Quick question for you guys south of the border (prompted by http://boards.straightdope.com/sdmb/showthread.php?t=353938). I know you have both federal and state income tax so I assume you have special tax forms to fill in for each state. Do you send the state forms and the state income tax together with the federal forms and tax to the IRS and they then pass the state part on, or do you send the state forms and tax separately directly to the state tax folks?
They’re sent separately.
And not all states have income taxes: (from Wikipedia)
Nine of the 50 United States do not have a personal income tax:
* Alaska
* Florida
* Nevada
* New Hampshire - does have tax on interest and dividends
* South Dakota
* Tennessee - does have tax on interest and dividends
* Texas
* Washington
* WyomingCool. I learned something new today - I thought it was just Alaska that didn’t have state income tax.
When I lived in South Carolina we filed the state income tax return with the state and the federal with the IRS office, I think in Atlanta.
They go to different places and have different rules. The feds don’t give diddly squat about your state tax return and vice versa.
Tha’t not completely true. For example, in CT, if you file jointly vs married but filing separately on your federal return, you have to file the same way on your state return. For many years you also had to enclose a copy of the federal 1040 with your state income tax.
I’ll join in the pile on. I used to live in Ohio. All the income earned in Ohio was filed on an Ohio income tax return. They were filed seperately.
You’re right. :smack:
They are filed separately in Pennsylvania. But its pretty easy since the state has a flat income tax. There are other nuisance type taxes that I have to declare on the form and end up paying $10 or so every April.
In adddition to OldGuy’s note, another exception to this is that you get deductions on your federal income taxes for:
[ul]
[li]State, local, and foreign real property taxes;[/li][li]State and local personal property taxes; and [/li][li]State, local, and foreign taxes on income.[/li][/ul]
There are a few more, but these are the most common for individual taxpayers.
Short version: The portion of your income that is paid to the state in state income taxes is not included in income for the purpose of determining your federal taxes.
Cite: US Tax Code, § 164 (a) (1) - (a) (3)
Disclaimer: IANAL.
Boast: None of this matters if you live in Tennessee, where we have no state income tax. 
MLS writes:
> The feds don’t give diddly squat about your state tax return and vice versa.
The two returns can’t be contradictory in their statements about the basic financial facts though. The parts of your income that you are taxed on and the kinds of deductions you get are different on the two forms, but you can’t put down one set of facts on the federal form and another on the state form and get away with it. I don’t know if they regularly check that the two forms are basically consistent. I always do the two forms at the same time. I fill out my federal form and then fill out my state form, copying over the appropriate numbers.
In California some filings to the state require a copy of your federal 1040. When I did my kids returns last year, the software printed a copy of my son’s 1040 for inclusion with the state return. On my daughter’s return this was not necessary. So the state sometimes does care what is on your federal 1040.
And even if your state return doesn’t require a copy of the federal return, it may use it as a starting point. The CA form does. If you were doing it by hand instead of having software crunch it, you would find directions like “Enter adjusted gross income from your federal return”.
For the OP - the REAL fun comes in down here when we happen to move. You owe tax to both states, and have to struggle through special “part year” forms to give each their prorated share. The last time I had to do that was way back when I was still filling forms out by hand. I don’t know how well TurboTax or TaxCut handle the situation. At the very least it would be annoying to have to buy an extra state.
Those people who (like me) work in one state and live in another need to fill out two state tax forms every year, although the tax we pay to the state we work in is a credit against the tax on the state we live in (I live in NJ & work in NY).
Actually, as I recall, Alaska does have an income tax. But they made it a certain percentage of your federal tax and they have the IRS collect it for them on the same return.
You’re going to have to back that up with a cite. Theres nothing on the web that says that, and everything else says the opposite: NO STATE INCOME TAX.
There never was a state tax in Alaska when I lived there.
Are you possible getting this confused with the money from the Permanent Fund? I believe that money is taxed as income on federal returns.
New York starts with your Federal income as reported on the Federal form, then adds particular state additions or subtractions for the variations in the state law. After that new income is calculated, the New York deductions are taken, and several credits are added (if you qualify). Finally, you can denote money to go to various causes (Wildlife, Missing Children, Cancer research, etc.), reducing your refund.
It usually only takes about a half hour to complete once you’ve done the Federal form.