Do You Owe State Taxes?

by Megan Kunis

As a United States (US) citizen, everyone owes state taxes. The real question is: how many states do you owe?

Many people think that they are only obligated to pay state taxes in the state in which they reside. The truth is it’s possible to owe state taxes in multiple states. There are mainly two reasons why one would have to pay state taxes in multiple states:

  1. Relocation

Wherever you live in the US, each state has you recorded as a resident. If you were a homeowner or a renter, and/or collecting wages, that state has the record of you residing in there. Your duty as a US citizen, it is not only to pay federal taxes, but also the state taxes.

Think of it this way: If you’re residing in Florida, then you expect certain things to be well maintained like public parks and beaches. You expect the protection of law enforcement and firefighters to put out fires, the streets to be well taken care of, etc. Taxes take care of all of these things and as a residing citizen, you will be expected to pay your share, whether you own property or not.

So, if you live in Texas this year, but expect to move to Louisiana next month, then when the 2018 tax filing season approaches, you will be expected to file state taxes for both Texas and Louisiana. Now, there is a possibility that you may not have to pay any state taxes depending on how much was taken out of your paycheck throughout the year. In most cases, many people receive a state refund.

  1. Conducting business in that state.

As a business owner, it’s becoming quite common to take care of taxes in multiple states, especially with so many eCommerce businesses competing with each other. Whether you have a brick and mortar location in just one or several states, or selling a product in a state other than where you live, you may be obligated to pay sales tax on the item where you sold the product in. This means that you need to be informed about the different sales tax in each state that you conduct business in.

This is why a tax lawyer is so important to have on your team when conducting business on this level. Many business owners find out all too soon that they’re in over their head when it comes to conducting business in multiple states. While the business itself is the same, where they’re located may have to be operated slightly different according to the tax laws of that state. This might be intimidating for a business owner, but old hat to a seasoned tax lawyer.

Worlds Forum Taxation and Advisory not only have an experienced tax lawyer on hand to manage your business tax obligations, we also have professional tax preparers, and CPAs at your service.

 

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