Determining correct state for tax payment and deductions after double relocation

[noviceattax]

Context:

1. From beginning of this year I was working for the company A in IL and living in IL. Then in middle of the year I moved to NJ to work for company A only at their NJ site. I quitted from A on date x.
2. From date x + 1, I started working for another company, say B, in California and moved to California.
3. Company A sent me final paystub on date x + 4 which included:
   1. Final wages (last few days), $W, for the work I did for A in NJ while living in NJ.
   2. Repayments I had to give back to company A, say $R.
      
      1. This repayment of $R was of the relocation benefits they gave me for the IL to NJ move. I repaid the entire benefit they gave me (including the commission of the relo management agency).
   3. Payout for unused accrued PTOs at A, say $P.  I accrued PTOs while I was in NJ as well as while in IL (this year only).

Question:

1. To whom do I need to pay the state taxes on the $W. NJ or CA or both?
2. To whom do I need to pay the state taxes on the $P. NJ or CA or IL or a mix?
3. Will I get some tax deductions on $R? If so, from which state IL, NJ or CA?

Please feel free to reach out for any clarification or if you need more details.

[Critter-3]

You will file a part year IL return on the IL wages earned while in IL.  A non resident NJ return for the income earned in NJ.   And a part year CA return for the income earned when you lived there.  

[noviceattax]

Thanks, @Critter-3 for commenting. I do understand that I will be filling taxes for three states part year. However, this doesn't  answer the specific question I was asking about. Please let me know if my question wasn't clear. I will be happy to clarify. 

[NCperson]

@noviceattax for 1) and 3) simply follow what is reported on the W-2.   That is where you worked and earned these dollars. 

@Critter-3 why the non-resident return in NJ? He lived there.  Why isn't it part year returns in all 3 states? 

2) is a more complicated to explain - I will come back to that later. did you get the Relo benefit and pay it back in the same calendar year? 

[Critter-3]

@Critter-3 why the non-resident return in NJ? He lived there.  Why isn't it part year returns in all 3 states?   Short answer is a part year return wants to know when you moved in OR moved out and you did both ... so a non resident return is what fits your situation.  

As for the "complications" ... I highly recommend you seek local professional assistance in what is bound to be a sticky situation. 

[NCperson]

this is the ask in TaxSlayer for the NJ situation... @noviceattax what were the actual dates you were living in NJ? 

Resident:

You are a resident if you maintained a domicile in New Jersey OR maintained permanent living quarters AND spent more than 183 days in New Jersey during the tax year.

Non-Resident: 

You are a Nonresident if New Jersey was NOT your domicile and you spent 183 days or less in New Jersey OR if you spent more than 183 days in New Jersey AND you did NOT maintain a permanent home.

[noviceattax]

@NCperson , thanks a lot for helping with this. Thanks, @Critter-3 . I appreciate the help from you guys.

I lived in NJ for a continuous 48 days period and for those 48 days my work location for the company A was in NJ. I had a home in NJ and got an NJ state driver's license within the period. Then, on the 49th day I moved to CA  and that was my start day with the company B, and my work location for the company B, from the first day with them.

However, company A sent my final paycheck on the 52nd day. All the money earned in this paycheck was for the work I did in NJ while living in NJ (and maybe the PTOs payoff that were accrued in IL too) and in this paycheck they withheld state taxes for NJ only. However, I had already started living in CA by then but my new residence address wasn't updated in their system by then, so they had no reason to hold taxes for CA. Now, I am not sure if the final paycheck amount should be taxed in CA too, as the day when I got that money I was actually living in CA, though I earned that while working and living in NJ.

Please let me know if you need any further details. I am not sharing the exact dates to maintain some anonymity but if the exact dates really matter I can share those as well.

[noviceattax]

@NCperson Regarding the relocation benefit and paying it back, yes they were both in the same year.

[NCperson]

@noviceattax for me, then you are going to file 'part year' residence in all three states.  Again, I would just report to each state the amount of income that is stated on the W-2.  Presumably your W-2 shows three states, right?  Assuming you are going to do this tax return in TT, just answer the questions in the prompts and it will come out correctly.  There is no 'double taxation'.  You will only report the income earned in each state to that state. 

for that last NJ paycheck, you were living and working in NJ when you earned that money.  Yes, you could make the case that you were living in CA when it was received, but then you are not going to report on your tax return what is listed on the W-2.  That risks questions and audits from NJ - to me - not worth creating that headache, even though it may be technically correct to list that last paycheck as earned in CA.  (CA is never going to know and won't question why you are reporting more income than the W-2 states - they are glad to take your money!)

On the repayment, can you go through that again? 

When you received the bonus, which state were you living in and which state W-2 is it listed under? 

When you repaid the bonus, which state were you living in and which state W-2 reflects the repayment? 

what is your concern?  the fact that this is all within one tax year makes it not complex. 

[noviceattax]

@NCperson , thanks got it.

Regarding your follow up questions:

1. When you received the bonus, which state were you living in and which state W-2 is it listed under? 
   1. I got the cash lumps bonus when in IL. But some of the expense reimbursements came when in IL and some when in NJ.
2. When you repaid the bonus, which state were you living in and which state W-2 reflects the repayment? 
   1. I repaid all of if when living in NJ. I haven't got the W-2 yet, but I assume it will be NJ.
3. what is your concern?  the fact that this is all within one tax year makes it not complex. 
   1. My concern is that since now I have repaid all the bonus back and the expenses that means I have paid for the expenses now, so can I claim tax rebate on the expenses?

[NCperson]

@noviceattax let's focus on the expenses.  What were these expenses? moving expenses? 

if you were reimbused for moving expenses that was taxable income to you (and you can not take a deduction for them); they should be reflected in the W-2.  When you paid the money back, and since it was within the same year, I would suspect it would reduce the W-2.  

you get no tax benefit on the relocation expenses.  In effect, since you repaid the relo expenses to the employer, you paid for that relocation personally and neither the employer or the IRS is going to help you out with that.  Presumably you got a better paying job in CA, so in the end, you 'win', 

it this crossed different tax years, then it would be quite the complex situation.  There would be a path to resolution, but not easy.  You don't appear to have that situation here. 

Are you overthinking the situation and maybe best to wait until you actually have the W-2s in January?    

[noviceattax]

Yeah, maybe waiting for W-2 could be a good option. Thanks for explaining the situation.

Thank you, for all the discussion @NCperson .