Monday, January 10, 2011

Non-Resident State Taxes

Q.  Apparently our investment adviser put us into some investment which included royalties in Oklahoma. Since my husband and I are residents of Texas, we don't need to pay state income taxes. A few weeks ago we received a letter from the state of OK requesting a state income tax return. My husband said to ignore it, but I don't want any trouble. What should we do? JG, Texas

A.  Every state having a state income tax has a filing requirement depending on Gross Income, your filing status, and your age. Quite often the filing requirement threshold for a non resident is lower than if a resident. I did look at OK and found that in 2009, non-residents with a Gross Income of $1,000 or more were required to file a return. Based on receiving a letter from OK, you probably are required to file a return. This doesn't mean you will owe taxes, but you need to file the return and meet the state's requirement.

Tax Tip:  Many states are sending out letters to non-residents requesting state income tax returns. Technology today has caught up with all of us. Every state knows the amount of gross receipts earned by any taxpayer. Many of my clients are shocked when they learn they now need to file in 2,3,4 or more states. This doesn't mean you will pay double tax, but double filing, if you will, is required. For residents of states which have income taxes, any tax owed to the non-resident state is usually taken as a credit on the resident state return, if taxes are due.

For your convenience, I have placed a link to the Department of Revenue or state equivalent for all 50 states on the left. If in doubt, check, as penalties and interest add up fast!

No comments:

Post a Comment