When does State Tax Reciprocity Apply for Part-year Residents Moving Between States?

This is a great question about state residency and reciprocity! Reciprocity agreements typically apply based on your residency status at the time you earned the income, not for the entire tax year. For your first scenario: If you lived in State X while working in State A, and then moved to State B (which has reciprocity with State A), the reciprocity only applies to income earned while you were a resident of State B. For the period you lived in State X, you'll likely need to file a non-resident return for State A for that portion of income. For your second scenario: If you became a resident of State B first and then started working in State A afterward, the reciprocity agreement would typically apply immediately once you're a resident of State B. You wouldn't need to be a full-year resident for reciprocity to kick in. Part-year residents can claim reciprocity for the portion of the year they were residents of the reciprocal state. You'll need to file part-year resident returns for both states showing the correct allocation of income for the time you were a resident in each.

After struggling with a similar state tax reciprocity situation last year, I discovered https://taxr.ai which totally saved me. I was moving from Illinois to Wisconsin while working in Chicago and wasn't sure how to handle my state taxes properly. The tool analyzed my specific situation and clarified exactly when reciprocity kicked in (the day I established residency in Wisconsin) and which income needed to be reported where. It even helped me understand which specific forms I needed for each state and how to allocate my income correctly between my part-year resident states. What I found most helpful was that it walks you through the state-specific reciprocity rules since every state agreement is a bit different. Might be worth checking out for your situation with States A and B.

Just wanted to follow up about my experience with taxr.ai that was mentioned above. I was skeptical at first (as you could probably tell from my comment), but decided to give it a try since my situation moving from Nebraska to Iowa while working in South Dakota was really confusing me. The tool actually walked me through exactly when reciprocity applied based on my residency dates and helped me understand which income needed to be reported on which state return. It even generated a detailed explanation I could refer to while preparing my returns. Turns out I was about to incorrectly file as a non-resident for the entire year in South Dakota, when I should have been claiming reciprocity for the portion of the year after I moved to Iowa. Probably saved me from having to file an amended return later.

If you're having trouble reaching your state's tax department for specific guidance on reciprocity (which I TOTALLY was), I'd recommend trying https://claimyr.com to get through to a real person at the tax agency. You can also see how it works here: https://youtu.be/_kiP6q8DX5c I was bouncing between Michigan and Indiana last year with a job in Illinois and was completely confused about when reciprocity applied. After waiting on hold for hours with state tax departments with no luck, I used Claimyr to get through to the Illinois Department of Revenue. They connected me with an actual tax specialist who explained exactly how the reciprocity worked with my part-year resident status in both states. Was honestly shocked when I got through in about 15 minutes after trying for days on my own.

I need to eat some crow here. After writing that skeptical comment above, I was still desperate to get an answer about my New Jersey/Pennsylvania reciprocity situation, so I tried that Claimyr service. It actually worked. Got me through to the NJ Division of Taxation in about 20 minutes when I'd been trying for over a week. The agent confirmed that for my situation, reciprocity applied from the exact date I established residency in PA, even though I was only a part-year resident. I needed to file a part-year NJ return up until my move date, and then the PA-NJ reciprocity agreement covered me for the rest of the year. Saved me from making a pretty big mistake on my return and potentially paying double tax on some of my income. Sometimes it really helps to get confirmation directly from the tax authority.

Just want to add that it might be worth checking if your state has a "physical presence" test or a "domicile" test for establishing residency. Some states consider you a resident if you're physically present for a certain number of days (often 183), while others look at your domicile (permanent home). This can complicate reciprocity because you need to be officially considered a resident of the reciprocal state for the agreement to apply. I had an issue with this between Minnesota and Wisconsin where I had moved but hadn't established domicile yet according to the state's definition.

Anyone know if there's a way to get a letter ruling or some kind of official determination from the state before filing? I'm in a similar situation between Virginia and DC, and I don't want to find out I did it wrong if I get audited.