Does paying income tax to one state automatically stop another state from taxing the same year?

No. Paying tax to one state is important evidence, but it does not automatically cancel another state's filing requirement or assessment. The right treatment depends on residency status, source of income, and the credit rules of the states involved.

For example, a resident state may tax all income of its resident, then allow a credit for tax paid to another state on income also taxed by that other state. A nonresident state may tax only income sourced to that state. A part-year state may require allocation between resident-period income and nonresident source income.

The EA should ask three questions:

1. Which state was the taxpayer a resident of during each part of the year?
2. Which income was sourced to each state?
3. Which credit or allocation schedule applies?

Assume Jordan Patel was a resident of State A through March 31, moved to State B on April 1, and earned 30,000 before the move and 90,000 after the move. If State A sends a bill for the full 120,000, the EA should not rely on a one-line statement that State B tax was paid. The response should show the move date, the wage allocation, and any credit available under State A rules.

On an exam, the best answer usually says to prepare the correct resident, part-year, or nonresident return and claim the proper credit or allocation, rather than telling the taxpayer to ignore the second state.