Why file tax return one one state but live in another?

Question

Why would one file tax return in one state but work in another? For example:

If a person lives in New Jersey, but works in Utah, and file tax return for New Jersey?

Answer 1

Normally living in one state and working in another does not make any sense unless you live near the border of an adjacent state, or you are on temporary work assignment (for not more than 1 year) and can deduct overnight travel expenses.  Overnight travel expenses for the remote work location cannot be deducted if time is undetermined or over a year (and daily commuting expenses without overnight travel are NOT deductible).

Of course if you own property in another state, the state where the property is located will want their income tax on any gain, but your home state should give you credit for that against income tax due in your home state from the sale.

Answer 2

Utah taxes are withheld from the paycheck.  You file in Utah because you work there.  You file in New Jersey because you live there and you receive a credit for taxes paid to other jurisdictions.

Answer 3

. . . .because that's the law. . . .

as a resident of a state, you can be required to file on all income earned there, although you get a credit for taxes paid to other states. . . .the state where you work will withhold state taxes for that state, but the state where you live receives no withholding

Answer 4

If the state you live in has a State Income Tax, you are required to file.  It could be that they'll give you credit for tax paid to the state you actually worked in, and paid taxes in, but they'll want to see your return.  Often, you only get partial credit.  And also - any unearned income, like interest dividends, stock sales...or lump sum distributions, retirement income...what have you...would be taxable to the state you live in, not the state you might commute to for work.

Bottom line, your state of residence is going to want to see ALL your income.  Hopefully, they'll give you credit for tax paid elsewhere.

Answer 5

Well, I live in California & work in Maryland & I have to file both states--one for the state income tax that Maryland takes out & one because California law requires it (and taxes out its own share of taxes)

Answer 6

Basically, the person has a nexus connection with each state.  Nexus exists by living in one state.  Nexus also exists by working in another state.