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
Should you or your child report earnings on Form 1099-Q? Learn more from the tax experts at H&R Block.
Discover why the tax refund you got is less than expected or different from what was shown when you filed. The tax experts at H&R Block explain further.
If someone has fraudulently filed a tax return with your SSN, use Form 14039 to fix the situation. Learn more about tax identity theft with the experts at H&R Block.
Filed your taxes and want to get updates on your return? Use these IRS and state tax phone numbers to check your return status.
