Do I need to claim my Arizona state tax wadges on my Colorado state tax return and vise versa with my Arizona?
Some states require you to report all your income for the year, but pro-rate the tax due based on either how long you lived in the state or what % of income was earned in each state. Some states require you to report only income earned while living there, working there, or both. Either way, you do not lose money. In either case, also check the IRS publication “moving expenses” to see if you are eligible to deduct the cost of moving between states. If you live in one state while working in another, you must report the income to both states. However, you claim a credit on one of the two returns for the amount of tax paid to one state on the income taxed by both states, so you do not lose money. (Generally, the credit is for the amount paid to whichever state charged less, so your total tax, net of credits, is the same as if you paid tax only to the state with higher taxes.
