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Tax season can be particularly complex for nonresidents living or working in the United States. While federal taxes are generally more discussed and better understood, many individuals are unaware that they might also be required to file a state tax return, even if they do not live in the state where they earned income. Each state has its own tax code, filing thresholds, and rules for nonresidents, which makes navigating state tax obligations especially challenging for those unfamiliar with the U.S. tax system.

Filing a nonresident state tax return is often a legal obligation for those who have earned income in a state where they do not reside. Understanding what this type of tax return involves, how residency is defined at the state level, and when filing is necessary is crucial to ensuring compliance and avoiding potential penalties or missed refunds.

What Is a Nonresident State Tax Return?

A nonresident state tax return is a state income tax return submitted by someone who earned income in a state where they were not a resident during the tax year. Even though you do not live in a particular state, earning wages or generating any kind of taxable income within that state may create a tax obligation. This type of return is designed to report only the income sourced within that specific state, and it helps the state determine how much tax, if any, is owed.

Unlike the federal government, which imposes taxes at the national level, each state determines its own approach to income taxation. Most states tax income earned within their borders, regardless of where the taxpayer resides. As a result, if you performed work in a state or received income from property or business operations in that state, you may be required to file a nonresident return.

It’s not uncommon for people to mistakenly assume that they only need to file taxes in the state they live in. However, if income is earned elsewhere, the other state has the legal authority to tax that income as well.

Understanding State Residency Classifications

States categorize individuals into three general residency types for tax purposes: full-year residents, part-year residents, and nonresidents. Your classification determines what portion of your income is taxed and whether you need to file a return in a particular state.

A full-year resident is someone who lived in the state for the entire tax year, usually having their primary residence or domicile there. Part-year residents are individuals who moved into or out of the state during the year and only lived there for a portion of the year. Nonresidents are those who never lived in the state during the tax year but earned income from that state.

Each state defines residency differently. Some use a physical presence test based on the number of days you were in the state. Others consider intent to remain, ownership or rental of property, registration of vehicles, or where you are registered to vote. In general, if you spent more than 183 days in a state and maintained significant ties there, you might be considered a resident for tax purposes.

Nonresidents, on the other hand, do not meet any of the state’s residency criteria but still earned income from the state. Even short-term employment or freelance work can trigger a nonresident filing requirement.

States That Do Not Impose an Income Tax

Not all states tax individual income. Currently, eight U.S. states do not impose a personal income tax. These states are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming.

If you reside and work exclusively in one of these states, you generally do not have to worry about state income taxes. However, if you lived in a tax-free state but worked in a neighboring state that does impose income tax, you may still have to file a nonresident return with the state where the income was earned.

These tax-free states can be attractive to many people, especially remote workers, but residency requirements must be met to avoid paying tax elsewhere. Simply having a mailing address or owning property in a tax-free state does not automatically exempt you from taxation in another state where you perform work or operate a business.

Earning Income Across State Lines

If you worked in more than one state during the year, whether remotely or by physically traveling to different locations, you may be required to file multiple state returns. For instance, someone who lives in Pennsylvania but commutes daily to work in New Jersey will need to file a resident return in Pennsylvania and a nonresident return in New Jersey.

Similarly, remote workers who live in one state but are employed by a company based in another state may have filing obligations in both places. In some cases, the income might be allocated across states based on the number of days worked in each location, but states differ in how they determine sourcing rules.

For business owners, freelancers, or those with rental income, the rules can be even more complex. Income is generally considered sourced to the state where the services are performed, where the property is located, or where the business is conducted.

Moving Between States During the Tax Year

If you changed your primary residence during the tax year, you might be considered a part-year resident in both your previous and new state. Most states require part-year residents to file a return reporting the income earned while living in the state. This often involves prorating your total income based on the time you spent in each state.

Additionally, if you earned income from your former state after moving, you may be considered a nonresident of that state for the remainder of the year. For example, if you moved from Illinois to Colorado in June but continued to receive freelance income from Illinois-based clients, you would be a part-year resident in Illinois and a part-year resident in Colorado, and potentially a nonresident of Illinois for income received after your move.

The transition between states may also involve different rules for determining domicile. States generally look at several factors to determine your intent to make the new state your permanent home, such as registering to vote, changing your driver’s license, leasing or buying property, and enrolling your children in local schools.

How Reciprocity Agreements Affect Your State Filing

Some states have entered into agreements called reciprocity agreements. These are designed to simplify tax obligations for people who live in one state but work in another. If a reciprocity agreement exists between your state of residence and the state where you work, you generally only have to file and pay taxes in your home state.

