Ask anyone and they’ll tell you the same thing: moving is terrible and they hate it. Not only do you have to worry about packing up and moving all your stuff from one location to another, you also have to change your address, get new healthcare, register to vote, get a new driver’s license, and all that jazz.

Then there’s the part where you have to adjust to a new neighborhood, find new friends, settle into a new job, and all that jazz.

Guess what? There’s one more thing you have to do: figure out your taxes.

A tale of two (or three) tax returns

If you moved to another state this year, taxes are about to get a lot more complicated, because now you have to file not one, not two, but THREE tax returns.

The first is your federal tax return, which should be pretty much the same as always. So far, so good. But in addition, you’ll have to file a tax return in each state you lived in (that means the one you moved from and the one you moved to). 

Introducing: the part-year resident tax return

Before you start sweating, no, filing three tax returns doesn’t mean you’ll pay triple taxes. Federal taxes will be the same as before, and for state taxes, you’ll file two part-year resident tax returns. This means you’ll only be taxed based on the income you received in each state (rather than your total income for the year).

Let’s say, for example, you lived in Washington through August 31st, then moved to New York September 1st. You would pay Washington state taxes on the income you received through August 31st, and New York state taxes on the income you received starting September 1st.

But what about…?

What if you received income from interest or dividends? In that case, you’ll divide it based on the number of days you lived in each location. You can also report income per state if you know exactly how much you earned in each location. For instance, maybe you closed your old savings account in Washington and opened a new one in New York, in which case you’d have pretty exact income numbers.

Some states require you to report all your income for the year if you’re a resident of that state at the end of the year. But even if you do report all your income twice, you won’t have to pay double the amount. On your new state’s tax return, just claim a tax credit for any taxes you paid to your old state, and you shouldn’t have to pay that again in your new state.

Have questions about filing taxes in two states? Connect with one of our CPAs and get all the help you need.