Move Recently? Everything You Need to Know About Filing Your Taxes Properly
Have you moved in the past year? If so, it’s crucial to understand how your move could affect your taxes. While relocating to another state is unlikely to affect your federal taxes, you may have state tax implications.
If you haven’t moved, but you live in one state and work in another, you may also still have additional tax filing requirements you have to meet.
Does moving affect your taxes?
Moving can impact on your state taxes, especially if you move from one state to another. Because you must file a tax return in the state where you live, living in two states in a single year might result in having to file multiple tax returns.
Relocating may not impact your federal tax filing. You can still file just one federal tax return with your new official address.
I relocated to a new state. Where do I file taxes if I’ve moved?
In most cases, you must file a tax return in any state where you resided during the year. If you relocate to another state and earn income during the year, you’ll have to file a tax return in both your old and new state.
In 2015, the Supreme Court ruled that two different states couldn’t tax the same income. The ruling is good news if you moved out of state because it means you won’t be subject to double taxation on your earnings. But you will still have to file tax returns in each state and pay taxes on the portion of the total income you earned there.
Filing a part-year resident tax return, step by step:
Step 1: Determine which states you must file a tax return in.
Your tax liability as a part-year resident is based on the percentage of your income earned in each state. As a result, you should file a tax return in both states when you move.
Step 2: Calculate your earnings in each state.
To file your part-year resident tax returns, you’ll need to know not only your total yearly income but also how much you earned while living in each state.
Step 3: Determine the percentage of your income earned in each state.
Once you know how much income you earned in each state, determine what percentage of your total income each portion made up. For example, let’s say you made $100,000 in 2021. You earned $40,000 in Alabama, and $60,000 in your new home state of California. You’d claim 40% of your income in Alabama and 60% of your income in California.
Step 4: File the appropriate tax forms in each state.
Each state has unique tax forms, so it’s important to identify what document each state requires from its part-year residents. For help finding the right forms, you can contact the agency in each state that oversees tax collection, often the Department of Revenue.
I live and work in different states. How does that impact my taxes?
Even if you haven’t moved recently, you may still be required to file tax returns in two different states. If you live in one state and work in another, you may have to file a normal tax return in your state of residency and a nonresident tax return in the state in which you work.
Just as in the case of moving from one state to another, filing a tax return in both states doesn’t mean you’ll pay taxes on the same income in both states. In most cases, you’ll pay taxes on the income in the state in which you earned it and claim a tax credit in your own state for the taxes paid to the other.
Do I have to change my address with the IRS when I move?
The IRS will automatically register your new address when you file your federal tax return for the first time after moving. But if you move in between tax filing periods, you might want to proactively let them know by filing an IRS address change. That way, you’re sure you receive any important documents the agency sends you.
For example, many Americans received stimulus checks in 2020 and 2021. For taxpayers without direct deposit set up, the IRS sent the checks to the address on record. If you hadn’t updated your address with the IRS, you might not have received your check.
While you’re updating your address with the IRS, be sure to complete a USPS change-of-address and have your mail forwarded from your old address to your new one.
The bottom line
When you move from one state to another, you can expect there to be some tax implications. While you likely won’t be required to pay more in taxes (unless you move to a state with a higher tax rate), you’ll have to file multiple tax returns. Each state expects its residents to file a tax return each year, and those who move during the year should file a part-year resident return in each state.
Other frequently asked questions
Do I have to file taxes in two states if I moved?
If you move from one state to another during the year, you’ll usually be required to file a part-year resident tax return in each state.
When are taxes due?
In most years, taxes are due on April 15. When April 15 falls on a weekend, tax day is pushed back to the following next business day.
When should I start my taxes?
The IRS typically starts accepting tax returns in the early part of the year. In 2022, they started accepting returns on Monday, January 24. While you don’t have to file your taxes until April 15, you might want to start sooner if you expect a refund or have a complex tax situation.
Can I write off moving expenses?
Before 2018, individuals could deduct moving expenses if they moved for a job and met certain requirements. The Tax Cuts and Jobs Act of 2017 suspended that tax deduction, and now only active-duty military members can claim the deduction. Beginning in 2026, other individuals will once again be able to deduct moving expenses when they move for a job.
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