Multiple state residencies

[jenwallace]

Hi,
My husband and I lived and worked in New Mexico until May '05, travelled for 3 months, and now I am working in Mass and my husband is currently unemployed. He recieved distributions from retirement funds last year while living in NM.
Do we have to report our NM income on our Massachusetts Tax form? Do we have to report the retirement acct. distribution on our Mass tax form? Do we have to report Mass income to NM?
thanks
Jen

[Mr. Knowitall]

As you had income in both states, unless the amount was so small as to be below the threshold for filing you would file tax returns in both states. For simplicity's sake, you may wish to enlist the help of a tax service or use a computer program like TurboTax, such that you don't accidentally overpay your taxes.

[Fxston]

Generally any pasive income like interest, dividends, and gains/losse on securities sales are reported in your state of residence. Usually you would apportion your passive income over the time you resided in that state. For example, if you lived in NM for three months, 3/12 of the income is reportable to NM and the rest, 9/12, is reported to MA. W-2 or wage income will indicate on them what state the earnings were reported to. If you worked for the same company in two different states, you will receive a W-2 reflecting the income earned in one state to that state, and another reflecting earnings in the second state. If no state withholding was made on your husband's retirement income, which is reported on a 1099-R, then I would attribute or apportion or allocated it to the state you were in when you recieved it. If you got it in a lump sum, then you report it to the state you were in. If your recieved the money in both states, then I would apportionate it like other types of passsive income. Be aware that some states like NY have you apportion all your income, even wages earned in another state, and apportion it by using your time residing in the state. Check the forms and instructions as you fill out the tax forms. There should be some guidance in the tax forms as to how to allocate your income, but the two states may not do it the same way and it is possible to be double taxed on your income if each state uses a different method for allocating passive income.