What you should Know about State Tax Refund

There are numerous ways in which you can ask for a state tax refund. In the state of California alone, refunds reached approximately $760 in 2005. Taxpayers are entitled to get refunds, not only in California, but in all other states as well. You can easily discover how to get refunds in the easiest way possible.

In looking for the best way to get state tax refund, you will learn that the regulations are different for each state. The best option so that you get accurate information is to check the IRS website or consult a tax professional. It’s easier if you have low income or rent credits since you could claim your property tax refund; especially if you’ve filed your income tax return on time. You can even get refunds even if you don’t reach the tax filing threshold. This is possible because you may have money cut from your paychecks or you may have earned federal tax credit. Also, the tax rate depends on your income and the number of dependents you have.

Most people aren’t sure if state tax refund is taxable. Generally, it is taxable in the year that you acquire it. For example, if you paid more than the required amount for your state tax last year; and the state gave back your money this year, then the taxes you’ll be paying will be for the current year. You’ll be receiving a form 1099 from the state, notifying you of the returned amount. The state will also be sending a copy to the IRS so that you won’t have to pay the same taxes; however, there are still exemptions to the rule. Therefore, it is better for you to read up on it first so that you’ll have an idea of what you’re supposed to be doing.

If you still have doubts, you can visit the IRS website of get the help of a professional. Nevertheless, you should know that state tax refund is taxable in the case that you listed the deductions while filing your income tax returns.