Question

If I’m paying state taxes to one state while working in another, to which state do I pay estimated taxes?

Answer

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.

More Help with State Taxes

Whether you need help with state or federal tax help, we can help! If you want to tackle taxes yourself, use our state edition tax software.

Related Topics

Related Resources

Top IRS audit triggers: 8 tax mistakes to avoid

What triggers the IRS to audit a tax return? Learn how common tax mistakes and errors can be a red flag and affect your chances of IRS issues.

What are the current tax rates?

Find the current percentages for federal income tax rates, capital gains tax rates, Social Security tax rates and more from the tax experts at H&R Block.

The Complete Guide to the W-2 Form

The key to understanding your w-2 form is decoding the boxes and numbers. Learn how to read your w-2 form with this box-by-box infographic from H&R Block.

Form 8863

The tax experts at H&R Block outline how students and parents can file Form 8863 and document qualified expenses. Read about Form 8863 here.