Reciprocity agreements can significantly reduce paperwork and potential confusion. For example, if you live in Maryland but work in Washington, D.C., you only need to file a Maryland return and not a D.C. nonresident return.

It’s important to note that not all states offer these agreements. If you work in a state without a reciprocity agreement with your home state, you will likely need to file returns in both states. In these cases, your home state may allow you to claim a credit for taxes paid to the other state, which prevents double taxation of the same income.

Income Thresholds and Filing Requirements for Nonresidents

Filing requirements for nonresidents vary by state and often depend on income thresholds. Some states require you to file even if you earned only a few hundred dollars, while others have higher minimum thresholds. Certain states also impose tax obligations on nonresidents with investment income, capital gains from property sales, or business earnings sourced to the state.

To determine whether you need to file, you should check the filing instructions provided by each state’s revenue department. These guidelines typically outline income thresholds, specific sources of income that are taxable, and any exceptions that might apply.

If you received income in a state but are unsure whether it qualifies as state-sourced income, review the relevant definitions. Common examples of state-sourced income include wages, salaries, tips, commissions, rental income from property located in the state, and earnings from pass-through entities such as partnerships or S corporations operating in that state.

Common Mistakes Nonresidents Make

One of the most common errors is failing to file a required nonresident return because the taxpayer believes only their state of residence matters. Others mistakenly assume that working remotely exempts them from tax in the employer’s state, which is not always true. States like New York may still assert taxing rights over remote workers depending on where the employer is located.

Misreporting residency status, underreporting income sourced to another state, or filing the wrong state form are all common filing mistakes. Each of these errors can lead to audits, penalties, or delays in receiving tax refunds. Staying aware of where income was earned and which states claim taxing authority over it can help avoid such mistakes.

Understanding State-Specific Tax Forms

Filing a nonresident state tax return is not as simple as submitting the same form across all states. Each U.S. state with an income tax has developed its own tax forms tailored to different filing statuses, including those for nonresidents. These forms are often completely separate from the standard forms used by full-year residents, and they require a different approach to report only the income sourced within that state.

For example, individuals who earned income in New York but are not residents are required to file Form IT-203, which is specifically designed for nonresidents and part-year residents. This form helps taxpayers calculate the portion of income earned in New York and determine the tax owed accordingly. Similarly, California uses Form 540NR for nonresidents, which includes detailed worksheets for allocating income and credits.

These state-specific forms often require supporting documentation such as a copy of your federal tax return, W-2s, 1099s, and other proof of income. Nonresidents should ensure that they gather all relevant records before beginning the state filing process.

It is essential to verify that you are using the most current version of the state’s tax form. Many states revise their tax documents annually to reflect changes in law, rates, or reporting requirements. Filing an outdated form can result in processing delays or the need for resubmission.

Where to Find State Tax Forms

State tax forms and filing instructions are typically available on each state’s department of revenue or taxation website. These resources often include instructions, FAQs, and worksheets to guide taxpayers through the filing process. In some cases, states may offer downloadable PDFs for manual filing or online portals for electronic submission.

For those unsure which forms to use or whether they even need to file, most states provide tools or checklists to help determine filing status, income thresholds, and residency classification. Reviewing these tools carefully can help avoid unnecessary filings or omissions.

Different Filing Requirements by State

Income thresholds for nonresident state tax filings differ significantly from state to state. While some states set low minimums that trigger filing obligations, others impose filing requirements only when income reaches a certain amount.

In Connecticut, for instance, nonresidents must file a return if they earned income in the state and their gross income exceeds the exemption amounts tied to their filing status. In contrast, Massachusetts requires nonresidents to file if they earn more than $8,000 from Massachusetts sources or have to pay taxes on any income.

Even if your income is below the filing threshold, it may be worth filing a return to claim a refund if your employer withheld state taxes from your paycheck. Failure to file could result in forfeiting that refund, especially since some states impose strict time limits on claiming overpayments.

Deadlines for Filing Nonresident State Tax Returns

Most states align their tax filing deadlines with the federal due date, which for the 2025 tax year is April 15. However, this is not universal, and some states have their own independent deadlines. For example, states may extend the deadline if April 15 falls on a weekend or public holiday.

It is important to verify the deadline for each state where you are filing, especially if you are preparing multiple returns. Filing after the due date can result in penalties and interest charges, even if the delay was unintentional.

