Triple Tax Trouble (maybe?)

Gafoto

Here's the deal.

Legally I'm a resident of the state of Virginia (drivers license, health insurance in that state, etc). I earned no legal income in that state this year. I took a job with the Forest Service in California in May and worked there until the beginning of this month. I'm going to be living in Utah for the rest of the year and likely earning income there too. I won't be returning to Virginia and I'm actually kind of unsure where I should establish residency as I will be moving seasonally every 6 months for the next couple years I believe.

Does anyone have any idea how I should be filing my taxes? Federal taxes seem straightforward, just line up the W2s. I'm a little confused about state taxes and where I should file and for what incomes. Anyone else been in this situation?

useless4

Check a tax lawyer. VA is highly vindictive and serious about collecting state income taxes from people who have residence here (as established by factors such as mailing address, drivers license etc) and earn income tax elsewhere. Alot of people who live in Northern VA work "elsewhere" so it's a benefit to them to track everything they can claim not matter how lightly the connection is.

illig

honestly, the easiest would be to use tax software that can handle the intricacies for you (or a tax preparer)

i lived in NJ for a while and worked in NYC - then moved to NYC half way through the year and my taxes were similarly messy... usually you need to file the taxes to the state you worked in, and then to the state where you worked, deducting all the taxes you paid to state #1 - add to that the need to file to two states as a partial year resident

so yeah - software or a professional

Tox

Gafoto wrote:

...I'm actually kind of unsure where I should establish residency as I will be moving seasonally every 6 months for the next couple years I believe.

I can't speak to the tax issues at present, but I recommend looking for a state that doesn't collect state income taxes. I'm pretty sure texas is one such state, if it's feasible for you to move there. I feel like this would help prevent the issue in future years.

rockmonkey

Another easy place to get more information is each state's websites on their state taxes. There is usually a FAQ with a question similar to yours or a way to search for the bits of law pertaining to this situation since it's pretty common. It may turn out that due to each states laws that if you establish residency in state A that you have to file taxes in both states while if you claim residency in state B you only end up paying taxes once. You may be screwed regardless based on where the money is earned.

tyrannus

Filing your state tax returns for all the states in question will take a bit of expertise, as many states (although I am unsure of how your Utah/Virginia situation'll be handled, check with your state's tax advisory board) will require you to pay tax in income earned in other states, but will give you a credit for taxes paid to other jurisdiction. This credit may not exceed the amount of tax that you'd pay to the state you're filing for.

Your best bet is to probably check the residency requirements for Virginia and whether or not you'd have to file a return for them. Otherwise, things will get a little complicated

http://www.tax.virginia.gov/site.cfm?alias=WhoMustFile

Part-Year Residents are also subject to the same filing requirements as residents. In computing Virginia adjusted gross income for a part-year resident (see line 10 of the 2010 Form 760PY), the Virginia subtractions include the subtraction for income received while living in another state.

So basically, you'd take your Federal AGI, which will include income earned in Cali and in Utah, and subtract out the Cali and Utah income to come up with your Virginia income.

It's a little more complicated than that, but that's the general idea.