If I live in one state and work in another, which state do I owe state taxes to?
I live in a state where I have my home address. I work ina different state. I also do work from home. When I travel, I stay in a hotel. Will my state tax fall in the state I live in or the state I work in? Can travel/hotel expenses can be deducted in the year end filing?
This is an interesting question, and has a few separate parts.
In very general terms, your state income tax(es) depends on where you are when doing the work, so per your example you would likely owe tax in your "home" state for the portion of your income earned while working from home, and from the "different" state when you are working in the office. There is additional complexity here because each state has its own particular approach to how the accounting works, and depending on the two states involved in your own case, there may be specific rules around reciprocal agreements, credits to your "home" state tax return for taxes paid in the other state, etc.
The question about the tax deduction for your travel expenses has its own complexity, and depends on the details of your situation. This topic is addressed at length by the IRS here. You will see there that you must determine whether your home or the office in the other state is your "main place of business".
Good luck, and as in most cases where complexity creeps into the situation, consider seeking out a qualified tax professional in your area to consult on details like this and in accurately completing your income tax returns.
It is possible that you owe taxes to both states. You might, however, get credit for the income taxes paid to the non-resident state on your home state tax return. If they are bordering states it is possible that they have a reciprocal tax relationship. I would highly recommend to use a tax professional to file your return next year, either a CPA or Enrolled Agent. Regarding your unreimbursed expenses, if you are a W2 employee the new tax law does away with the unreimbursed employee expense deduction. If you are a contractor considered self employed, then you might be able to deduct your expenses on schedule C, but certainly confirm with your tax professional.
My first suggestion to you is not to file the tax return on your own when you have very little tax knowledge. However, if you must start somewhere, here’s some general idea.
Depending on your home state, where you bought your house, has any reciprocal tax agreement with the state you’re working. If it does, you can avoid filing multiple state taxes. At a minimum, you can ask your employer not withhold the tax from the state you’re working. On the other hand, if there’s no reciprocity, then you must file both state tax returns and may claim some tax credits from your home state for the tax you paid as a nonresident to the state you are working. As you can see, it’s getting complicated.
For your second question, the employee expenses (hotel bill, food expenses, etc.) are no longer deductible due to the Tax Cut and Job Act of 2017. Thus, you may want to gather your courage to negotiate a pay raise to cover those out-of-pocket costs while you travel. Best!