Alabama/Florida Taxes

[kcladyjane]

My husband and I are considering a move to the Gulf Shores, AL area.  We were interested in living in Alabama and hopefully working within the state also.  If I did work in Florida while living in Alabama I wouldn't have to file a Florida return, but would have to file an Alabama right?  And I would owe AL for what I made in Florida?  We will also have a rental house in MO.  So a MO state tax return also.  Any advice would be great!

[mwcpa]

If you work in State A and live in State B, in most cases, and state A has no income tax, you will pay tax to State B since you live there.

If own a rental property in State C and live in State B, State C will want a tax return (assuming there is a state income tax) and State B will tax you on the same income (since you live there), but there will be a credit against the State B tax for the tax paid to State C on the profits from the rental, you may end up being even steven.

Example.

State C's rental property net income is 1,000.  You pay 100 as a non resident on those profit to State C.
In State B, the tax on the 1,000 of profit is the same 100.  State B would allow you credit on the tax paid to State C to offset that tax so State B would tax you at zero for this (effectively)

Real life is a little more complicated than my example, which is just to get the concept down.

[braje]

Florida does not have State income tax.

[mwcpa]

braje, what you note is true, Florida does not have an individual income tax, but if one work in Florida and lives in Alabama, as noted by the original poster, Alabama will tax those earnings from Florida. 

If you live in a state you will be reporting tax from all sources, not just earned in that state.  To offset any issue of double taxation, resident state grant a credit for tax paid to non resident state (if I live in NJ but work in NY, the State of New York will tax me, but NJ will afford me a tax credit to help offset my tax owed to NJ)

[braje]

Yes MWCPA I understand that but the OP asked "If I did work in Florida while living in Alabama I wouldn't have to file a Florida return"