How to Simplify Your Multi-State Business Taxes
There are several reasons why, as a business owner or an individual, you may be required to file more than one state tax return, and it’s important that you understand when it’s required, and how you should go about doing it. As with any tax concern, hiring a professional tax company or individual tax pro to help guide you is a smart move, since it guarantees you’ll always be within the confines of the law and can meet the tax requirements in a timely and accurate manner. Below are four of the most common reasons for multi-state tax filing:
1.You’ve moved from one state to another If both states withhold income taxes – the state you moved from, and the state you moved to, you could be required to pay state taxes on a prorated basis, but a lot will depend on how long you’ve spent living and working in each state. 2.You reside in one state, but work in another If you’re working in a state different to the one in which you live, there’s a good chance you may need to file more than one state tax return, but as is typically the case, you won’t be required to pay taxes to both states. Instead, and unless both states have a reciprocal tax agreement, you would be required to pay taxes to the state in which you’re employed.
What is a state reciprocal tax agreement? This describes an agreement upon which one state agrees not to tax employee compensation, subject to employer withholding of the other reciprocal state; such agreements only apply to employee compensation. 3.You own property that earns you an income in another state If you generate a reportable income from a property in another state, you might be required to file a tax return in that state, and you should report the income on your resident return, too.
4.You own a business and work in multiple states If you’re self-employed and work across multiple states, while your federal income tax isn’t affected by this, you will be required to file tax returns and pay state income taxes in multiple states. For business owners working in more than one state, things can quickly get complicated when it comes to taxes, and liaising with a tax professional who understands the intricacies of your circumstances, is generally advisable.
If you’re in a situation in which you’re required to file taxes in more than state, or aren’t sure if this applies to you or not, you should try to seek help from a professional tax advisor at the earliest to avoid breaking any laws or incurring any penalties. Guidance from a tax specialist will simplify all tax proceedings irrespective of whether you work in one state, two, or twenty, just make sure you always work with one that has plenty of experience and that you’re comfortable dealing with.
At Heyer & Associates, we proactively assist our individual and small business clients in meeting their goals. Our key area of focus is ensuring that our clients remain compliant with federal and state tax laws by providing them with high quality accounting and tax service Coral Gables. If you are looking for individual tax preparation in Miami, Heyer & Associates would be a right option.