Am I Still Required to File A Past State Tax Return?

states with no income tax

Don’t worry about filing a past state tax return if you belong to one of these as your resident state.

The U.S. states that do not have income taxes are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. However, just because you don’t need to pay income tax, doesn’t mean a state is any cheaper to live in. In order to maintain state revenue, states with no income tax rely on other uses of taxes such as estate, property, sales, excise, gift taxes and more.

For example, here are a few ways each state maintains their state revenue:

  • Alaska depends on estate, excise, gift and severance taxes
  • Florida depends on property, sales, and corporate income taxes
  • Nevada; being a tourist attraction, depends on fees, gambling taxes, and high sales taxes
  • South Dakota taxes property, alcoholic beverages and cigarettes
  • Texas depends on high use, sales and property taxes
  • Washington depends on business, occupation and sales taxes
  • Wyoming depends on taxing property and businesses

Unlike the seven states above, New Hampshire and Tennessee do not have personal income taxes but still taxes specific types of income. New Hampshire doesn’t have sales tax, or inheritance tax but it does tax interest and dividends. Tennessee does not have estate and inheritance tax but taxes dividends and interest due to its Hall Tax.

Have you forgotten to file a state return or two?

In the case that you put off filing a state return, (one with income tax) you need to understand your tax situation. First off, your resident state is where you are a permanent resident. It will also tax all sources of your earned income. A non-resident state is another state where you are earning income and taxes you on that income. You are a part-year resident if you were a resident of a state for only a portion of the tax year, such as moving to a new state.

You can avoid being double taxed, by claiming a credit for taxes paid to a nonresident state. Both states will divide the withholding between them and the state whose tax liability was not exactly met will either give you a refund or a tax bill.

Most importantly, you need to know if you need to file more than one state return.

Pay attention to the following to determine if you may need to file more than one state return:

  • moving during the year
  • working in a different state
  • working in multiple states
  • you spend a lot of time with family/spouse in a different state
  • owning multiple houses in different states
  • you spend summer in the north and winter in the south

Click here if you think you have a dual state residency.

Here’s what you need to file.

If your state has income tax and you’re required to file, you will need to obtain your income statements such as W-2 and 1099 statements. You can do so by requesting an income transcript from your state, not the IRS.  After all, the IRS only provides you with federal tax information for an income transcript, so it does not give you the state amounts withheld. You will need to contact your state department of revenue in order to retrieve this information.

In addition to this, if you are reporting prior year expenses, ensure that you have documentation such as child care expenses, donations and medical care receipts. You will also need to contact your state department of revenue regarding their statute of limitations for claiming your refund and payment plans for a tax liability. Keep in mind, each state differs with penalties and interest for the tax you owe.

Rapidtax is here to help.

All you need to do is create an account, enter your tax information, submit your account, and we will calculate your state refund or tax liability for you. It’s that easy. Feel free to contact our customer support team if you have any questions.


Leave a Reply

Your email address will not be published. Required fields are marked *