Unemployment taxed as income in multiple states?

Forum|Forum|5 years ago
March 16, 2021
2 replies
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My husband is active duty military. We are filing separately for our federal returns. My home of record is PA, and I have been receiving unemployment from PA throughout 2020; however, I never lived in PA during this time. Instead, I lived half of 2020 in KS and half in VA, due to my husband's orders. I have prepared my PA return as a nonresident, and apparently owe nothing. Should I actually have filed my PA return as a resident since it is still my home record (driver's license is there, voter registration, etc)? Is it accurate that I could owe taxes to KS on my unemployment I received from PA while living in KS? Same question about VA. Thanks!

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MAK70

If you were a Pennsylvania resident because you are a military spouse, you were supposed to file Pennsylvania resident return and report the PA Unemployment there. The MSRRA allows you to use your resident state, so the normal state tax rules become "as ifs".

This means you would not file for Kansas or Virginia because it is "as if" you were in Pennsylvania for the year.

If you already filed the Pennsylvania return as a nonresident, you will have to amend it but if you had no other income you would not need to file for Kansas or Virginia.

TomD8

Employee

You have another option: you can file as a resident of your active duty servicemember spouse's military home of record, even if you have no other connection with that state. You can also file as a resident of your own state of domicile. The choice is yours. See page 3 of this reference:

https://www.jag.navy.mil/legal_services/documents/Info_Paper_2018_SCRA_Amendments.pdf

Also: Pennsylvania does not tax unemployment compensation.

**Answers are correct to the best of my ability but do not constitute tax or legal advice.

SundayInSalem

You do not owe anything to Pennsylvania. Neither of you have taxable income if you are PA residents. And you don't have to file a PA tax return if your husband is filing separately.

Unemployment is not taxable to PA so you have no PA income. You are not required to file a PA return if your gross taxable income is less than $33. If you are a PA resident, nonresident or a part-year PA resident, you must file a PA tax return if:

You received total PA gross taxable income in excess of $33, even if no tax is due with your PA return; and/or
You incurred a loss from any transaction as an individual, sole proprietor, partner in a partnership or PA S corporation shareholder.

Active duty pay for PA residents stationed outside PA is not taxable to PA. The military should not be withholding PA state tax.

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