State Income Taxes

Everyone in the U.S. is familiar with the federal income tax. So much so that April 15, the day our federal income is due, is a well-known date to most American taxpayers. The income tax doesn’t stop at the federal government for some Americans. You may have to pay a state income tax. Whether you do depends on where you live and work.

This article explains the state income tax. Income tax rules vary by state and can differ from the federal laws. You could have to pay fines or face criminal charges if you don’t pay your taxes. Talking to an attorney experienced in your state’s income tax is a good idea. They can give you legal help and help you avoid tax problems.

What Is the State Income Tax?

A state income tax is a tax on your income levied by a state. Depending on your state’s tax laws, it could be only on income you earn in the state. In other states, it could be on the income you earn anywhere. If you earn income in a state where you don’t live, you may also have to file a state income tax return there.

In 2023, 42 states and Washington, D.C., have a state income tax. In most cases, the state tax day is the same as the federal tax day, April 15.

Employers withhold state taxes along with federal income taxes. You may get a state tax refund if you pay more than you owe. People who don’t have taxes withheld must pay their taxes directly. Examples include independent contractors and small business owners.

What Happens if I Don’t Pay My State Income Tax?

The Internal Revenue Service (IRS) enforces federal tax laws. State tax authorities enforce state taxes. You may have to pay a penalty if you don’t file a personal income tax return and pay your state income tax. You could also have to pay interest on your unpaid taxes. You could face criminal charges in extreme cases.

When Do I Need a Lawyer’s Help?

State tax laws vary widely. Add to that the differences in how you pay the tax and your state taxes can become complex. A tax professional can be essential to avoiding tax issues. There are generally two types of tax professionals.

A certified public accountant (CPA) can help you complete the required tax forms. They can also file your tax return for you. A CPA can also help lower your tax bill through tax planning.

A tax lawyer can also help you with tax preparation and planning. But their expertise is helping you deal with a tax controversy. A tax controversy is a tax dispute between entities. For example, between you as a taxpayer and the IRS. An attorney can help you with an audit. They can also be your legal representation in tax court.

A low-income taxpayer clinic (LITC) can give low-income people tax help. They can help you understand your taxpayer rights. You may find them at law schools. Law students eager to gain legal experience often staff these tax clinics. An LITC can also help if you speak English as a second language. You can find people who speak Spanish and other languages there. Your state bar association and legal aid societies can also help you find free or low-cost legal services. The IRS offers free or low-cost tax preparation through its volunteer income tax assistance (VITA) program.

State tax laws can be complex. A lawyer experienced in your state tax code can give you legal assistance with your taxes. They can also represent you in a tax dispute.