Owning property in multiple states and traveling between states for business or leisure, can impact your tax liability in those states.
Most states have a threshold for the number of days you’re allowed to stay in the state without paying taxes. If you frequent another state a number of times per year, it is important that you remain within the threshold to avoid tax penalties, or simply track the number of days you’ve spent in a particular state to ensure accurate tax submissions and maximize tax benefits.
While an accurate log of taxable days is essential when it comes to filing your tax as a multistate resident or when doing business in multiple states, it is not an easy task. Being diligent in logging your travel days per state per annum, can be a full-time job. Understanding the impact of living in a higher vs. lower tax state for parts of the year can be difficult to track and make sense of.
We take a look at the software that can help you track your residency days per state to aid a smoother, less complicated tax filing process:
1. Tax Day
TaxDay (Taxday.com) is an innovative travel-tracking app for people who work or reside in multiple states throughout the year. The app allows you to track the time you spend in different tax jurisdictions and comes with the complete and often complex residency tax rules for all 50 U.S. states.
The tax-app links to your cellphone GPS to automatically track the amount of time you spend in a specific state. This allows you to quit the stress of manual tracking, giving you an accurate log of taxable days to account for on your multistate tax return each year.
- GPS tracking: uses cellphone GPS to track your time in different states.
- Data security: keeps your information safe and private.
- Travel overview: app reports and notifications let you monitor your travel history.
- Tax planning: tax reports provided by the app give your tax practitioner accurate information for easy tax filing.
2. Tax Bird
Like Tax Day, Tax Bird (Taxbird.com) tracks the number of days you spend in a state. The app also alerts you when you approach the threshold for residency, and creates a detailed report on the time you’ve spent in different states.
- Uses your device’s location to track time spent in state.
- Provides a comprehensive residency report that shows the total days spent in each location per tax year.
- Notifies you when you approach a state residency threshold.
Like Tax Day and Tax Bird travel tracking apps, Monaeo (Monaeo.com) works in the background to log your travel time across states. The app offers a calendar display of your annual travels, giving you access to details on specific trips gone by. It also offers warning alerts when the threshold timeframe is approaching.
- Provides automated travel logging and recordkeeping of travel per state.
- Gives you early alerts when approaching residency thresholds.
- Provides location reports that can be accessed for years after the travel
- Offers data security
Keeping track of the time you spend in other states is imperative to filing accurate tax returns. Unreliable data can put you at risk of investigation and multistate tax penalties. If you travel between states, it is advisable to consult with an expert to help you manage your tax portfolio in a way that safeguards you against run-ins with the IRS.
Fusion CPAs are equipped to help individuals and entities with multistate taxes. We offer financial planning, tax preparation, bookkeeping, and software solutions. With our outsourced accounting and tax services, you will know the economic outcome, tax considerations & implications of traveling between states and reaching the residency threshold in more than one state per annum.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.