Do I file both VT and NY taxes if I live in NY but work in VT?

Q. Do I file both VT and NY taxes if I live in NY but work in VT?

A. Yes.

The general rule is: your report all your income on your home state 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. You will have to file a non resident VT state return and pay VT tax on the income earned there.. You will also file a NY full year resident return and calculate tax on ALL your income. NY will give you a credit, or partial credit, for the tax you pay VT. So, there will be little or no double taxation, but you have the cost and hassle of filing two state returns. Do the nonresident state return first.

Yes.  You will file a non-resident VT return with any VT source income; here is the VT reference.  You will also file a resident NY return reporting all income sources.  On your NY return you should claim a credit for taxes paid to another state to mitigate the double taxation by VT and NY.  

Complete your VT non-resident return first and take note of the income taxed and the VT tax liability.  TurboTax will transfer the amounts needed to claim the NY credit to your NY state resident interview and you should only need to verify.

In the VT interview only allocate to VT the income earned in VT. Likely your wages have been allocated to VT already after entering your form W2 with VT state information in the federal "Wages & Income".   

To generate the correct forms in TurboTax follow these steps.

1. In the "My Info" section
2. Edit your information
3. Indicate you lived in NY on 31 Dec
4. Indicate you did not live in another state
5. Continue
6. Still in "My Info"
7. Scroll down to "Other State Income"
8. Answer "Yes" you earned income in another state
9. Select VT from the dropdown
10. Continue