FIRE Finance: How to e-File Multiple State Returns with TaxAct Online?

The dawn of a new year is often accompanied with new dreams and rejuvenated hope. It also reminds us to get ready and contribute our share towards this great nation. How? By paying our taxes :).

As you might have noticed from our posts, we have been keeping an eye on deals for tax preparation software. We shall continue to do so until the D-day for filing taxes.

You Ask

One of our readers, Nick*, has emailed an interesting question:

"I just read this article (about an excellent deal from TaxAct) from your site and I was wondering if you were really able to eFile two state returns? I've only been able to eFile one in the past and I would love to be able to do two. Can you tell me how you did that?"

*The reader's name has been changed to protect his privacy.

We Reply

The need to file multiple state returns is quite common. Some reasons for it may be:

relocation to a different state or a change of our domicile state
a new job in a different state
your spouse lives or works in a different state

Last year we had to file a sum total of five tax returns - one federal return, three state returns and one city return!

Now that should have been taxing. Surprisingly and fortunately it wasn't so. We had used TaxAct Online Ultimate Bundle and e-filed most of them.

Coming back to Nick's question: To e-file multiple state returns using TaxAct Online, please do the following:

Log in to TaxAct online.
Enter data for federal return. You may e-file your federal return at this point or choose to do so later.
Click on the tab "State Q & A" at the top. Next select "Add State." Enter data for the chosen state. Please see the image below.

e-File Multiple State Returns with TaxAct Online

Repeat step #3 for another state.
Revise all data.
Whenever you are ready simply e-file Federal or any of the states as you desire.

Special Case

A couple of years ago we had an unique need. We had to file two state returns with different filing statuses - Married Filing Jointly(MFJ) and Married Filing Separately(MFS)!

The problem with TaxAct is that it does not allow the filing status (of a return) to be changed. The filing status is locked to one chosen for our federal filing. We sent an email to TaxAct and quote their response:

"If a taxpayer files as Married Filing Joint on the federal return, and wants to change to Married Filing Separate on the state return, TaxACT does not "exclude" income from the other spouse on the state return. The taxpayer would need to enter a new federal return with the MFS filing status and just enter the one spouse's income amounts, etc. to have that income and data transfer alone to the state return. This Married Filing Separate federal return would not be e-filed. The same procedure would be done for the second spouse if desired. Taxpayer can then individually e-file the Married Filing Joint return and the Married Filing Separate state return(s)."

Based on above advice, we executed these steps last year:

Entered federal and state data.
e-filed both with same status - Married Filing Jointly.
Downloaded pdf copies of all the e-filed returns.
Saved a copy of pdf docs showing comparison with previous year's tax returns and national averages.
Changed federal data and filing status to Married Filing Separately.
Added a new state and entered data.
Did NOT e-file federal return. Simply e-filed return for the second state. As expected, an additional fee was charged for the second state.

Must admit, it worked like a charm. We have been quite satisfied with our TaxAct experience. We hope this post helped with filing multiple states' tax returns using TaxAct. Please leave your feedback :).

Anonymous said...

I have one question. Last year my husband was a resident of Pennsylvania and a partial year resident of Nebraska. I was a resident of Nebraska only. We intend to do as you suggested using taxact... File MFJ for federal return and MFS for state.

My question is that when we file Pennsylvania (PA) return, does he still enter the income he earned in Nebraska. Or, does he just enter the income from PA sources

FIRE Finance said...

@Anonymous
Thank you for contacting us.

At this link you will find all forms and guides related to personal income tax for PA.
http://www.portal.state.pa.us/portal/server.pt/community/personal_income_tax/14692

On the same page towards the bottom half is a link to PA PIT Guide - Chapter 4: Filing Requirements for PA Personal Income Tax
http://www.portal.state.pa.us/portal/server.pt/document/628135/pitguide_chapter_04_pdf

In the guide on page 11:
"
III. TAXATION
A. How Residents are Taxed
A resident is taxed on all of his or her taxable income whether it is received from
sources inside or outside Pennsylvania.
A taxpayer is allowed a resident credit for any tax imposed by and paid to other states
or countries based upon income that is subject to Pennsylvania personal income tax.
Such taxpayers should complete PA-40 Schedule G-L, Credit for Taxes Paid by PA
Resident Individuals, Estates or Trusts to other States or Countries. PA-40 Schedule G-L
must include a copy of the tax return filed with the other state or foreign country.
Refer to PA PIT Guide Chapter 17 Credits."

----------------------------
So here is the summary:
----------------------------
1. First determine your husband's PA residency status for tax purposes. Please refer to the same guide mentioned above.

2. If your husband is truly a PA resident for tax purposes then
2.1 First file Nebraska tax return.
2.2 On PA tax return report income from Nebraska sources as well.
2.3 Claim tax credit on PA return for the amount paid to Nebraska by completing PA-40 Schedule G-L.

Hope this helps and good luck!

Thankyou so much. This helps out a lot !!

How to e-File Multiple State Returns with TaxAct Online?

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