How does multi-state taxation work for individuals?

For individuals who earn income from multiple states, they generally need to file a tax return in each state where they have income sources. The income must be allocated or apportioned to each state based on the specific tax laws and rules. Individuals may be able to claim a tax credit in their state of residence for taxes paid to other states to avoid double taxation. However, the credit may be limited based on the state’s tax laws. Proper documentation, such as W-2s and 1099s, is crucial for accurately reporting income and claiming credits or deductions.