The COVID-19 pandemic has changed our lives to a great extent and, the filing of taxes is not anomalous. Working from home is the new trend and, as per the research from McKinsey, 80% of the workforce enjoys working remotely, from home. In the ensuing days, the employers are anticipating the hybrid workforce, in which some employees will work from home permanently and some temporarily. According to the survey done by the American Institute of Certified Public Accountants (AICPA), 70% of the respondents are not aware of Multiple State Taxes Returns and think that working from home will not impact their tax returns and their obligations towards each state.
When you have to file Multiple State Taxes Returns
You might be wondering about the situations when you need to file Multiple State Taxes Houston tx. Let's discuss when you need to file Multiple State Tax Returns in Houston so that you do not get perturbed while filing your Multiple State Taxes Returns.
You live in one and work in another state
You have to file Multiple State Taxes Returns if you live in one state but get recruited to work in some other state. Then, you have to file Multiple State Taxes, in your home state where you live, and in the state where you work. But, if there is a reciprocal agreement between the two states then, you have to file Multiple State Taxes in the state of your residence. Many states have signed the reciprocal agreement to deal with the inconvenience caused to the employees who live in one state and work in a different state. Each state has its own rules for multiple state tax returns and, the employees are required to fill the form accordingly. If you are boggling about multiple state tax returns in Houston, then you should consult a tax professional for your better understanding.
You and your spouse work in different states
If you and your wife are settled in the same state but work in different states then, you have to file your tax returns in the state of your residence. However, if your employer withheld state taxes in the state of your employment then, you have to file the tax returns in the non-residential state. However, it entirely depends on the rules of the state of your residence and employment.
You live in two states and work in the different state
Do you live in two different states in a year and work in another state? If yes, then you need to file a part-year tax return with both states of your residence. If you are perplexed listening to the term part-year resident, then let's talk about it for your information that he is the person who lives in two different states in a year.
Some Tips for Filing Taxes in Multiple States
Are you feeling overwhelmed listening about multiple state tax returns? Don't worry because we are here for you to provide some tips that may help you while filing your tax returns.
- At first, make a note of your residence where you lived partially or full-time during the year, and also, keep in mind the properties you have in other states for your vacation homes. And at last, take care of the state where you work.
- The next task is to determine the type of residency you have in each state, out of the different types of residencies, namely full-time residency, part-time residency, and non-residency.
- Let's first discuss the full-time residence. Your residence at any state will get considered full-time when you live there for more than six months period. If your work location also lies in the same state, then you have to file tax returns only for that state, assuming that you do not transit to other states in the meantime.
As the name itself suggests, the non-residency is simple to understand. It is the state where you do not live for any time during the year but, your work location is situated in that state.
If you shift permanently to a new state, you need to provide documents proving that you are a resident of the newly moved state. The documents may include the driver's license in that state, your right to cast a vote in the state you want to prove your residence, the proof of registering a vehicle in that state.
Multiple state taxes returns seem to be a new concept to many of us in post-pandemic days because now a large chunk of the population is working from home in a state different from the state of their work. Therefore, it is common to bemuse regarding multiple state tax returns in Houston. But, in case of any confusion, you can contact tax professionals who are well-versed in this domain and advise you to make well-informed decisions.