5 Misconceptions About Your State Tax Refund StatusPublished:
You may think you know everything about your state tax refund status, but many people believe things that aren’t necessarily true. And with all the mystery surrounding the ever-changing tax laws and how to get the biggest tax refund, it's no wonder. Here are five misconceptions most people have about their state tax refund status.
1. You Only Owe Income Tax In One State
You live in New York so you only need to file your taxes with the State of New York, right? Not necessarily. If you lived in another state, even for a short amount of time, you will need to file a return and figure out your tax refund status for that state as well.
If you worked in another state, or earned certain income from another state, you will probably need to file with that state too. This is true even if you didn’t live there. For example, you could be be a resident of California who does contract work for a company in Georgia. Whether you briefly traveled to a different state for work, or you work remotely from home, make sure to get your refund status for that state this tax season.
2. State Taxes Are the Same as Federal Taxes
Many taxpayers fill out their state tax forms the same way they fill out their Federal tax forms. They mistakenly believe that the rules and regulations are the same for state as they are for Federal. However, this is often NOT the case. Every state has different tax laws and its own Department of Revenue to enforce them. This means that different states may give you a wildly different tax refund status. You should check your state’s specific tax requirements before you file.
3. The Audit Went Great, Now I'm Finished
You were shaking in your boots when you received a tax audit notice. Luckily, your meeting with the tax agent went smoothly. You went over your tax refund status and filing and discovered there weren’t any major problems. So, you go home thinking it’s all done.
But wait! Everything might not be taken care of. The agent at your tax office isn’t going to tell you if there was an overpayment of tax. They will only let you know if you underpaid. So if you’re still owed money from your tax refund status, you will have to figure this out for yourself.
4. I Work in an Income Tax-Free State
If you happen to work in a state that doesn't have state income tax, you might think you don’t have to file your state taxes. But keep in mind that you also have to file for the state you live in, even if you work in another state. The same is true for the reverse — if you live in a state that has no income tax, you may still have to file taxes for the state from which you earn income.
5. I Need to Pay Taxes Based on Where My Employer Is Located
Some taxpayers believe they need to file and pay taxes in another state because that is where their employer is located. However, this is not always the case. Your employer’s headquarters generally have no bearing on your tax refund status.
The only time this is relevant is if your employer withheld taxes from your wages for their state. If so, you’ll likely need to file a nonresident tax return in the employer’s state to receive a refund of the withheld tax. This will affect your state tax refund status.