Are You Getting Your State Tax Refund Right? Tips to Double-Check

Tax season is upon us! Often, federal tax returns get all the attention. But if you live in one of the forty-one states that have a state income tax or the District of Columbia, you need to think about your state refund too. Tax filing software can typically be used for both your federal and state returns and the state return will pull information from the federal return. It’s important to be sure you’re getting your state refund correct to maximize your refund. Here are seven tips to double-check.

Tip # 1: Not All States Have Income Tax

There are nine states in the United States that currently have no income tax. They are:

• Alaska
• Florida
• Nevada
• New Hampshire*
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

*Currently, New Hampshire doesn’t tax earned income but does tax interest income and dividend income.

If you live in any of the other states or the District of Columbia, you will be responsible for filing a state income tax return.

Tip # 2: Be sure to File Your State Return

Your state and federal returns are separate. They both are generated from the same information, but one is sent to the federal government and the other is sent to your state. If your state has an income tax, the first thing you want to be sure you’re doing is filing two tax returns.

Tip # 3: You Might Owe Taxes in More Than One State

If you move during the year, work in multiple states during the same year, or work in a state that is different from the one you live in, you will likely need to file state taxes in both states. The good news is that states aren’t allowed to tax earnings from another state. So, you won’t be double-taxed. However, you will need to file taxes in both states.

Some states do have reciprocal agreements with neighboring states that can allow you to file your taxes using a reciprocal form. If you live in one state and work in a neighboring state, check to see if reciprocal forms are available when you go to file your taxes.

Tip # 4: Double-Check Your Personal Information 

Once you’ve filed your tax return, you want to be sure you’ll get your refund as quickly as possible. So, it’s important to double-check all your personal information after you’ve entered it on the return. Inaccurate social security numbers, names, or addresses can cause refund delays. Check your information to be sure it reflects official records. This is especially important for any dependents you have. If you are requesting a direct deposit for your refund, also double-check your bank information to be sure the money will go into the correct account.

Tip # 5: Confirm You Claimed All Eligible Credits 

The state you live in may have different deductions or credits compared to your federal return. This is important because maximizing your deductions and credits can help you owe less or get a larger refund. To see what credits and deductions your state has, visit its Department of Revenue website.

Tip # 6: Review Income and Deductions Carefully 

It’s important to make sure you have all your information as you get started on your state tax return. Before you get started, double-check your W-2s and 1099s to be sure all your income is accounted for. Be mindful of any part-time jobs you’ve had, jobs you left, or gig work that you’ve done. You want to have an accurate picture of your income. 

If you plan to itemize deductions, you’ll also want to gather proof of qualifying expenses. Be sure to look at the standard deduction for your state. Even if you don’t itemize at the federal level, you might be able to at the state level. This can help you reduce your taxable income.

Tip # 7: Use the State Refund Tracker 

Once you’ve filed your state taxes, it can be a while before you get your refund. During this time, you may want to check your refund status. For most states, you’ll check with the state’s Department of Revenue. Go to their website and look for an option labeled “Where’s my refund”. Select this choice and then give the system the information it asks for (social security number, tax year, etc.). From there, you will be able to track your state tax refund.

While state taxes can be an afterthought, you want to be sure you are getting them right. Minimizing taxes you may owe or maximizing your refund is important. It allows you to keep more of your hard-earned money.

✅Action Item: In the next 24 hours, take time to familiarize yourself with your state’s Department of Revenue website to learn about filing requirements and deadlines, and to see what credits or deductions you may qualify for.