Extensions to file are available in many states, but the rules vary. Some states automatically extend the filing deadline if you received a federal extension, while others require a separate state extension request. Keep in mind that extensions to file do not extend the time to pay any taxes owed. Interest and late payment penalties can accrue even if an extension is granted.

Filing Multiple State Returns

Nonresident taxpayers who earned income in more than one state during the year may be required to file multiple state returns. This scenario is common among remote workers, traveling professionals, contractors, and people who relocated mid-year.

When filing in multiple states, each nonresident return should reflect only the income earned within that state. Your home state, if it collects income tax, may require a full-year resident return, which includes all worldwide income. In such cases, the home state typically allows a credit for taxes paid to other states to prevent double taxation.

Accurately allocating your income across states is crucial. This often involves calculating the number of workdays spent in each state, identifying where services were performed, and allocating business or rental income appropriately. Many states provide worksheets or schedules to help with this calculation.

Taxpayers should keep detailed records of where and when income was earned, including time logs, contracts, and travel itineraries. These records are particularly important if audited or questioned by state tax authorities.

Reciprocity Agreements and Their Impact

Reciprocity agreements between states can reduce the need to file a nonresident return. These agreements allow residents of one state to avoid paying income tax in a neighboring state where they work. Instead, they pay taxes only to their home state.

For example, if you live in Virginia and work in Maryland, the two states have a reciprocity agreement. Your employer in Maryland would withhold Virginia state tax instead of Maryland tax, and you would only need to file a Virginia return.

However, not all states have these agreements in place. States like California, New York, and Massachusetts do not offer reciprocity with neighboring states. If you live in one of those states and work across the border, you will likely be required to file two returns: a resident return and a nonresident return. In cases where reciprocity agreements apply, employees must often submit a certificate of nonresidency to their employer so that the correct state tax is withheld from their paycheck.

Income Sourcing Rules by State

Each state has different rules about how income is sourced. For nonresidents, income that is considered sourced to a particular state usually includes:

• Wages or salaries for services performed in that state

• Business income from operations in the state

• Rental income from property located in the state

• Income from partnerships or S corporations operating in the state

• Capital gains from the sale of property located in the state

Some states use a time-based allocation method for sourcing wages. For example, if you worked 60 days in New York out of 240 total workdays in the year, 25 percent of your wages may be considered New York-source income. Other states may use different allocation formulas based on location of services or customer base.

Income earned remotely can be particularly complicated. Some states assert taxing authority based on the location of the employer or client, even if the services were performed elsewhere. This can lead to unexpected filing obligations for remote workers and freelancers.

Coordination Between Federal and State Returns

Filing a nonresident state tax return usually requires information from your federal return. Most state returns start with federal adjusted gross income and then apply state-specific modifications, exclusions, or additions to arrive at state taxable income.

Because of this, it is usually best to complete your federal tax return first. This allows you to transfer relevant income figures, deduction details, and filing status to your state returns. Many states request a copy of your federal return to be attached or included with your state submission.

Some taxpayers consider filing their state return first to receive a refund quickly and use that money toward any federal tax owed. While technically possible, this approach is not ideal because it could cause inconsistencies between returns and lead to delays or corrections. Additionally, most e-filing systems require that the federal return be filed first or simultaneously.

Choosing Paper Filing or Electronic Filing

Most states now offer the option to file nonresident returns online, and many encourage e-filing as the fastest and most reliable method. E-filing provides immediate confirmation of submission and often results in quicker processing of refunds.

However, some taxpayers still prefer to file paper returns, especially when dealing with complex scenarios or if they need to attach additional documentation not easily submitted online. When mailing paper forms, it is important to use the correct mailing address and include all required documents, including W-2s, 1099s, and a copy of the federal return. Be aware that paper returns may take significantly longer to process. Filing early can help avoid delays during peak season.

Withholding and Estimated Payments

Nonresidents working in a state are generally subject to state tax withholding by their employer. The amount withheld should reflect the income earned in that state, but it is not always accurate. If the withholding is too low, the taxpayer may owe additional tax when filing. If it is too high, they may be entitled to a refund.

Freelancers, independent contractors, and business owners may not have taxes automatically withheld. In these cases, nonresidents may need to make estimated tax payments to the state throughout the year. Failure to make timely estimated payments can result in underpayment penalties and interest.

Reviewing pay stubs and end-of-year tax forms is important to determine whether proper withholding occurred. If necessary, nonresidents can request a state-specific withholding form from their employer to update or correct withholding amounts for future pay periods.

