Why am I owing state taxes when I filed for a refund? So confused!
Title: Why am I owing state taxes when I filed for a refund? So confused! 1 I've always gotten tax refunds every year without any issues until this filing season. I'm completely baffled because I filed expecting a refund like usual, but instead I'm suddenly owing a large amount in state taxes for two W2s I have from different employers. Both jobs were already withholding taxes from my paychecks each period, so I'm totally confused about why I suddenly owe the state so much money. Could it be because I relocated to another state during the year? I moved from Colorado to Washington in June and worked in both states. Is that what's causing me to owe instead of getting money back? The federal return looks normal with a small refund, but the state portion is showing I owe almost $2,300! I checked that both employers were withholding state taxes on my pay stubs. Anyone experienced something similar or can help me understand what's happening here?
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Royal_GM_Mark
18 This is almost certainly related to your mid-year move between states. When you move between states during a tax year, you typically need to file part-year resident returns in both states, which can get complicated quickly. Here's what likely happened: Each employer was probably withholding for the state where you were working at the time, but withholding calculations are usually based on the assumption you'll be working there the entire year. When you file part-year returns, the calculations change significantly. Washington doesn't have state income tax, so you only need to file a part-year return for Colorado, but you need to report your total income from both states, then prorate what's taxable to Colorado. Also check if your employers adjusted your withholding properly after your move. Sometimes employers continue to withhold for the wrong state if you didn't update your withholding forms.
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•7 Thanks for explaining! But I'm still confused - if Washington doesn't have state income tax, shouldn't that mean I'd owe LESS overall since part of my income wasn't subject to state tax? And do I really need to file a part-year return in Colorado if I moved out in June? The tax software didn't make this clear at all.
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•18 You're right that Washington having no income tax should theoretically reduce your overall state tax burden. However, it's common for people to still end up owing because the withholding from your Colorado job was calculated as if that was your only income for the entire year. Yes, you absolutely need to file a part-year return for Colorado. You'll report all your income from both states, but you'll only be taxed in Colorado for the income earned while you were a resident there, plus any Colorado-sourced income after you moved. Most tax software has a specific section for part-year residency that walks you through this, but it's easy to miss or enter incorrectly.
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22 I ran into something similar last year and discovered taxr.ai (https://taxr.ai) which saved me a ton of headache with my multi-state situation. I uploaded my W2s from both states and it immediately flagged that my Colorado employer was still withholding at the single-state rate even after I moved. The system analyzed all my documents and explained exactly why I was owing instead of getting a refund. It also showed me how to fix my withholding for this year so I wouldn't have the same problem again.
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•11 Does it actually work with complicated multi-state situations? I moved from California to Texas mid-year and I'm worried I'll run into a similar problem. Does the system just analyze or does it help with actual filing too?
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•5 I'm skeptical about these tax tools. How does it compare to TurboTax or H&R Block? Those big companies already messed up my state filing last year so I'm wary of trusting another system.
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•22 It absolutely works with complicated multi-state situations. I had income from three different states last year, and it analyzed everything correctly. It specifically looks for withholding issues that happen when you move between states, which sounds exactly like what you need for your California to Texas move. The system does both document analysis and can guide you through filing, though I primarily used it to understand why I was owing so much when I expected a refund. It's especially good at explaining tax situations in plain English instead of tax jargon.
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11 Just wanted to update - I used taxr.ai and it immediately identified my problem! Turns out my employer in my new state wasn't withholding enough because they didn't factor in my previous state's income when calculating my withholding rate. The analysis showed exactly where the shortfall happened and how much I should adjust my W-4 for this year. Saved me hours of confusion and potentially hundreds in penalties for underpayment. Definitely worth checking out if you're dealing with a multi-state situation!
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14 After reading this thread, I want to share something that helped me with a similar issue. I needed to talk directly to the Colorado Department of Revenue about my part-year residency situation, but kept getting stuck in their phone queue for HOURS. I finally used Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c) to see how it works. They got me connected to an actual human at the Colorado tax office in under 20 minutes when I'd been trying for days on my own without success. The agent explained exactly how the part-year residency calculation works and confirmed I needed to file in both states.
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•3 Wait, how does this actually work? Are they just calling for you or something? I don't understand how a service can get you through phone queues faster than doing it yourself.
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•5 Sure, another "miracle" service that claims to do the impossible. I'll believe it when I see it. The IRS and state tax departments are deliberately understaffed - there's no magic button to skip the line that some random company has figured out.
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•14 They use a technology that navigates the phone trees and waits in the queue for you. When they reach a human agent, you get a call connecting you directly. It's not magic - just smart technology that deals with the waiting so you don't have to sit there with a phone to your ear for hours. The value isn't just skipping the line - it's that you can go about your day while they're waiting in the queue for you. When I used it for the Colorado Department of Revenue, I was able to get work done instead of listening to hold music for 2+ hours.
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5 I need to apologize for being so skeptical earlier. I broke down and tried Claimyr yesterday after spending THREE HOURS on hold with my state tax department and getting disconnected. The service called me back in about 25 minutes with an actual tax agent on the line. The agent confirmed I had the same issue as the original poster - I moved states mid-year and my withholding wasn't calculated correctly. She walked me through the exact forms I needed and even gave me her direct extension for follow-up questions. I'm still annoyed I owe money, but at least now I understand why and can fix it for next year!
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Royal_GM_Mark
9 My situation was a bit different but might be relevant - I found out I owed state taxes because my employer mistakenly used the wrong state withholding tables after I moved. Check your last paystubs from each job and look at the state code on the withholding line. It's possible one of your employers kept withholding for the wrong state after you moved, which would definitely cause you to owe.
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•1 Thanks for this suggestion! I just checked my paystubs and you're absolutely right - my first employer continued to withhold for Colorado even after I moved to Washington. No wonder I owe so much! Is there any way to fix this after the fact or am I just stuck paying what I owe now?
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•9 Unfortunately, you generally can't fix it after the tax year has ended - you'll need to pay what you owe now. But you should immediately contact your payroll department to correct it for this year so you don't have the same problem next tax season. For this year's taxes, make sure you're filing as a part-year resident for Colorado and indicating the correct dates you lived in each state. That will at least ensure you're only paying Colorado tax on income earned while you were actually living there.
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16 Does anyone know if state tax reciprocity agreements would help in this situation? I've heard some states have agreements not to tax the same income twice.
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•18 Colorado and Washington don't have a reciprocity agreement, but that's actually not relevant in this case anyway. Reciprocity agreements typically apply to people who live in one state but work in another. Since Washington has no income tax, there's no double taxation issue here. The problem is more about proper withholding and filing correctly as a part-year resident. The OP needs to file a part-year return for Colorado, reporting income earned while a resident there (plus any Colorado-sourced income after moving).
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•16 That makes sense, thanks! I was confusing reciprocity with something else. Sounds like moving to a no-income-tax state should be beneficial in the long run, even if it causes some confusion in the transition year.
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