Ways of Filing your Taxes

Even if the Federal Income Tax laws plague individuals and businesses, these are only allotted to the federal government and not the state in which you reside. This is why you still have to pay state taxes. The tax rate you pay is based on your gross income. However, state taxes are not uniform for all states. For example, the states of Washington, Nevada, Alaska, Florida, Texas, South Dakota and Wyoming don’t have state taxes at all.

Other states base their tax rates on different kinds of income. The state tax system is generally progressive in the majority of states. This means that the higher your gross income, the higher your tax is.  Here’s a comparative example: the highest tax rate is in Vermont with 9.5%, while the lowest state income tax is Illinois flat tax at 3%. You don’t have to worry if it seems complicated for you. You only need to learn a few simple steps to be able to file your state taxes.

With the advent of technology and the Internet, it has become so much easier to pay your taxes. The IRS and and state tax administration agencies have collaborated to make life easier for tax payers by making it possible to file taxes online from the comforts of your home (as long as you have a computer with Internet connection).

Through the Federal/State e-file, you can file both your Federal and State income taxes at the same time. A software program classifies the data for Federal and State returns into two different packages and then sends them to the IRS, making it more convenient and time-efficient.

Filing your state taxes online is more beneficial than doing it manually. You’ll be immediately given a receipt of refund, and the filing process is more accurate, therefore eliminating most errors and glitches in the system. Most importantly, you’ll have proof of filing so you won’t be tricked into paying your taxes twice.

You can also choose to file state taxes directly. You can opt for getting a tax professional to handle your taxes or you can do it yourself through computer software or the tedious task of manually filling out your task forms.


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.