Claiming a Refund as a Nonresident

Many nonresidents filing a state tax return do so because their employer withheld state taxes, even if they earned only a small amount of income or none at all from that state. If you had state tax withheld and your total state tax liability is less than what was withheld, you are entitled to a refund.

To claim a refund, you must file a nonresident state return showing the actual income earned in that state and calculating the correct amount of tax owed. The difference between the amount withheld and the calculated liability will be refunded. In most cases, you must also submit copies of W-2s or 1099s showing the withholding, along with the completed nonresident return.

Refund processing times vary by state. While e-filing generally speeds up the process, mailed paper returns can take several weeks or months, especially during tax season. Some states allow taxpayers to check the status of their refunds online by providing their Social Security number or ITIN and the refund amount.

If you do not file a return, you forfeit any refund owed to you. Most states impose a time limit to claim refunds, usually within three to four years of the original due date of the return. Failing to meet this deadline results in the loss of your refund, even if the state collected more tax than legally owed.

Applying for a State Tax Credit for Taxes Paid to Other States

A common concern among nonresidents is the risk of being taxed twice on the same income by multiple states. To address this, most states allow taxpayers to claim a credit for taxes paid to another state on income also taxed by the resident state. However, this credit generally applies only on the resident return and not on nonresident filings.

If you are a full-year resident of State A and earned income in State B, you will usually file a nonresident return in State B and report the income earned there. Then, on your State A resident return, you report your total income and claim a credit for the tax paid to State B on the same income. This prevents being taxed twice on the same earnings.

The credit is usually limited to the lesser of the tax actually paid to the other state or the amount of tax that would have been imposed on that income by your home state. This requires calculating tax liability as if the income were earned in your home state and comparing it to what you paid elsewhere.

Some states, such as New Jersey and Pennsylvania, have specific instructions for claiming this credit and may require you to attach a copy of the nonresident return and proof of payment. The process can be more complicated when the income was earned in multiple states or involves business and investment income. In such cases, keeping detailed records and working through state-specific credit calculations is important to avoid errors.

Amending a Nonresident State Tax Return

If you discover an error or omission on a previously filed nonresident return, you may be required to file an amended return. Common reasons include underreporting or overreporting income, incorrect residency status, missing tax forms, or receiving corrected W-2s or 1099s.

Each state has its own amended return process. Some use a specific form for amendments, while others allow you to resubmit the original nonresident form with a checkbox indicating it is an amended return. You will typically be asked to provide an explanation of the changes and attach any relevant supporting documentation.

If the change involves your federal return, such as receiving a corrected 1099 or filing an amended Form 1040-NR, you should first wait for the federal amendment to be accepted before amending your state return. Some states may request a copy of your IRS Form 1040-X or updated 1040-NR to verify consistency.

Amended state returns generally have a statute of limitations, often three to four years from the original due date or the date the return was filed. If you are filing an amendment to claim a refund, it must be submitted within that time window. Missing the deadline means you cannot recover any overpaid taxes.

Amendments can also lead to additional tax, interest, or penalties if you underreported your income or were initially not in compliance. Some states assess a late payment penalty from the original due date, even if the issue was corrected later. Others offer voluntary disclosure programs or reduced penalties for individuals who come forward to correct honest mistakes.

Common Filing Errors Nonresidents Make

Nonresidents often make mistakes when preparing their state tax returns, particularly when dealing with multiple jurisdictions or unfamiliar rules. Avoiding these common errors can help ensure accurate and timely filings:

• Filing as a resident instead of a nonresident, leading to overpayment or unnecessary reporting

• Using the wrong state form or tax year version

• Reporting income earned in other states as if it were sourced to the filing state

• Not allocating income correctly based on days worked or services performed in the state

• Failing to claim tax credits for taxes paid to other states

• Forgetting to attach supporting documents such as W-2s, 1099s, or the federal return

• Missing the filing deadline or failing to request an extension when needed

• Overlooking the need to amend a return when updated tax forms are received

Taxpayers should double-check that the residency status selected matches the income being reported and that the proper allocation worksheets have been completed. Each state defines residency and source income differently, and assuming a one-size-fits-all approach often results in errors.

State Residency Audits and Documentation

Nonresident tax filings can sometimes trigger residency audits, particularly in states with aggressive enforcement like California, New York, and Massachusetts. These audits aim to determine whether an individual properly filed as a nonresident or if they should be treated as a part-year or full-year resident based on their ties to the state.

Common factors that may lead to an audit include:

• Having a mailing address or driver’s license in the state

• Owning property or maintaining a residence in the state

• Spending a significant number of days in the state

• Maintaining family or business connections in the state

• Earning substantial income from in-state sources

States may request documentation to support nonresident status, such as travel records, lease agreements, utility bills, or employment contracts showing work location. Keeping these records organized can be essential if your residency classification is challenged.

