It’s about time to start looking into your state income tax and federal tax returns. Though the deadline isn’t until April 15, it’s never too early to get ahead.
But did you know that moving affects filing your tax return?
Let’s take a look at what you should look out and plan for upon moving to a new home.
State and Local Income Tax
Depending on where you’re located, you may be accustomed to paying a certain rate to both the state as well as your municipality. Each governing body generally has its own rules for taxable income that differ from federal return filing.
In fact, several states do not collect income tax from residents at all. This can be jarring if you’re moving out of one of these states, or a happy change when moving into one. There are seven states that do not require you to file state returns: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming.
That being said, it’s good to inform yourself on what other types of taxes a state may collect in place of a state tax. For example, Florida hasn’t had a tax since 1855, but it features a higher sales tax and property tax than many other states.
Different localities also impose taxes on those who live and work in specific areas to cover the costs of civic services. Inform yourself of the exact tax percentage rates to compare to what you’re used to. This way you won’t be blindsided when it comes time to file with the IRS.
Do I Have to Pay Taxes Twice?
Whether you’re handling your income tax return by yourself or with a tax professional, there’s a section to account for living or working in multiple states during the calendar year.
While paying twice isn’t exactly putting it right, you’ll be responsible for paying state taxes to both states for the duration of your stay there. Once again, state rules apply in each case. If you lived in Pennsylvania and moved to Florida, you’ll pay partial state taxes to the former while not paying any state tax to the latter.
Property Taxes and Moving Deductions
Another thing that homeowners should always be on the lookout for is the tax rates on properties in a new state and county. States like New Jersey, New Hampshire, and Texas had the highest property tax rates in 2019, while Louisiana, Hawaii, and Alabama had the lowest.
You’ll need to weigh the pros and cons of higher tax rates versus the overall cost of living and whether or not that state imposes state tax. In some cases, the costs may actually even out in the end.
Additionally, the United States IRS may offer you itemized deductions to cover moving costs in certain instances. If you are moving to accept a new job or have been transferred to a new location, you may be able to deduct all of your expenses from your taxes.
There is no limit to these deductions, so you must thoroughly check that you satisfy the requirements: time worked in the new state as well as the distance moved being 50 miles or greater from your previous home. Of course, all of your expenses reported must be within reason and necessary to facilitate your move.
Long-Distance Moving – InterWest Moving and Storage
While we may not be able to help you with your tax refunds, we can help you safely and quickly move into a new home. Moving comes with big changes, and we’re here to help alleviate some of the frustrations and hassles that come with moving.
InterWest Moving is a proud member of the Atlas Van Lines network, possessing almost 500 agents throughout North America to get you where you need to go in no time. Whether you need to move far for work, or need help relocating your family, we’ve got you covered.
To get a free moving quote, reach out to us today! An agent close to you will reach out in no time to get you started.