If you live in one state and work in another, you may have to make out three sets of income-tax forms: One for the IRS, and one for each of the state governments. States that charge income tax generally expect everyone working there to pay tax, though some states will exempt you if your income is low enough. Your home state will usually grant you a tax credit for whatever you pay your workplace state so that you don't have to pay double the regular tax.
Contact your home state's department of revenue to find out if it has a reciprocal agreement with the state where you work. Ohio and Indiana have an agreement, for instance: Indiana residents who work in Ohio only pay taxes in Indiana, and vice versa. If you're covered by a reciprocal agreement, all you have to do is file taxes with your home state.
Add up your income from the state where you worked and see if you have to file there. You file in Idaho, for example, if your gross income from your work there is $2,500 or more. If you work in Connecticut, you have to file if your employer withheld state taxes or your total income exceeds a cut-off point -- $13,000 for single filers as of 2012.
Complete the state tax forms for your workplace state if you have to file. Calculate how much tax you owe, based solely on the money you made in that state. Compare the tax bill with your withholding to figure out whether you get a state refund or write the state a check.
File your home state tax return, calculating how big a tax credit you can claim. Include whatever paperwork you have to submit to justify the tax credit. If you live in Connecticut but work in Wisconsin, for example, you complete Schedule 2 of the CT-1040 form, and attach a copy of your Wisconsin return.
- Gaebler.com: Reference Taxes if You Work out of State
- Gaebler.com: State Income Tax Reciprocal Agreements
- Idaho State Tax Commission: Are There Any Circumstances That Exempt Me From Having to File an Idaho Income Tax Return?
- Connecticut Department of Revenue Services: Nonresident Working in Connecticut
- Michigan Department of the Treasury: Frequently Asked Questions -- Individual Income Tax
- Connecticut Department of Revenue Services: Resident Working in Another State
- If you write off state income taxes as a deduction on your federal taxes, remember to claim taxes for both states.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.