Where Do You Need To File A State Tax Return?
By trycmcw at 22 February, 2012, 12:00 am
A lot of people realize that they need to file a Federal tax return. But few realize that there’s another filing requirement: a state tax return. These forms involve payment to your particular state, and are used to fund state-level government and initiatives. But how do you know where you owe payment? It’s not just dependent on where you live.
In General, You Pay Where You Work
There are many places – especially on the east coast – where you may live in a different state from where you work. Even if you’re not on the east coast, border towns are fairly common, and traveling for business is common as well. However, a good understanding of what’s actually due to each state is not common at all. In principle, the idea is simple: you pay where you work, for work completed in that specific state. For example, if you spent 50% of your time working in Oklahoma and 50% in Texas, tax offices would need to file with both states. You’d pay dues on 50% to one and the other 50% to the other.
Non-Income Based Factors
The rules governing income payments only apply to work/income in that area. There are many other activities which may cause you to owe money even if you didn’t do any work in a particular area. For example, property fees apply to wherever you happen to own property, regardless of whether or not you actually live there.
The More Locations, The More Complex
If you work in one or two states, your tax return is not likely to be very difficult. But as you add more locations, that difficulty will go up quickly. The best course of action is to keep a detailed log of where you are working and what you do while you are there. Many applications exist to make this task easier, but you can also work without one.
The more places you have to file, the more likely it is that you will be audited at some point. In addition, most places that can prepare a tax return will charge for additional state forms. A written record of what transpired and where you were in the course of your business helps in both these situations. Written records are always better than approximation because they’re so easy to quantify. Measure the time in days, and if possible measure your exact earnings during this time.
When in doubt, it is always better to file a tax return needlessly than to unintentionally neglect one that should have been submitted. If your situation is particularly complex, don’t hesitate to turn to a professional, or even to a lawyer or CPA.
Author is a freelance copywriter. For more information and to locate Texas tax offices, please visit Liberty Tax.
No comments yet.