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
Do you need to file estimated taxes each quarter? Learn more about quarterly tax payments and get tax answers at H&R Block.
How long penalty abatement takes depends on the type of penalty relief you’re requesting. Learn more from the tax experts at H&R Block.
Your excess estimated tax payments have been released and a refund will be sent to you. Learn more about IRS notice CP17 from the tax experts at H&R Block.
Learn more about your options to reduce or remove an IRS estimated tax penalty. Get the facts from the tax experts at H&R Block.
