Your Life

Your Life

Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.

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Pioneer
Posts: 1
Registered: ‎05-17-2017

Moving from Indiana to Minnesota

I am transferring job locations from Indiana to Minnesota. I was wondering how this would affect my 2017 taxes and also claiming residency for taxes as well. I will be renting while living in Minnesota because I won't be staying in Minnesota for more than 2 years.

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Tax Pro
Posts: 5,727
Registered: ‎02-23-2016

Re: Moving from Indiana to Minnesota

HI babrince,

 

Welcome to the H&R Block community.

 

It sounds like you are going to establish permanent residence in Minnesota for at least a two-year period.  If this is true then you'll be a part-year resident of Indiana and a part-year resident of Minnesota so you'll have two state tax returns for 2017.  Indiana and Minnesota do not have a reciprocity agreement, so if you earn some income in one state while still living in the other your state returns will be somewhat tricky but otherwise your income earned in each state is what is reported on the return for each state.

 

Since you are moving due to a change in your job you can deduct your moving expenses.  This includes the cost of travel (miles, plane ticket, train ticket, etc. and the cost of moving your belongings and pets).  You must work full-time for 39 weeks out of the first 52 weeks that you are in your new location in order to qualify.  There is also a distance test, but I have no doubt you will meet it since you're moving to another state.  The distance test requires that your new job be 50 miles further from your old home then your old job was.

 

The moving expense deduction is taken directly on your Form 1040 so it will help you out quite a bit, especially if you have a great deal of expense.  You can deduct moving expenses on your 2017 return even if you haven't met the time test (39-weeks requirement) yet when you file so long as you moved in 2016 and reasonably expect to meet the requirement.  If for some reason you don't meet the requirement and you don't qualify for an exception the amount of your deduction is recaptured on the next tax return as ordinary income.

 

If you plan on maintaining permanent residence in your current state then you'll have a resident return and a non-resident return most likely.  However, the residency rules for each state will have to be carefully looked at because each state has different rules.  For example, in a number of states you are a resident if you lived in the state in a permanent place of abode for more than 183 days during the year.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)