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3 Tips for Filing State Income Taxes

Yep, you read that right. Most people know about federal income tax filing, but some forget that you also have to file income taxes for the state you live in too. Talk about a headache. Filing taxes can be a confusing process, with plenty of complicated language, tricky math, and tons of rules to keep an eye on. 

Well, we’re here to make it easier. Filing state income taxes may seem like a hassle, but it doesn’t have to be as long as you follow these 3 simple tips. Read on to find out what you can do to ensure that your tax filing goes smoothly, and you get the big refund that you deserve this April. 

Get those forms prepared

Alright, this is probably the trickiest step: getting all the various forms that you’ll need ready to go before you start doing your taxes. Every state is different, so it can be tricky to know exactly what forms you may or may not need. For instance, California requires the 540 Tax Form, and Texas actually doesn’t have income tax at all! (Though that doesn’t necessarily mean you don’t have to file for other state taxes.)

Common forms that you may need, however, include:

  • 1040 Federal tax forms (often useful for reference)
  • W2’s from work, which state your earnings at most hourly and salaried jobs
  • Earnings statements from other sources of income
  • Investment and dividend income
  • Inheritance documentation
  • Asset appreciation documentation 
  • Receipts from charitable donations
  • Forms demonstrating tax exemption in your state

Once you’ve put together a secure folder with forms that you might need, it’s time to start the serious work of getting your taxes done.

Report everything accurately

This can’t be stressed enough: filing your taxes will go much easier for you if you simply report everything as accurately as possible. As you go through each set of question on your state’s tax administration website (or when using the paper forms), be sure to carefully reference each of the documents above. 

Remember: Putting an inaccurate amount for your earnings may trigger an audit. And, if you are found to have underpaid your taxes throughout the year, you may be fined. That makes it especially important that you check your work along the way. 

Another common mistake people make is paying the amount they owe in their federal tax bracket, rather than the bracket that they fall into in their particular state. 

State tax brackets vary significantly by state, and all are different from the bracket you might fall into on your federal taxes. Be sure that you know how much you owe in your state and in your federal brackets separately. 

You should also be aware of the various different taxes that states impose:

  • Income tax
  • Estate tax
  • Investment income tax
  • Property taxes
  • Sales and use taxes
  • “Sin” or excise taxes

Pro tip: In most states, the amount you owe in income tax will be lower than the amount you owe to the federal government. If you’re paying more – especially significantly more – in state taxes, be sure to double-check your work, as you may have made an error. 

Don’t be afraid to get a little help

There’s no shame in needing a little extra help when it comes to filing your state taxes. Luckily, there are tons of services available for those who need help completing their taxes accurately and in a timely manner. In general, you’re likely to see two different options:

  • Online tax software: These options allow you to complete your taxes fully online with the help of prompts and user-friendly forms. These are a great, inexpensive option for those whose tax situation isn’t that complicated, or those who are confident they can handle their taxes mostly on their own. 
  • Tax professionals: Professional tax filing services usually involve a human professional working through your tax documents and preparing everything for filing. These can be more expensive, as you’ll have to pay for the labor of your tax professional manually going through all your documents and inputting the right values, but it can be a good option for those with complicated tax situations. 

At the end of the day, the important thing is that you file your taxes accurately and on time. You can use these tips to help you make sure that you’re able to do so every year!

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