Overview

If you change states during the tax year you may owe tax to more than one state. Start by establishing the dates you lived in each state and where your income was sourced. In my practice helping mobile taxpayers, clear documentation and early withholding adjustments are the most common ways to avoid surprises and audits.

Step-by-step checklist

  • Record your move date and supporting proof (lease, closing statement, driver’s license change, utility bills, mail).
  • Determine residency status in each state for the tax year (full‑year, part‑year, or nonresident).
  • Allocate (prorate) salary, business, rental, and other income to the state where it was earned.
  • Claim credits for tax paid to another state where allowed to prevent double taxation.
  • File required part‑year or nonresident returns by each state’s deadline and pay any tax due.

Residency basics (what matters)

States use different tests—domicile, statutory residency (days present), or a combination—to decide if you’re a resident. Part‑year residents usually pay tax on all income while resident and only on income sourced to the state while nonresident. Check the tax agency website for each state and the IRS summary on state returns for general guidance: https://www.irs.gov/filing/state-tax-returns.

Allocating income and credits

  • Wages and salary: Generally taxed where you lived when you earned them or where the work was performed. Remote work can create source issues—track where you physically worked.
  • Business/self‑employment: Allocate by days worked or by revenue sourced to each state, as the state rules require.
  • Investments and retirement: Often taxable based on residency during distributions or by state sourcing rules.
  • Credits: Most states offer a credit for taxes paid to another state on the same income—use it to avoid double taxation, but follow each state’s form instructions.

Practical examples (short)

  • If you moved from California to Texas on July 1, you’d typically file a California part‑year return reporting income earned while a CA resident and a TX return only if local filing or withholding rules apply (Texas has no state income tax).
  • If you moved from Ohio to New York and kept earning income sourced to Ohio clients, you may owe a nonresident Ohio tax return for that sourced income and a part‑year New York return for income while you lived there.

Common pitfalls to avoid

  • Not filing in the former state because you assume moving absolves past obligations.
  • Failing to allocate income correctly (e.g., treating all 1099 income as taxed only by the new state).
  • Not changing payroll withholding after a move—this can create penalties or big balances due.
  • Overlooking credits or reciprocity agreements that could eliminate duplicate tax.

Documentation that helps in an audit

  • Lease or mortgage closing statement showing move date
  • New and old driver’s license or state ID dates
  • Utility bills and voter registration records
  • Employer payroll records, W‑2s, 1099s, and day‑by‑day work logs for remote or contract work

When to get professional help

If you have multi‑state W‑2s, remote-work fee arrangements, business apportionment, or unfamiliar residency rules, consult a tax professional. In complex cases I’ve seen, early planning (before year‑end) cuts tax bills and paperwork significantly.

Helpful resources and internal guides

Authoritative references

Professional disclaimer

This article is educational and not individualized tax advice. State laws change and facts matter—consult a qualified tax advisor or state tax agency for guidance tailored to your situation.