Key takeaways
- Residency status decides how much income each state can tax, so start with the move dates and the work locations.
- A W-2 shows where tax was withheld, not where the work was done, so check the work days first.
- State returns usually start from federal adjusted gross income, then add, subtract and apportion the state share.
- For 2026 returns the federal deadline is April 15, 2027, and Forms W-2 are due to employees by February 1, 2027.
Residency sets which state returns you file
A state with an individual income tax places each person into one of three groups for the year: full-year resident, part-year resident or nonresident. A resident generally reports all income from every source. A nonresident reports only the income the state treats as coming from inside its borders, such as wages for work performed there. A part-year resident is treated as a resident for the months they lived in the state and as a nonresident for the rest of the year.
States define residency differently, and some add a day-count test. Use the state's own definition and current instructions, not the federal rules.
Decision rule: if the client moved into or out of a state during the year, expect a part-year return in each of those states. If the client lived in one state all year and earned wages in another, expect a resident return at home and a nonresident return in the work state.
Work location drives the nonresident filing
New York's nonresident FAQ says a nonresident with income from New York State sources must file, and that a nonresident pays tax only on New York source income, which includes earnings from work performed in New York State. A client who lives in New Jersey and performs work in New York is a New York filer for that work, whatever state the employer is in.
Ask for the days worked in each state, not only the employer's address, because a W-2 address does not show where the work was performed.
Failure mode: the client sees State A withholding on the W-2 and assumes State A is the only state to file. Withholding shows what an employer sent to a state, not where the income was earned. Check the W-2 state boxes against the work-location record before deciding which states to file.
How federal AGI starts the state return
Most state individual returns start from federal adjusted gross income. On New York's Form IT-203, the nonresident and part-year return, line 19 is federal AGI. The instructions say the Federal amount column is generally the same as the adjusted gross income on the federal return, but it is not the same when the special accrual rules apply to a full-year nonresident or a part-year resident.
Worked example with made-up figures. Suppose federal AGI is one hundred twenty thousand dollars, and thirty thousand dollars of that is wages for work performed in New York. The New York instructions say the state first computes a base tax as if the client were a full-year resident, then applies the percentage of income subject to New York tax. Using a simple wage ratio as the illustration, that percentage is one quarter. If the base tax is six thousand dollars, the apportioned amount is one thousand five hundred dollars before the state's own adjustments. The state's worksheet sets the actual percentage, so use this only to check the preparer's math.
Failure mode: the federal return is right and the state return is wrong because the preparer carried total wages into the state column instead of the state share. Ask the preparer for the state column of each income line, not only the federal total.
Pair each federal form with its state form
The federal return is a Form 1040 with Schedule 1 (Form 1040), Additional Income and Adjustments to Income, which covers items such as unemployment compensation, prize and award money, gambling winnings, and adjustments such as the deductible part of self-employment tax and educator expenses. Self-employment tax itself is an additional tax, reported on Schedule 2 (Form 1040), Additional Taxes. Each state has its own resident, part-year and nonresident forms that start from the federal numbers.
Pairing rule: for each state where the client had income or tax withheld, write down three items. These are the state form it will file, the federal lines it starts from, and the state withholding it should claim as a credit.
Prepare the federal and state returns from the same records, so every state number traces to a federal line. For 2026 returns, the federal deadline is April 15, 2027. Each state sets its own due date, so track those separately.
Documents to send for a multi-state return
Ask the client for every Form W-2 for the tax year, with the state section visible. Boxes 15 through 20 hold the state and local information, including state wages and state tax withheld, so a copy that cuts them off is not enough. Also ask for every 1099 the client received, any state refund notice from the prior year.
Exact wording to send: “Please send every W-2 you received for 2026, including any from a job in another state, and a list of the dates you worked in each state, with the city if you know it.” Follow with a second line that asks whether they moved during 2026, and if so, for the move date and both addresses.
Build the work-location record from calendars, travel expenses and the employer's remote-work policy. A table with the state, start and end dates, and work days in each state is enough for the preparer to decide which nonresident returns are needed.
Decision rules for the common multi-state cases
If the client moved in 2026, get the exact move date. The part-year split depends on that date, so get it exactly. Prepare a part-year return in each state, with the resident period and the nonresident period kept separate.
If the client has a state withholding amount for a state where they did not live, ask for the work days in that state. If the work created income from that state, file a nonresident return there to claim the withholding. If the work did not create state-source income, the withholding may be recoverable only through a refund claim.
Failure mode: the client lived in State A and worked remotely for an employer in State B. The client may owe a State B nonresident return even though no one in the office ever saw them in State B. Check the state's rules for employer-location and remote work before filing only the home state.
Avoiding double tax on the same income
When a client pays tax to two states on the same income, the resident state usually allows a credit for tax paid to the other state. The credit is capped by the resident state's own tax on that income. Ask the preparer to show the credit calculation for each state, not just the total.
Keep a one-line note for each state: where the client lived, where the work was done, and what the W-2 shows. The preparer needs that note to check each credit.
States with no personal income tax
The AICPA's state tax summary for Washington says that Washington does not impose a personal income tax. Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no broad personal income tax, so a client who lives and works in one of them usually has no state income tax return to file. Check the state's revenue site for any tax on a specific type of income before telling the client that nothing is due.
The no-tax rule does not clear the client of other states. A client who lives in Texas and worked in New York still owes the New York nonresident return, because New York taxes earnings from work performed there. Decision rule: if the home state has no income tax, the only state returns to check are the states where the work was performed and the states where tax was withheld.
Timing for 2026 returns and W-2s
The 2026 federal return is due April 15, 2027. Say the tax year whenever you give that date, since clients mix up 2026 and 2025.
Employers must furnish Copies B, C and 2 of Form W-2 for 2026 wages to employees by February 1, 2027. The client should expect every W-2 by that date, and the firm should flag any missing W-2 before then.