My wife, who works for the federal government, was promoted and we moved from AL to GA. The job change was announced in June, she physically moved and started work in July, and after living in temporary housing, we purchased a home in GA in December 2006. We sold our AL home in Jan 2007.

1. Her payroll office deducted her for both AL and GA taxes for three months. Can we take a credit on both states returns so as not to be taxed twice?

2. The travel office provided a separate W-2 for relocation expenses and included a gross-up amount to cover federal taxes. Is any of this W-2 taxable in AL or GA? If so, which one?

1) You must file as part-year residents for both states. You pay taxes to each state for the income earned IN each state.

2) Mostly GA, because that is where she was loacted when she got the money. Some CAN be allocated to Alabama for the moving expenses paid while in Alabama.

You MAY want to get professional tax help; contact me at email below if interested.