Tax implications of working in a different state than my permanent address?

This is actually pretty common for contractors and temporary workers. Since you're physically working in Colorado, you'll need to file a Colorado tax return for the income earned while working there. Colorado will tax the income you earned while physically working in that state. For Arizona, since that's your permanent residence/domicile (where your driver's license, voting registration, etc. are), you'll need to file a resident tax return there too. Arizona will want to tax all of your income, but you'll get a credit for taxes paid to Colorado to avoid double taxation. When you file your taxes, you'll need to complete: - Arizona resident return reporting all income - Colorado nonresident return reporting only Colorado-sourced income - Form 309 (Arizona's credit for taxes paid to other states

This is a common situation! When it comes to state taxation, there are two key concepts: domicile (your permanent legal home) and statutory residency (based on time spent in a state). Michigan considers you a resident if you're domiciled there OR if you maintain a permanent place of abode and spend 183+ days there. Colorado considers you a resident if you're domiciled there OR you maintain a permanent place of abode and spend more time in Colorado than any other state. Based on your situation, it sounds like your domicile might still technically be Michigan (driver's license, voter registration, car registration all point to this), but you're physically present and working in Colorado. You'll likely need to file as a part-year resident in both states. You'd report all your income on both returns, but each state will tax only what you earned while a resident of that state or income sourced from that state. Colorado will definitely tax the income you earned there, regardless of your residency status. When you file, be sure to claim credit for taxes paid to the other state to avoid double taxation on the same income. Most tax software can handle multi-state returns, but this might be a year where consulting with a tax professional makes sense.

When I was in a similar situation last year, I used https://taxr.ai to sort out my multi-state tax situation. I was working in three different states throughout the year and couldn't figure out where I needed to file or how to calculate everything. The site analyzed my specific situation, showed me exactly which forms I needed, and gave me step-by-step guidance. They have a specific tool for determining state residency status and figuring out your tax obligations when you work across multiple states. It saved me from making some pretty big mistakes on my return!

Just wanted to follow up - I actually tried https://taxr.ai after posting my question here and wow, it was super helpful! I uploaded my W-2 and answered some questions about my living situation, and it clearly showed me that I needed to file as a part-year resident in NY and a nonresident in Florida (even though Florida has no income tax). The best part was it explained WHY I needed to file certain forms based on the specific days I spent in each location. It also flagged that I might be eligible for a special telecommuter rule that applied to my situation. Definitely worth checking out if you're dealing with multi-state issues.

If you're having trouble getting clear answers about your situation, you might want to try Claimyr (https://claimyr.com). I was in a similar situation - working contracts in multiple states - and needed specific answers from the tax authorities about my residency status. I tried calling both state tax departments directly but kept getting stuck in hold queues for literally hours. Through Claimyr, I got connected to an actual human at the Colorado Department of Revenue in about 15 minutes. They have this system that navigates the phone trees and waits on hold for you, then calls you when a real person answers. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with gave me the exact filing requirements for my situation and even emailed me the specific forms I needed.

I have to eat my words. After posting my skeptical comment yesterday, I decided "what the hell" and tried Claimyr. I figured I had nothing to lose after spending literal hours trying to get through to the IRS about my refund issue. I used the service and went about my day. About 40 minutes later (which is WAY faster than I ever got through myself), I got a call connecting me to an actual IRS representative! They were able to look up my refund status and found that there was a discrepancy with my reported state tax payment from last year that was holding things up. The agent helped me understand exactly what documentation I needed to submit to resolve it. I'm honestly shocked it worked. Saved me who knows how many more hours of frustration.

One thing to watch out for - make sure your employer is withholding the correct amount for Colorado. I was in a similar situation (working in Nevada, permanent residence in California) and my employer wasn't withholding enough Nevada tax. I got hit with a penalty when I filed. You might want to double check your paystubs or talk to your payroll department to make sure they're withholding enough for Colorado based on your actual earnings there!

I went through something similar last year and discovered taxr.ai (https://taxr.ai) which really helped me figure out my multi-state situation. I was working remotely from three different states and was super confused about where I owed taxes. Their AI analyzed my specific situation and gave me personalized guidance about which states I needed to file in and what my residency status was in each one. They explained that just having a mailing address somewhere doesn't automatically make you a resident for tax purposes - it's about your "tax domicile" which includes factors like where you actually live, where you earn income, and your intentions for permanence. They also helped me understand how the credits for taxes paid to another state work so I didn't get double-taxed on the same income.

Following up on my question about taxr.ai - I decided to try it out and it was actually super helpful! It analyzed my situation (working in Nevada but permanent address in California) and clarified that I needed to file as a California resident but could exclude the income I earned while physically working in Nevada. The system asked me detailed questions about how many days I spent in each state, where my permanent ties were, and my intentions for the future. It even helped me understand how California's aggressive tax policies work for residents earning income out of state. What I really appreciated was getting clear guidance about my specific scenario instead of trying to piece together general advice that might not apply to me. Definitely recommend if you're dealing with multi-state tax issues!

