I’m wondering if I did this wrong last year, though I used turbotax & this wasn’t flagged as an issue: D had taxable income from room & board stipend, (as well as summer job income in home state) which I paid fed & state tax on. However, state tax was paid to home state & not that where college is located. Should I have done 2 state returns? maybe it’s time to consult a pro!
thx for any insights you may have.
It might depend on the tax laws of each state. I would think that tax on work income from home state would only be due in home state. But taxable scholarship income would depend on if state where the school is taxes it, as well as home state.
tax year 2014 or 2015?
^^ tax year 2014 so far but as I look at 2015, same question & wondering if I have to amend/re-submit for 2014
Yes, you could do two states. You may or may not owe any taxes to the school state.
Most states have taxpayer information on a website now. Maybe search for taxability of scholarships.
For tax purposes, my daughter is considered a resident of VA, where attends school, even though she is a full-time student with permanent residence in a different state. She files a VA tax return, then files in our home state, getting a credit for the taxes paid to VA. She pays a small amount of tax in our home state, which has a slightly higher rate than VA. You need to investigate the tax situation in both states to figure things out.
You can’t be a legal resident of two different states at the same time, so saying that your daughter “is considered a resident of VA” while having “permanent residence in a different state” makes no sense. It is of course possible to owe income tax to multiple states in the same tax year, depending on the source of the income and other factors. The typical situation is that a non-resident has earned income in state A (for instance, a part-time job at college) and files a non-resident tax return in that state for that income, and then gets credit for any tax paid on that income when filing a tax return in state B, the state of residence.
Our kids had the opposite of what @mamag2855 had.
Their permanent residence was out home state. They filed federal income taxes using this home address…and state taxes as residents in our home state.
Then the filed as non-residents in the state in which they attended college.
@Madison85 maybe youncannclarify…but I don’t think a person can be a permanent resident of two different states…and I also think their federal tax form and instate tax form need to be from the same state.
@BelknapPoint ,It is absolutely possible, go look at the VA tax website where they define the following:
“Actual Residents: – Individuals who are physically present in Virginia, or who maintain a place of abode here for more than 183 days during the taxable year are actual residents. The period of residency does not have to be consecutive days. Most Virginia residents are actual residents of Virginia.It is possible to be an actual resident of Virginia and a domiciliary resident of another state. For example, dual status commonly occurs when a resident of another state enrolls in a Virginia school and lives here during the school year.”
Full-time students in VA who are also domiciliary residents in another state are considered actual residents per their definition in VA for the purposes of collecting income tax on income earned in VA(for my daughter, scholarship in excess of QEE Plus income earned from a part-time job).
Parents of students earning taxable income(either scholarship or otherwise) in the the state where they attend school must research what is required.
You are confusing your terms and definitions. A “domiciliary resident” is not a legal resident, and is only in the state of domicile on a temporary basis; for instance, to attend college. Again – you can’t be a legal resident of two different states at the same time. If you file state income tax returns in two different states for the same time period, at least one of those returns will be filed as a non-resident.
I never stated “legal” resident, this is a discussion of taxes. VA considers students who attend school full-time in VA and live with their parents at other times in another state to have “dual” residency status for the purposes of determining tax liability in VA.
VA considers our family’s home state to be the domiciliary state for our daughter, and she is considered an “actual” resident of VA(not a non-resident). Perhaps VA is unique in using this terminology, IDK, The point is, there are different rules and definitions for different states.
As I stated previously, parents of students attending college OOS need to do their homework.
Did the 1098 or w2s have a state box filled in? If student works in state X, lives in Y, you file in both. Y usually gives a credit for what you paid X.
Scholarship depends…
Right, and tax filing status includes filing as a resident or non-resident. So in discussing taxes and where and how to file them, the taxpayer’s state of legal residence is an important thing to know.
To recap:
You said that your daughter is considered a resident of VA, while at the same time she is a full-time student with permanent residence in a different state.
I replied that one cannot be a legal resident of two different states at the same time.
You in turn replied that “it is absolutely possible…”
Now you are saying that you never stated “legal” resident, when just several posts prior you told me that “it is absolutely possible” in response to my statement that one cannot be a legal resident of two different states at the same time.
Your daughter is a legal resident of one state and she spends time (and presumably earns income) in another state. As happens with many other people, she may need to file income taxes in both of these states. But she is not also a legal resident of that other state.
Full-time students in Virginia who live with their parents at other times in another state (which is probably their state of legal residence, unless the student has taken some affirmative step to become a legal resident of Virginia, other than simply attending college there) will only owe income taxes to Virginia if they have income that is sourced to Virginia; for instance, a campus work-study or other job in Virginia. Being domiciled and earning income in Virginia during the school year in and of itself does not make a Virginia college student who comes from a different state a legal resident of Virginia. A college student in this situation would file a non-resident Virginia income tax return, and generally would receive credit for income tax paid to Virginia on their home state income tax return, if they were required to file one.
should I assume that it is beyond the scope of Turbotax to help me determine whether 2 state returns need to be filed?
ie permanent address, school address, scholarship amounts are entered, & it seems to do a good job of identifying things like ‘looks like part of this scholarship is taxable’, but it did not suggest a 2nd state return. So perhaps I have to dig into the tax reg’ns of the specific states to figure it out?
@BelknapPoint , I prefaced my first post here #6 with “For tax purposes, my daughter is considered a resident of VA, where attends school, even though she is a full-time student with permanent residence in a different state”.
VA considers her to be a “resident” for tax filing purposes, since her non-QEE scholarship and all other income is earned in VA.
Cut and pasted from the VA taxation website:
"There are two types of Virginia residents: actual and domiciliary.
Actual Residents: – Individuals who are physically present in Virginia, or who maintain a place of abode here for more than 183 days during the taxable year are actual residents. The period of residency does not have to be consecutive days. Most Virginia residents are actual residents of Virginia.
It is possible to be an actual resident of Virginia and a domiciliary resident of another state. For example, dual status commonly occurs when a resident of another state enrolls in a Virginia school and lives here during the school year.
Domiciliary Residents: – Individuals whose state of legal residence in the technical sense is Virginia are domiciliary residents. Most domiciliary residents actually live in Virginia. Examples of individuals who are domiciliary residents but who do not live in Virginia are shown below:
An individual who enters the military from Virginia (i.e., claims Virginia as his/her home of record) will remain a domiciliary resident of Virginia, unless appropriate steps are taken to abandon Virginia as the state of domicile.
A student who attends school in another state, but maintains Virginia as his/her legal state of residence, is a domiciliary resident.
A resident of Virginia who accepts employment in another country is a domiciliary resident, unless appropriate steps are taken to abandon Virginia as the state of domicile."
According to the VA taxation website, my daughter is considered an “actual” resident of VA and a domiciliary resident of our home state.
My statements are the result of interpreting this website. So sorry to cause confusion around this topic, just attempting to share my limited experience with the state of VA. Parents and students, do your homework.