Some states use sophisticated data-matching systems and cross-reference federal and state filings, travel records, and real estate transactions. If the state identifies inconsistencies or believes residency status was misclassified, they may reclassify you as a resident and assess additional tax, penalties, and interest.

Recordkeeping Tips for Nonresident Filers

Effective recordkeeping plays a critical role in accurate tax reporting and defending your filing position in the event of an audit or dispute. As a nonresident, you should retain the following documentation for each state where you worked or earned income:

• Copies of filed state and federal returns

• W-2s, 1099s, and other income statements

• Employer-issued state withholding certificates (if applicable)

• Proof of tax payments and refunds received

• Travel logs or calendars documenting days worked in specific states

• Contracts or project agreements indicating work locations

• Lease agreements, utility bills, and housing documentation to show place of residence

• State-specific withholding or exemption forms submitted to employers

Tax records should be stored for a minimum of four years, though some states may audit returns filed up to six years in the past if substantial underreporting is suspected. Maintaining both digital and physical copies ensures you have access to records even if you change locations or lose access to prior systems.

Residency Planning for Future Years

Taxpayers who frequently move between states or work across state lines can benefit from proactive residency planning. Understanding how states determine tax residency helps you make informed decisions that reduce the risk of dual taxation or audit exposure.

Key strategies include:

• Limiting the number of days spent in high-tax states to avoid residency classification

• Establishing clear connections to your home state, such as a primary residence, driver’s license, and voter registration

• Avoiding financial and personal ties to other states if you do not wish to be considered a resident there

• Communicating clearly with your employer about your work location for proper withholding

• Submitting required state withholding forms and nonresidency declarations promptly

• Planning remote work or temporary projects with consideration for potential tax exposure

These strategies are especially important for independent contractors, digital nomads, and remote employees, whose work may span multiple jurisdictions. States are increasingly focused on cross-border workers and expect taxpayers to accurately report income earned within their borders.

Multistate Filing Considerations for International Students and Temporary Workers

International students and temporary workers on visas such as F-1, J-1, or H-1B often find themselves in nonresident situations due to internships, remote work, or relocations. While their federal tax residency may be nonresident alien status, their state residency is evaluated under different criteria and may result in a mix of resident and nonresident filings. 

If you attend school in one state but work in another, you may need to file as a nonresident in the work state while still being treated as a resident in your state of study. For example, an F-1 student studying in Illinois but completing a summer internship in New York will likely need to file a New York nonresident return for the income earned during that internship period.

International taxpayers should also be aware of treaty provisions, which generally apply at the federal level but may affect the income reported on state returns. While most states do not honor federal treaty exemptions, some may conform partially or require adjustments to income calculations. Understanding these nuances ensures accurate filing and prevents unnecessary tax liability or loss of refund eligibility.

Conclusion

Filing a nonresident state tax return in the U.S. can be a complex but necessary responsibility, especially for individuals who earn income across state lines or temporarily relocate for work, education, or business. Each state has its own tax laws, definitions of residency, filing thresholds, and rules on sourcing income, making it essential for nonresidents to understand their obligations clearly and act accordingly.

The process begins with determining your correct residency status and whether you are required to file a nonresident return in a particular state. Once established, accurate income allocation and proper use of the relevant nonresident forms are critical. Filing deadlines, supporting documents, and the potential for penalties if returns are filed late or inaccurately must also be taken seriously.

Beyond the initial filing, nonresidents should be aware of opportunities to claim refunds, apply for credits for taxes paid to other states, or amend returns if errors are discovered. Staying in compliance also involves keeping thorough records, understanding how different states audit nonresident claims, and proactively managing your presence and ties to various jurisdictions.

International students, remote workers, and temporary visa holders face added layers of complexity, including how state rules interact with federal tax treaties or visa-based exemptions. These individuals must pay special attention to the nuances of multistate filings and ensure they meet the expectations of both the IRS and state revenue departments.

In an environment where state tax enforcement continues to grow more sophisticated, nonresidents must approach tax filing with care, diligence, and a full understanding of the rules. Doing so not only ensures compliance but also helps avoid double taxation, maximize eligible refunds, and reduce the risk of penalties or future audits.

By taking the time to learn each state’s filing requirements and following best practices for documentation and residency planning, nonresidents can navigate the state tax landscape with greater confidence and accuracy year after year.