As the 2024 tax season approaches, many Americans are grappling with the complexities of filing their state and federal income taxes. While most taxpayers are required to file both, there are certain situations where you may be able to file your state taxes alone and skip the federal filing. This comprehensive guide will walk you through the key considerations to help you determine if you can file state taxes alone in 2024, and provide tips for a smooth tax filing process.
When You May Be Able to File State Taxes Without Federal
There are a few scenarios where you might be able to file your state taxes without filing a federal return:
- Income below federal filing threshold: If your income falls below the federal filing threshold for your age and filing status, you may not be required to file a federal return. For the 2023 tax year (filed in 2024), the threshold is $13,850 for single filers and $27,700 for married couples filing jointly under age 65.
- Living in a state without income tax: If you live in one of the nine states that don’t have a state income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming), you may still have a federal filing obligation even if you don’t need to file a state return.
- Special scenarios: There are some situations where you may not be required to file a federal return but still choose to file a state return, such as if you had state taxes withheld from your paycheck and want to claim a refund.
However, it’s important to carefully assess your situation before deciding to skip the federal filing. Incorrectly determining that you don’t need to file can lead to penalties and other consequences.
Risks and Considerations of Filing State Taxes Alone
While it may be tempting to simplify your tax filing by only submitting a state return, there are several risks to consider:
- Federal penalties: If you have a federal filing requirement and fail to file, you could face penalties from the IRS. The penalty for filing late is usually 5% of the unpaid taxes for each month or part of a month that a return is late, up to a maximum of 25%.
- State penalties: Similarly, if you file your state taxes incorrectly or late, you could be subject to penalties and interest on unpaid taxes from your state tax authority.
- Audit risk: Skipping the federal filing or making errors on your state return could increase your chances of being audited by either the IRS or your state tax agency.
- Missed credits and deductions: By not filing a federal return, you may miss out on valuable tax credits and deductions that could lower your tax bill or increase your refund, such as the Earned Income Tax Credit or education credits.
If you’re unsure about your filing requirements or are facing a complex tax situation, it’s always best to consult with a qualified tax professional who can provide personalized guidance.
How State and Federal Tax Filings Are Connected
In most cases, your state tax return will rely on information from your federal return. This means that even if you’re only required to file a state return, you’ll likely still need to prepare a federal return to have the necessary data.
Some key connections between state and federal filings include:
- Federal adjusted gross income (AGI): Most states use your federal AGI as the starting point for calculating your state taxable income. This means you’ll need to complete your federal return first to have this figure.
- E-filing requirements: If you’re e-filing your state return, you’ll typically be required to e-file your federal return as well, as the state filing process will pull in data from the federal forms.
- Separate vs. joint filing: In some cases, your state filing status may need to differ from your federal status. For example, if you file a joint federal return but want to file separate state returns, you may need to manually prepare your state returns rather than e-filing.
Understanding these connections can help you plan your filing process and ensure you have all the necessary information ready.
Tips for a Smooth Tax Filing Process
To make your 2024 tax filing as painless as possible, consider these tips:
- Gather records early: Don’t wait until the last minute to track down your W-2s, 1099s, and other tax documents. Start gathering and organizing your records early in the year to avoid a stressful scramble at filing time.
- Take advantage of free filing options: If your income is below $73,000, you may be eligible to file your federal taxes for free through the IRS Free File program. Many states also offer free e-filing options for qualifying taxpayers.
- Double-check your information: Before submitting your returns, carefully review all the data you’ve entered, including your Social Security number, address, and bank account information for direct deposit of refunds. Simple errors can delay your filing or refund.
- Watch out for scams: Tax season unfortunately brings out scammers looking to steal personal information or trick people out of money. Be wary of unsolicited calls or emails claiming to be from the IRS, and never share sensitive data unless you’ve initiated the contact through official channels.
Tax Credits and Deductions to Consider
Even if your income is below the filing threshold, it may be worthwhile to file a return to claim certain credits and deductions that can boost your refund. Some key ones to explore include:
- Earned Income Tax Credit (EITC): The EITC is a refundable credit for low- to moderate-income workers. For the 2023 tax year, the maximum credit is $7,430 for taxpayers with three or more qualifying children.
- Child Tax Credit: The Child Tax Credit provides up to $2,000 per qualifying child under age 17. If the credit exceeds your tax liability, you may be able to claim the excess as a refund.
- American Opportunity Tax Credit and Lifetime Learning Credit: These education credits can help offset the costs of college or post-secondary coursework. The American Opportunity Tax Credit is worth up to $2,500 per eligible student, while the Lifetime Learning Credit is worth up to $2,000 per tax return.
- State-specific credits: Many states offer their own unique tax credits, such as credits for child and dependent care, earned income, or property taxes paid. Check your state’s tax agency website or consult a tax professional to learn about credits you may qualify for.
When to Seek Professional Help
Taxes can be complex and confusing, especially if you have multiple sources of income, are self-employed, or have had significant life changes in the past year. Don’t hesitate to seek professional help if you’re feeling overwhelmed or unsure about your filing situation.
Some signs it’s time to bring in a tax pro include:
- Complexity: If you have a complicated tax situation, such as owning a business, having rental properties, or receiving income from multiple states, a professional can help ensure you’re in compliance with all requirements.
- Life changes: If you’ve gotten married, divorced, had a child, or retired in the past year, your tax situation may have changed significantly. A professional can guide you through the implications and help you claim all the credits and deductions you’re now eligible for.
- Stress and uncertainty: If the thought of doing your taxes fills you with dread or you’re constantly second-guessing whether you’ve done them correctly, it may be worth the peace of mind to have a professional prepare and file your returns for you.
Conclusion
Determining whether you can file your state taxes alone in 2024 requires careful consideration of your income, filing status, and the specific requirements of your state. While there are situations where you may be able to skip the federal filing, it’s crucial to assess the potential risks and downsides before making that decision.
By understanding the connections between state and federal filings, taking advantage of free resources and credits, and seeking professional help when needed, you can navigate the 2024 tax season with confidence. Remember, even if you’re not required to file, it may still be in your best interest to do so to claim valuable credits and ensure you’re in good standing with both the IRS and your state tax agency.
For the most up-to-date and accurate information for your situation, always consult official sources like IRS.gov and your state’s tax agency website. With the right preparation and resources, filing your taxes doesn’t have to be a daunting task.