A Couple More Tax Questions

[asterion]

Basically, two questions:

1. My legal residence is in New Mexico, but I have income in Pennsylvania. The state of Pennsylvania took money out of my paycheck. Do I need to file a tax return in each state (I have income in New Mexico as well) or is there some way I transfer income earned in Pennsylvania to New Mexico?

2. I had a group of stocks with a setup to automatically reinvest any dividends. I sold the entire lot as one transaction in 2004. With one exception where I actually bought a substantal amount of stock in one company early in 2004, all other investing activity was the reinvestment of these dividends. Do I really need to split the sell transaction between the less-than-a-year dividend reinvestments and everything else that was longer than a year? The math works out so that I wound up doing things like investing in 0.1 shares of a stock for less than a dollar’s worth of extra investment. I then assumed I could evenly split the commission between the one-year and less-than-a-year investments, so I wind up with losses of something like 7 dollars on these tiny transactions. I already did the math and it’s sitting there in TurboTax, but I’d be happy to clear it out if possible. Quite frankly, those amounts did not seem to be material to me, but I’d rather do too much than too little until I got an answer.

[iwakura43]

If you want money back from PA, you’ll have to file state taxes with PA. I live in New Jersey, but to get the money withheld by New York State refunded, I had to file in New York.

[Freddy_the_Pig]

@asterion

1. My legal residence is in New Mexico, but I have income in Pennsylvania. The state of Pennsylvania took money out of my paycheck. Do I need to file a tax return in each state (I have income in New Mexico as well) or is there some way I transfer income earned in Pennsylvania to New Mexico?

My state of Illinois has a line on its income tax form to claim a credit for income tax paid to other states. The only catch is that you can get penalized if the out-of-state payment was to a higher-tax state; for example, if 10% of your income was earned out-of-state, you can’t claim a credit for more than 10% of your Illinois taxes even though you may have paid more to the other state. Unless you’re concerned about differential rates, see if your New Mexico forms have a similar option.

2. I had a group of stocks with a setup to automatically reinvest any dividends. I sold the entire lot as one transaction in 2004. With one exception where I actually bought a substantal amount of stock in one company early in 2004, all other investing activity was the reinvestment of these dividends. Do I really need to split the sell transaction between the less-than-a-year dividend reinvestments and everything else that was longer than a year? The math works out so that I wound up doing things like investing in 0.1 shares of a stock for less than a dollar’s worth of extra investment. I then assumed I could evenly split the commission between the one-year and less-than-a-year investments, so I wind up with losses of something like 7 dollars on these tiny transactions. I already did the math and it’s sitting there in TurboTax, but I’d be happy to clear it out if possible. Quite frankly, those amounts did not seem to be material to me, but I’d rather do too much than too little until I got an answer.

Your scenario is a little hard to follow, but in general, yes, each dividend reinvestment establishes a separate basis price and transaction date. It sounds like you’re doing it right. You could probably get away with fudging it on “de minimus” grounds, but why take chances if you’ve already done the math?