Working and living in different states

State Income Tax: Living in One State, Working in Another

working and living in different states

If you work in one state and live in another, taxes may not be straightforward. You might be required to file in multiple states. Similarly, if you.

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Although tax rules and regulations vary from state to state, some states have attempted to ease the burden on people who live in one state and work in other states. This is particularly true of states that border one another, such as Iowa and Illinois. In these states, for example, someone who works in Iowa but lives in Illinois does not have to pay Iowa income tax. Instead, the worker will only pay income tax in the state in which he or she lives — in this case, Illinois. This is known as a reciprocal agreement.

Jonathan Mariner, a Major League Baseball executive who lived in Florida but worked in New York, learned the hard way how complicated and expensive it can be to live and work in different states when it comes to paying taxes. So he created an app to help businesspeople, athletes and anyone who lives or works in multiple states. In , while still living in Florida, Mariner began a nearly year stint as both executive vice president and chief financial officer at Major League Baseball. Also see: Get your kids to play these sports to boost their chance at a college scholarship. New York state had other ideas.

If you work in one state and live in another, taxes may not be straightforward. You might be required to file in multiple states. Similarly, if you move during the year or have an internship or clerkship for a few weeks in another state, you may be required to file in more than one state. If you earn income in one state while living in another, you will need to file a tax return in your resident state reporting all income you earn, no matter the location. However, you might also be required to file a state tax return in your state of employment. Sometimes states will have an agreement with other states that it borders. These states have what is known as a reciprocal tax agreement in place.

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Live Here, Work There. Where do I pay state income taxes?

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If your morning commute takes you from kitchen to couch, consider it a win. After all, what could be better than skipping roadway hassles and diving straight into your workday? It took years to convince your employer that you'd make an ideal telecommuter. Now you are enjoying the fruits of your labor, a perfect blend of working at home and traveling to consult with clients in other states. It's all going according to plan — until tax time arrives.

July 06, Most people live and work in the same state. A growing number of people, however, live and work in different states.

TurboTax can help you calculate the taxes you owe to different states. Residents pay tax on all of the income from all sources they received during the calendar year.
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It's not unusual to live and work in a different state, particularly if you live in a major metro area. But it can be a pain figuring out how to deal with the tax implications of having a "home state" and a "work state. Some states have reciprocal agreements, meaning you can work in a neighboring state without having to pay taxes there. The following have reciprocal agreements, and additional info regarding these individual state exemptions can be found in the links. If your work state is not on this list, check out the next section.

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2 COMMENTS

  1. Viollette C. says:

    Live Here, Work There. Where do I pay state income taxes?

  2. Leon B. says:

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