How do I fill out new employee tax forms, including W-4, when I permanently live in one state and temporarily live in another?

Forum|Forum|7 years ago
May 31, 2019
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How do I fill out new employee tax forms, including W-4, when I permanently live in one state and temporarily live in another?

I work in the state in which I temporarily live, but plan to return to my permanent address/state within the year. Once I return to my permanent address, I plan to resign from my current job, which is within the state where I temporarily live.

Hal_Al

Employee

It depends on which states you are asking about*. The general rule is: your report all your income on your home state tax return, even the income earned out of state. You file a non-resident state return for the state you worked in and pay tax to that state. Your home state will give you a credit, or partial credit, for what you paid the non-resident state.

So, do withholding for the state you are working in.

*Some states have reciprocal agreements; in which case you would withhold for your permanent residence state.

K

Krpolo

Thank you for the advice, how ever this is only half answered and I can’t find any answers online. You stated “do the withholding for the state you are working in”. Now what about the state that you are living in? I get that most states offer a credit for what you paid in the state you worked. But are you still filling out a w-4 for the state you live in and getting both state taxes with held?? Or are you only submitting one W4 in the expectation of just paying what ever is owed when filling taxes?

Hal_Al

Employee

The question cannot be answered, completely, until we know which states you are asking about, Which one do you live in which do you work in.

You also need to check with your employer if the will withhold for your home. So will tell you they only do work state.

That said:

Q. But are you still filling out a w-4 for the state you live in and getting both state taxes with held??

A. General rule: No. You only do the work state. The credit that your home state gives you will wipe out any tax on that income, so withholding is not necessary. But, for example, if the work state has a 2% tax rate and the home state 4%, the credit will not be enough. So, you either need to do withholding or make quarterly estimated payments.