Deal with Multistate Taxation Issues Swiftly and with Confidence
Dealing with taxes is never easy, no matter what your situation, but nothing compares to multistate taxation issues. Making sure you file federal and state taxes properly is complicated enough, but having to file taxes in an additional state makes a complicated situation nearly impossible to deal with on your own.
If you’ll be dealing with multistate taxation issues this year, it’s important to enlist the help of a professional. They can ensure that you aren’t overtaxed, ultimately ensuring you keep more of your money at the end of the year.
Filing a multi-state tax return is more common than you think
Although many people go their whole lives never having to worry about multistate taxation issues, the fact is, it’s much more common than you think. There are many situations that may require you to file taxes in multiple states.
- You are a shareholder of a corporation that does most of its business in another state
- You’re a partner in an out-of-state endeavor
- You own rental property in another state
- You’re the beneficiary of a trust or estate that has interests in another state
- You live and work in more than one state throughout the year
If you spent any time at all in another state or made money in any state other than where you live, it’s definitely worth speaking to a professional in order to determine whether or not you will be required to file a multiple state tax return.
Reduce your tax burden
The main reason to seek professional help for multistate taxation issues is to reduce your tax burden at the end of the year.
Fortunately, in most cases, you will be able to obtain a tax credit in the state where you live for any taxes paid to other states. To ensure that this is the case for you, it is essential that you seek the help of a professional team of CPAs. To discover the answers to your particular multistate taxation issues, schedule an appointment. We can help you file a return that will ensure you get to keep more of your hard-earned money.
Multistate taxation issues FAQ
How do I know how much I owe in each state?
You determine how much you owe in each state in much the same way everyone determines their income. You should receive documentation for every job you held in each particular state, and you’re required to pay taxes on that amount.
If you receive other income from other states, you may be required to keep your own records that you will then report on. For example, if you received rental income from another state, you would be required to claim that amount in that particular state.
So, if you made $50,000 one year and received $20,000 in rental income from another state, you would only be responsible for claiming that $20,000 in that particular state. You will not have to file your entire income in the state in which you do not reside.
What am I responsible for claiming in my own state?
Although you may only have to claim the income you made in other states, you are required to claim the full amount you earned in your home state. Using the example above, even though you would have paid taxes on $20,000 in another state, you would still be responsible for claiming that amount, in addition to the remaining amount, as your total income in your home state.
By paying taxes in both states, isn’t that double taxation?
Technically, yes, but you won’t be paying taxes twice. Although you’ll be claiming what’s already been taxed in your home state, your home state will provide you with a credit in the full amount of what was taxed in the other state.
How do I go about paying taxes in multiple states?
The best way to make sure you’re filing taxes properly in multiple states is to seek out the help of a professional CPA. While working together, you will likely have to fill out an apportionment schedule. This form allows you to portion out how much of your income came from where. There are a few different methods for determining and using your apportionment percentage, which is why it’s such a good idea to seek out the help of a professional.
What if I moved to a new state?
If you moved to a new state, you’ll have to pay taxes in both, but you’ll likely be required to file part-year returns. This essentially allows you to divide your year into two different pieces, only being taxed by each particular state for the time you lived there. Doing it this way allows you to avoid the double taxation and credit situation that others who live and work in multiple states have to deal with.
Where can I learn more about multistate taxation issues?
You can always speak to an accountant or talk to a professional CPA. However, you can also visit the Multistate Tax Commission website to learn more.