license, voters registration, etc., is irrelevant.  That's because people sometimes move to a new state and don't get their drivers license or voters registration for months or even years.  The date that counts is the date you establish your "domicile" - your permanent home - in the new state.

If you move in 2018, you'll be filing a part-year resident return in each of the two states.  This FAQ explains how to do that in TurboTax:  https://ttlc.intuit.com/questions/1901227-how-do-i-file-a-part-year-state-return

After you move to CO your rental income from your SC properties will still be taxable by SC, as well as by CO.  But you'll be able to take a credit on your CO return for any income that's taxed by both states, so you won't be double-taxed.  (You'll take a credit on the CO return for the SC taxes you pay after becoming a CO resident.)

15 Replies
Level 15
Jun 5, 2019 11:06:29 PM

Your rental income is fully taxable in SC.
You will need to check the CO state website for residency requirements, as well as check the SC state website to see what, if anything, is required to become a non-resident. Do understand however, that at best, you will be filing a part-year resident state return for both states, in the year you move. You will not be filing a non-resident return in either state, in the year you move.
See <a rel="nofollow" target="_blank" href="https://www.colorado.gov/pacific/sites/default/files/Income6.pdf">https://www.colorado.gov/pacific/sites/default/files/Income6.pdf</a>
I can't find any guidance really, for terminating residence in SC. But I do know that you are considered a resident until you do things like turn in your SC voter registration card, SC drivers license, and SC issued hunting or fishing licenses, and the like. But I think that's just the tip of that iceberg.

Level 15
Jun 5, 2019 11:06:30 PM

When you move to a new state, you become a legal resident on the day you begin living in your new domicile - your "permanent" home (whether owned or rented) - there.  (Temporary lodging such as a hotel room doesn't count.)  Until that day, you remain for tax purposes a resident of the old state.

The date on your new drivers license, voters registration, etc., is irrelevant.  That's because people sometimes move to a new state and don't get their drivers license or voters registration for months or even years.  The date that counts is the date you establish your "domicile" - your permanent home - in the new state.

If you move in 2018, you'll be filing a part-year resident return in each of the two states.  This FAQ explains how to do that in TurboTax:  https://ttlc.intuit.com/questions/1901227-how-do-i-file-a-part-year-state-return

After you move to CO your rental income from your SC properties will still be taxable by SC, as well as by CO.  But you'll be able to take a credit on your CO return for any income that's taxed by both states, so you won't be double-taxed.  (You'll take a credit on the CO return for the SC taxes you pay after becoming a CO resident.)

New Member
Jun 5, 2019 11:06:32 PM

Thanks Tom, that was the answer I was hoping for.

Level 15
Jun 5, 2019 11:06:33 PM

You're welcome, but see my edited response above.  My first response overlooked the fact that you'll still have rental income from SC after your move.  But you will not be double-taxed, as explained above.

Level 15
Jun 5, 2019 11:06:35 PM

Also TomDB (and correct me if I'm wrong please) what you state basically applies to the federal side. For state taxes, proving and establishing residency may have different requirements depending on the state.

Level 15
Jun 5, 2019 11:06:36 PM

A taxpayer's state of residence doesn't affect his federal taxes.
Most if not all states base residency on the concept of "domicile."   You are a resident of the state in which your "domicile" or permanent home, is located.  And a taxpayer can have only one "domicile" at a time.  I know of no state that bases its definition of residency on the date of a drivers license or voter registration.
If a dispute were to arise as to a taxpayer's domicile, a state might require some proof.  A utility bill usually carries more weight than a DL.  When people move they can delay getting their new DL for months or even years, but they usually can't delay getting electricity.

New Member
Jun 5, 2019 11:06:38 PM

Hi Tom,

Thanks so much for this info, i wonder if you can please expand upon the timing of claiming a credit for taxes paid to another state?

Example: move from State A to State B mid 2018 and continue to work remotely for same company in State A whilst taking up residence in State B. So, need to file 2018 state returns for both State A and State B. Will the credit for tax paid to another state be claimed in the 2018 return or does one need to wait until the following year, i.e. claim the credit on the 2019 return?

Thx!

Level 15
Jun 5, 2019 11:06:40 PM

@mark.summit - In your scenario, the "other state credit" may or may not come into play.  It would depend on the particular states involved, because some states tax non-resident remote workers, while others do not.

Level 15
Jun 5, 2019 11:06:41 PM

Basically, if you moved from state A to state B mid-year, then you will be filing a part-year resident state return for both states. Generally in such a scenario, credit by one state for taxes paid to the other just don't come into play.

Level 15
Jun 5, 2019 11:06:42 PM

The "other state credit" can come into play if the taxpayer moves to a new state, but continues to physically work in the old state.

New Member
Jun 5, 2019 11:06:44 PM

Thx all! Some more detail - moved from NJ to OR mid 2018, continued to work remotely for NJ-based company. State of NJ already withheld the usual amount of tax (indicated on W2) and now when using TT to complete the OR part-year return it is suggesting tax is now due to OR, unless it is possible to claim credit for tax already paid to NJ? Would this credit claim be for 2018 tax return or 2019 return?

Level 15
Jun 5, 2019 11:06:45 PM

Tax is definitely due to OR.  OR can tax all the income you earned after you became an OR resident.  

You can take a credit on your OR return for taxes that were paid to a non-resident state on income that was taxed by both the other state and by OR.

It appears from what you say that NJ has taxed your full 2018 income (they withheld taxes all year). Therefore, your income AFTER the move was taxed by both states, and thus you can take a credit on your OR return for the taxes paid to NJ on that portion of your income.
So you'll need to determine 1) how much of your income was earned as an OR resident; and 2) how much tax you paid to NJ on that income.
NJ is one of the few states that tax non-resident remote workers, if the worker is working remotely for his own convenience, rather than the convenience of the employer.  This topic is well-discussed here:  <a rel="nofollow" target="_blank" href="https://www.thetaxadviser.com/issues/2010/feb/apractitionersguidetothetaxationoftelecommuting.html">https://www.thetaxadviser.com/issues/2010/feb/apractitionersguidetothetaxationoftelecommuting.html</a>  

New Member
Jun 5, 2019 11:06:50 PM

TomD8 - thanks so much for your continued updates on these topics, I sincerely appreciate it. Your comment that NJ taxes non-resident remote workers was really helpful and I think I have it figured out now.

Level 15
Jun 5, 2019 11:06:53 PM
New Member
Jul 1, 2019 5:59:13 AM

Tom,

Good words. Would love some guidance on my situation. NC vs GA, partial year resident timing/taxes.

NC - house there (sold May 2018, family rented back until June 2018). Only income from NC sources was unemployment Jan18-Feb18.

GA - started new job Mar18, used temporary living relo expense for hotels 3 months Mar18-Jun18 by myself, and six weeks Jun18-Jul18 with family. Bought house early Jul18, moved in late Jul18 after repairs. All income except for NC unemployment was from GA employer.

Is all income from GA taxable to GA, even though my family still lived in NC for a few months? I know that states can't double-tax the same income, but I don't see that offset on the GA form. Only offset is for income earned in another state while a Georgia resident.

Thanks for your guidance. Happy to clarify anything above.

--CT