If I resided in State A for 3 mos. and earned rental income in State B for 12 mos., do I only need to claim 3 months of income(and expenses) on State A's tax return?

[thinman77]

During 2016, I lived for a 3 month period in PA while owning a home in FL.  Even though the income from the rental has already been reported on my federal return(FL doesn't have state inc. tax), my understanding is that I'd have to report the income received from the rental to PA as well.  What I'm not finding is a clear answer on whether it's required to report the yearly total amount of income/expenses for the property on the Schedule E for PA, or just the portion of each that was gained/spent during the 3 month period I was residing in that state.  Hoping someone may have a definitive answer here.  

Any and all help is appreciated.

[GeoffreyG · Accepted solution]

Your self-analysis is essentially correct.

All of your income (including rental) is included on your federal tax return, because that is the same in whichever state you live.

As a 3-month resident of Pennsylvania, that makes you a part-year PA resident for tax purposes.  As a part-year resident of PA, you'll only have to pay income taxes on money you received while living in PA.  This includes income earned in other states as well (such as a Florida rental property, but only that portion attributable to the time you were a PA resident).

If you then moved to another state for the remainder of the year, that would make you additionally a part-year (9-month) resident of that second state.  If this other state is Florida, then you don't have to pay any income taxes there, or file a personal income tax return there, because Florida does not have such a system.

However, it is not true that Florida does not have any taxes at all (other than a sales tax).  Because you owned a rental home there in 2016, Florida considers this act to be one of running a business.  Therefore, you may need to file Florida Form DR-405 (i.e, Tangible Personal Property tax return).  Don't worry too much, though, because the FL tangible personal property taxes tend to be fairly low, and the software needed to file this particular return is included in TurboTax, in the FL state module.  If you indicate to the program in the federal Schedule E data entry that you own a FL rental, it will in fact appear automatically in the state section of the program.

So, in effect you'll be a part-year resident of two states for 2016, and report 3-months of income (including FL rental) to PA, while the remaining 9-months is attributable to your other state.

Hopefully that answer is coherent and understandable.

If you have further questions, encounter any difficulties, or just want to speak with a live tax expert who can walk you through your TurboTax entries (including the ability to screen-share with your computer), please feel free to contact us.  We would be happy to help you (and as a paying TurboTax customer, the call is free to you).  Here is a link where you can create a support ticket and reach us:

https://support.turbotax.intuit.com/contact/

Thanks for asking this important question.

[thinman77]

Thanks!