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State Income Tax Questions

Do you need to know if you are required to pay state income tax? Or, have you not filed and need to know what to expect? Taxes can be confusing for most people; however, with a little assistance you can rest assure everything is in order. Tax Experts are available online to provide clarification to all your questions. Read below where Experts have answered state income tax questions for others.

What is state income tax?

This tax is an allowable deduction in the computation of the federal income tax with limitations. Most but not all U.S. states collect it and the rate varies by state.

Which states do not impose this tax?

Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not impose this tax. Also, residents of New Hampshire and Tennessee are not required to pay this tax, though they do pay on dividends and income from investments.

Do states tax bonds or Social Security benefits?

States that impose the state income tax are not allowed to tax income from federal bonds or other obligations. Most states also do not tax Social Security benefits or interest income from state obligations.

Will an Illinois resident lose their exemption status on a state pension and deferred compensation if they move out of state?

The pension and deferred compensation income will be considered taxable to the state of your residence based on the date received, if that state considers it taxable. It does not matter that the state it was constructed in does not tax it.

Is a business required by law to withhold this tax from interns who are residents of another state?

State income tax should be withheld by the employer for employees based on the location of where they are working. Where the employee lives does not matter. The employee is responsible for taxes for their state of residence.

Are federal retirees required to pay this in North Carolina?

According to North Carolina, an individual will not have to pay this tax on their retirement benefits if they have a qualifying federal retirement plan under the Bailey Decision.

Is there a statute of limitations for not filing?

In all states that have this tax, there is no statute of limitation for unfiled returns. The statute of limitations is generally a few years and begins at the time of filing the return or when the tax is paid.

What are the consequences for not filing a state return?

The consequences will vary depending on if you owe money to the state and what amount you may owe. Most states will add penalties and interest to the amount owed and could take action to put levies on your assets.

Understanding and correctly identifying information about state income tax laws can help when filing or if you haven’t filed yet. Experts can help answer any tax questions or what the consequences are for not filing. Get the answers fast and affordably by asking an Expert online at your convenience.

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