How are my taxes impacted when I relocate to a new state?

Ahh, a fresh start. The smell of new paint, the idea of new adventures, and the hunt for your new grocery store and barber/hair stylist. Moving can bring all sorts of new firsts, but it also brings a bit of confusion when it comes to taxes. Here's what you should know about filing taxes in your new state as you settle in: 

1) Establish Residency in your new home state Even if you have a pending sale on a home in your original home state, or haven't tied up all loose ends, begin the trek to establishing residency in your new state. Doing so will help you in the event you need to prove that you no longer are subject to resident taxes in the state you moved from. There are some times where you'll still need to pay tax to the state (i.e. if you still work there). Once you've done the super important stuff (found your local Starbucks and Target), you can achieve this by: 

  • Getting your driver's license + voter registration in your new state

  • Formally changing your mailing address

  • Registering your children in the local school district (if you have children)

2) Determine Your Status When you begin your process to move, reach out to your accountant if you have one. Your accountant is always better equipped to assist you if they're aware of your life changes before they occur. Generally speaking, unless you perfectly time your move on December 31st and establish residency in your new state as of Jan 1st, you'll likely be a part-year resident in 2 states. This requires an allocation of income, deductions, credits, and other tax items based on the number of days you lived in each state. Having this conversation with your accountant before it's happening will help you to track actual residency dates and do some tax planning (see next tip). 


3) Check for tax credits or other tax deductions (or penalties) you may be eligible (or subject to) in your new state.  Your accountant can also be extremely helpful here. If there are credits, deductions, other benefits or penalties that did not apply in your original home state that now apply, tax planning will come in handy. No two state tax returns are alike! For example, NJ offers a property tax deduction/credit for both renters and homeowners, but this deduction is not available in all states. Starting with the 2019 tax year, NJ also requires you and your family to have minimum essential healthcare coverage through 2019 and beyond (unless you qualify for an exemption) in order to avoid a Shared Responsibility Payment. Most states do not have this requirement.  4) Engage a local tax professional If you're new to a state and are unfamiliar with the state's tax law (and also unwilling to pull up your current state's tax return instructions for a cozy Saturday night read), schedule a consultation (or two) with a local CPA or tax preparer. A local professional will be familiar with the forms you are required to complete, and will prove to be valuable in helping you navigate your filing requirements in your home state(s). They'll also be able to help you create a tax plan and identify credits and deductions that may be new to you (as well as additional tax or penalties that you were unaware of).  ASE Group specializes in multi-state returns, especially for clients that moved to NJ/NY/CT/PA. We can help you avoid costly mistakes and overpaying tax liabilities when completing your tax return. New to the tri-state area? Want to discuss your individual tax needs?



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