[indyH]

I need some help with how to file state tax returns.

I worked less than 2 months in NJ in 2007 and my family still live there during this time. The rest of 2007 I worked and lived in IN. How should I handle my state tax returns? Should I file a full time IN resident and part time NJ state returns for 2007? How can I avoid being double taxed?

Thank you so much in advance.

[MukatA]

First you need to decide which one is your tax home. Assuming that IN is your tax home:

You file NJ return and pay tax on the income earned in NJ from NJ sources.
You file IN return and report all your income. Then on the IN return, claim credit for the taxes paid to NJ.

[ebaines]

If you actually lived in NJ for those first two months, then you are a part-year resident of both NJ and IN. You file part-year resient tax returns for both states.

[AtlantaTaxExpert]

If your family still lives in NJ, the state of NJ will contend that you are STILL a NJ resident and the income in Indiana is subject to their tax rates.

If I prepared your return, I would prepare your NJ return as a full-year resident and your Indiana return as a non-resident and claim a credit for the Indiana taxes paid on your NJ return. That would fly with no problem for 2007.

Tax Year 2008 would be a different story, because then Indiana would consider you to be a resident as well due to the duration of your stay.