If I’m paying state taxes to one state while working in another, to which state do I pay estimated taxes?
If you are paying state taxes when living in another state, you’ll pay estimated taxes to each state based on your expected:
- State taxable income
- Deductions
- Credits
Usually, the state where you live will give you a credit for the taxes you pay to the state where you work, which reduces the tax you own in the state where you live. If you have other income in the state where you live or if the state where you work has a low tax rate, you will need to estimate and pay state tax for that income. Also, if your withholding is not enough in the state where you work, you may need to estimate and pay state tax or increase your withholding.
If the states have a reciprocal agreement, you can file an exemption form. If you do, taxes won’t be withheld for the state where you work. You can ask your employer to withhold taxes for your resident state.
Related Resources
Learn how to request an IRS payment option, like an extension to pay or an IRS installment agreement, when your business owes taxes and can't pay.
For a limited time, qualifying taxpayers can pay nothing to file a 1040ez with a tax pro at H&R Block. Find out if you qualify and how you can pay nothing!
Learn more about IRS Letter 692C and how to handle proposed adjustments to your tax return with help from the tax experts at H&R Block.
IRS Form 433-F, Collection Information Statement, is used to determine taxpayer's ability to pay the IRS. Learn more from the tax experts at H&R Block.