Here’s what HIVE AI had to say about “How do I handle state tax returns if I move during the tax year?”:

Handling State Tax Returns When You Move Mid‑Year

What you generally file

• File a part-year resident return in each state where you were a resident during the year. Each return covers the period you were a resident of that state.
• If you earned income in a state after you moved out (or before you moved in), you may also need a nonresident return for that state to report and tax the income sourced there.

How income is divided

Wages and salary

• Report wage income to the state where you physically performed the work on those days. If you worked in multiple states, split wages based on actual workdays or employer payroll records reflecting state withholding.
• For remote work, wages are generally sourced to where you were physically located while performing the work, subject to special “convenience of the employer” rules in a few states.

Investment and other income

• Interest/dividends are usually taxed by your resident state when you were a resident.
• Capital gains are typically taxed by your resident state; gains from real property are taxed by the state where the property is located.
• Pass-through business income is sourced under each state’s apportionment/sourcing rules; you’ll allocate based on the business’s property, payroll, and sales or on where services were performed.

Proration of resident tax

• Many states prorate your resident tax based on the number of days you were a resident, applying the state’s full-year tax to a fraction of days in-residence over total days in the year. Always check your state’s instructions, but the federal framework for state resident-tax apportionment by days-in-residence illustrates the approach states often use. 1

Credits and withholding

• If both states tax the same income (for example, wages earned in State A while you were a resident of State B), your resident state typically offers a credit for taxes paid to the other state to avoid double taxation. This credit is claimed on your resident or part‑year resident return; eligibility and limits vary by state.
• Check your final pay stubs and Forms W‑2 for state boxes to ensure withholding is attributed to the correct state(s). You may need to adjust your state withholding on Form W‑4 or the state’s equivalent after you move.

Special situations to watch

Reciprocity agreements

• Some neighboring states have wage tax reciprocity allowing residents to pay tax only to their resident state on wages. If you moved between reciprocal states, file the right exemption certificate with your employer and follow each state’s part‑year rules.

Local taxes

• Cities and counties (e.g., certain local wage taxes) may require separate part‑year filings.

Estimated taxes

• If you will owe $1,000+ to a state after withholding, make state estimated payments for the remainder of the year after your move to avoid underpayment penalties. Split estimates between states based on where the income will be taxed.

Practical steps and documentation

Establish your residency dates

• Keep objective records: lease start/termination, closing statements, driver’s license/ID updates, voter registration, vehicle registration, updated HR/payroll address, and utility bills. States use these to determine when residency began/ended.

Allocate your income carefully

• Use workday calendars, payroll reports, brokerage statements, property closing statements, and K‑1 state schedules to support how you split income between states.

Itemized deduction nuances

• Some state returns prorate itemized deductions or allow only state‑version deductions. Where a federal item requires proration for time in different states (like the sales tax table when you lived in more than one state), follow the state instructions; the federal Schedule A table illustrates day‑count proration when living in multiple states. 2

Amended returns after a move

• If you discover you allocated income or withholding to the wrong state, amend the affected state return(s). When you amend your federal return, it can affect state liability—states generally expect you to amend correspondingly and not attach the state to your federal amended return. 3

Edge cases and planning tips

• Moving to/from a state with no income tax: You still file a part‑year return for the taxing state; non-tax states won’t require a return for wages but could still have filing for other taxes.
• Property sales: The state where the real estate is located taxes the gain regardless of residency; your resident state may also tax the gain with a credit for tax paid to the property state.
• Unemployment compensation: Usually taxed by your resident state at the time you receive it; check each state’s rules.
• College savings or other state‑specific benefits: Contributions/credits are generally tied to residency and timing; check whether your move affects eligibility.

Why states prorate in the year of a move

• The general concept is to compute the state’s resident tax as if you were a full‑year resident and then multiply by a fraction based on the days you were a resident during the year. While each state’s exact method varies, this day‑fraction approach is reflected in federal rules that addressed state resident taxes in split‑year residency scenarios. Always follow the specific instructions for your destination and departure states. 1

What I need from you to tailor this precisely

• Your former and new states
• Move date(s) and where you physically worked before/after the move
• Any income from property or businesses in either state
• Your W‑2 state boxes and any 1099s with state withholding

With those details, I can map exact forms, lines, and allocation methods for your two states and flag any reciprocity or credits to optimize your tax outcome.

Sources

1 – Treasury Regulation 301.6362-6 📄 Summarize
2 – IRS.gov – Instructions for Schedule A (2024) 📄 Summarize
3 – IRS.gov – File an amended return 📄 Summarize

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