Credit for Taxes Paid to Other State or Jurisdiction

When you are a full-year resident of any state, generally you are required to include on that return all income earned regardless of the state you earned it in. If you also have income earned in another state where you did not live (your nonresident state), you are usually allowed a credit on your resident state return for taxes paid to that other state (or other "jurisdiction" as some states term it) if the income was actually taxed by both of the states.

There are 43 states that assess income tax and each has a separate set of instructions on how to calculate the income taxed by both states and how to calculate the tax paid to the nonresident state. For this reason, the TaxAct program is unable to calculate the two amounts automatically, and therefore the user must manually perform the calculations and enter them into the appropriate sections of the state returns. The State Form Instructions will provide guidance on how to perform the calculations.

The Taxpayer Support department staff are not at liberty to provide tax advice regarding the amounts you should enter in those fields, but can help by providing the instructions as to how that specific state outlines to calculate the amounts. Below are general instructions on calculating those amounts for any state:

  1. Complete and print the nonresident (NR) return first.
  2. Access the State Q&A for the resident return and navigate to the Q&A screen where the fields are located for the amount that was taxed by both states and the tax liability to the other state.
  3. Click State Form Instructions on the right to access the instructions for that specific resident state as to how they want those amounts calculated.
  4. Once the amounts are entered, print the resident return and the information on any credit calculated should print as part of the return.

Although not all states require it, you should attach a copy of the nonresident return when claiming a credit for taxes paid on your resident return. If you choose to e-file the return, just keep a copy of the nonresident return with your tax records. Your resident state agency may request a copy if verification is needed.