Living and Working in Different States Can Be a Tax Headache

Lately, we've seen a significant increase in the number of people changing jobs compared to past years. Some media outlets have named it the "Great Resignation." In many cases, people are crossing state lines and getting new jobs a different state than where they live. But doing this can also bring up tax issues that can be quite complicated. For instance, if I live in one state and work in another, which state income tax return should I file? Do I need to pay taxes for two states? Who withholds what? Let's try to answer these questions.

Residency Question

The question of where you're deemed to be a resident is an important one in determining which state will tax your income or how your employer will withhold taxes from your paycheck. For residents of a state, all income from sources inside and