Can I File Federal And State Taxes Separately ?
Assesses will find that both tax returns use some of the same numbers and that the information that gets reported on a state return may also get listed on your federal return.
It is advisable to file the federal return first as the state return will ask for figures from certain lines in the federal form. However, it is not possible anymore to e-file your state return before federal return just as a measure to add an extra layer of security. Another change to be noted is that if you have filed your federal return on papers, you won’t be able to e-file your state return and vice versa. So just file the federal return now and wait for its acceptance and then go for filing the state return. You can find detailed information about IRS Federal TAX Filing Online instruction & manual guide more help contact tax experts on toll free 📞 1-855-481-5333.
The IRS e-file software doesn’t allow combining federal and state payments while e-filing. Separate payment has to be made to the state using payment procedures for the state.
Although, both the federal and state will consider the same type of income as taxable, especially income from wages however their rules and rates can vary widely.
Things to Be Noted While Filing Federal and State Return Separately
- After the passage of the Tax Cuts and Jobs Act (TCJA), federal income tax rules underwent some significant changes in 2018.
- States and the federal taxes differ in when it comes to the types of income they tax and the deductions and credits they allow. For example, Social Security, Treasury Securities, including Savings Bonds are taxable federally while a number of states exempt it.
- Certain states like New Hampshire and Tennessee do not tax earned income, however, they only tax investment income (interest income and dividends).
- States like Illinois will tax both the earned and unearned income 4.95% flat tax rate.
- The federal tax has a progressive tax bracket however, states may have progressive taxation barring 9 states – Colorado (4.63%), Illinois (4.95%), Kentucky (5%), Indiana (3.23%), Michigan (4.25%), Massachusetts (5.05%), North Carolina (5.25%), Pennsylvania (3.07%), and Utah (4.95%). Both federal and state may revise their brackets annually.
- Tax Cuts and Jobs Act (TCJA) was passed, there are 7 marginal tax brackets at federal level – 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
- States like Alaska, Florida, South Dakota, Nevada, Texas, Washington, and Wyoming do not levy state income tax at all.
You can also find full details How To File Business Taxes Online in easy steps .
How to File Taxes Separately State & Federal
Filing by Mail
When filing returns separately, your federal return goes to the IRS office, while your state return goes to your state’s taxation office. An advantage of separate filing is that if you complete your federal tax returns early, you can wait for the refund from the federal government, and once received you can pay the additional tax owed to the state government with this refund money later when the state return is due.
Filing your tax returns online can simplify things but it is difficult to know what is happening to your information. Tax software usually ask piece of information once under a single process and applies it to state and federal returns simultaneously and also e-file to different agencies. There is a facility to make a single payment, depending on how much you owe to which government.
TurboTax allows to File Federal and State Taxes separately in two simple ways:
File your federal return now, delete the state tax. This allows you to skip payment now for your state and come back later re-do your state return;
Pay simultaneously for both federal and state returns now. Once on the screen – Let’s get ready to e-file screen, select File by mail button > Click “I’m not ready to file” radio button below your state > Click save. Here you pay for both, but it will save the efforts to redo the work on your state later.
There may be instances where you need to file your state and federal tax returns together. In such cases, your state may ask you to submit a copy of your federal return. The original is submitted to the IRS and a copy is with the state tax department simply for reference.
Can Filing Separately Help You Save On Your Tax Return?
- If you file online on TurboTax it can allocate the right tax to be paid to both the federal and state tax department, prepare your return, and do all the calculation for you. It has a choice of simply opting out of filing the state return until later and save you from making a payment now.
- Where out-of-pocket medical expenses for your partner is large, filing separately helps as the IRS only allows you to deduct the amount of these costs that exceed 10% of AGI (Adjusted Gross Income). Medical expenses ÷ the annual income ≥ 10% then whatever amount is in excess will be allowed as a deduction. Obviously, showing individual income and dividing the medical expense will easily cross the 10% mark.
TurboTax can help with the best alternative and recommend the best filing status for you based on the state you reside in. You can contact TurboTax for filing your returns and for any questions related to taxation. Assesses can try the free TurboTax option to file a simple return and for complex tax filing, enhanced support, maximum tax return guarantee, and no penalty filing assurance they can opt for the paid version.