Many RVers and those who work camp, in particular, work in multiple states during the year. How do you file taxes when working in multiple states?
The biggest factors to consider when you travel and work are the following:
- Physically working in a state
- Length of time spent in each state
I get this question often since many digital nomads and RVers travel across state lines and work wherever they go. To understand if you’ll owe taxes when working in multiple states you must first understand the following items.
Domicile is important because it’s where you claim as your resident state. Your domicile should issue your driver’s license. It should be where you have your RV or car registered and insured. Domicile is where you have ties for tax purposes. This is why many RVers and digital nomads choose income tax-free states such as Florida, South Dakota, and Texas.
2. Physically working in a state
Next up consider if you’ll be physically working in a state or not. Examples of this would be:
- Amazon camper force
- working at a campground in the office or doing maintenance
- travel nursing where you go into a hospital or clinic
- an electrician who goes to a job site
These are all jobs that need you to be physically present to get the work done.
Pretty much all of these jobs should also be paying you W-2 wages. This would be in a weekly, bi-weekly, or monthly paycheck. It doesn’t matter whether it’s salary or hourly. It’s still W-2 wages.
In January you’ll receive a W-2 for each employer that you worked for during the year. State taxes most likely were withheld from your pay so you’ll need to file in that state to know whether you receive a refund or owe more taxes. If you had more than one work camping job, you’ll most need to file taxes when working in multiple states.
Most of the time you file a nonresident tax return in the states in which you worked as a work camper. This also means the only income that should be taxed by that state is the income you earned while physically working there.
Let’s look at an example where you will need to file taxes when working in multiple states:
You spend the summer in Montana working at a campground from May through September. You earn $10,000 during your time there and had state taxes withheld from your paycheck. You’ll need to file with the state of Montana as a non-resident even if you claim an income tax-free state as your domicile.
3. Time spent in a state
The last factor is the amount of time spent in one state. If you spend more than half the year or over 180 days in one state, then you might need to file a resident tax return there. This is sometimes called a statutory resident. Look up the state laws or get help from a tax professional if you think this might apply to you.
California, Massachusetts, New Jersey, and New York are particularly aggressive in this respect so be aware if you’ll be working in any of those states. In this situation, you’ll be required to file a resident tax return vs. filing as a non-resident.
States With Tax Reciprocity
There are 16 states that have tax reciprocity. This means either the state won’t make you pay their state income tax or you get a credit from your resident state for taxes paid to another state. The following are the sixteen states.
- New Jersey
- North Dakota
- West Virginia
What if you work remotely?
A common myth about state taxes is that you have to pay them to the state where your employer is located. This is for the most part incorrect.
The location of your employer’s corporate headquarters or home base should have no bearing on your state income taxes.
The only exception I know to this rule of thumb is New York-based employers. Yes. If you work for a New York-based employer you most likely will owe New York state tax.
While nonresidents who don’t physically live or work in a state can create a state income tax liability there in a few ways, simply working for an out-of-state company isn’t one of them. Having to file a state tax return results from being paid for work you personally did on that state’s soil.
To wrap things up, if you physically worked in multiple states, then you’ll most likely owe state tax returns. While it can feel overwhelming and stressful, it most likely won’t be as bad as you think. I do suggest you hire a professional to help you file and take some of the stress off your shoulders.