Question about this - I travel for work too and spend time in multiple states. Does it matter if you EARN money in a state or if you LIVE in a state temporarily? Like if I'm working remotely from a hotel in Florida for a California company, which state gets the taxes?

When I was in almost this exact situation (working in Washington while "officially" living in Oregon), I spent WEEKS trying to get through to the state tax departments for clarity. It was a nightmare - constant busy signals, disconnects, and being transferred between departments where nobody seemed to know the answer. I finally found Claimyr (https://claimyr.com) and it was a game-changer. They got me connected to an actual Oregon tax specialist within 20 minutes when I had been trying for days. You can see how it works here: https://youtu.be/_kiP6q8DX5c The tax agent walked me through exactly what my obligations were in both states and confirmed I was only required to file in my resident state since Washington has no income tax. Saved me so much stress wondering if I was doing things right.

I have to admit I was wrong about Claimyr. After commenting here, I was still stuck in tax limbo with questions about my multi-state situation, so I gave it a shot out of desperation. Within 45 minutes, I was talking to a real person at my state tax department who actually knew what they were talking about. I've been trying to get clear answers for MONTHS. The agent confirmed that I needed to file a non-resident return in the state where I was temporarily working, and explained exactly how to claim a credit on my home state return to avoid double taxation. What was most surprising is that the advice I'd been getting from friends and even some online "experts" was completely wrong for my situation. Getting the official word directly from the tax authority gave me peace of mind that I'm doing things correctly. I'm still shocked this actually worked.

One thing to consider that hasn't been mentioned yet - some states have reciprocity agreements that can make this simpler. For example, I live in Virginia but work in DC, and because of reciprocity, I only pay Virginia income tax despite earning my money in DC. Michigan has reciprocity agreements with Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin - but not Colorado. So that won't help in your case, but it's something others in similar situations should check. Also, the timing of when you establish residency matters a lot. If you moved to Colorado in June, you'd be a part-year resident of both states. Your Michigan income tax return would cover January through May (or whenever you established Colorado residency), and your Colorado return would cover June through December.

Don't forget that if you work remotely for a Colorado company but decide to travel to other states, you might need to track the days you work in each state. Some states (like New York) are super aggressive about taxing even a single day of work performed in their state. I learned this the hard way when I worked in 3 different states last year. Had to keep a detailed calendar of which days I worked where. It was a pain but saved me from potential audits.

This is a really complex situation that trips up a lot of people! Based on what you've described, you'll likely need to file in both states since you have income earned in Colorado but your domicile (permanent legal residence) is still in Arizona. Here's what I'd recommend: **For Colorado**: You'll file as a nonresident since you're just working there temporarily. Colorado will tax the income you earned while physically working in the state, regardless of where your permanent address is. **For Arizona**: Since your driver's license, voting registration, and permanent address are all there, Arizona considers you a resident and will want to tax all your worldwide income. However, you'll get a credit for taxes paid to Colorado to avoid double taxation. The key thing to remember is that "residency" for tax purposes isn't just about where you get mail - it's about where your life is actually centered. Since you're living in hotels/Airbnbs temporarily for work, you haven't established Colorado residency yet. Make sure to keep detailed records of your work dates in Colorado, as you'll need this for your tax filings. Most tax software can handle multi-state returns, but given the complexity of your situation, it might be worth consulting with a tax professional to make sure you're handling everything correctly. Also double-check that your employer is withholding the right amount for Colorado - you don't want to get hit with underpayment penalties!

I went through almost the exact same situation last year! Working in one state while maintaining residency in another is definitely confusing, but here's what I learned: Since your permanent address, license, and voter registration are all in Arizona, you're still considered an Arizona resident for tax purposes. The fact that you're temporarily staying in hotels/Airbnbs for work doesn't change your legal domicile. You'll need to file: 1. **Arizona resident return** - reporting ALL your income (including what you earned in Colorado) 2. **Colorado nonresident return** - reporting ONLY the income you earned while working in Colorado Arizona will give you a credit for the taxes you pay to Colorado, so you won't be double-taxed on the same income. You'll essentially pay whichever state has the higher tax rate. The tricky part is making sure your employer is withholding enough Colorado tax. Check your paystubs - Colorado has a flat rate of 4.55%, so you can estimate if they're withholding enough. If not, you can submit a new W-4 to increase withholding or make estimated payments. One thing that saved me a lot of headache was keeping a simple calendar of which days I worked in Colorado versus any days I might have worked remotely from Arizona. Some tax software will ask for this level of detail. The good news is that most tax software handles multi-state returns pretty well these days, but definitely keep all your documentation organized!