You might think that part-year taxes are proportional to the amount of time spent in the state, but that's often not the case.
Most states divide the income earned in that state by the total annual income to come up with a percentage. That percentage is then applied to the state tax on the entire year's income—no matter where it was earned—to prorate the tax liability. TurboTax follows the rules for each state.
Below is a behind-the-scenes look at how part-year tax calculations are performed in most states (it gets a little geeky, so beware).
What counts as income?
In general, taxable income for part-year residents includes earnings received while a resident of that state, as well as income from tangible property (property that can be physically touched, such as buildings, cars, computers, or furniture) located in the state.
Income from intangible property (such as interest income, dividends, and pensions) is generally reported to the state you were living in when you received the income.
