Personal Finance (Not Investing) • Not filing state return because of zero tax

I have owed zero state taxes for the last two years and I expect that will continue.

To me it seems like a catch-22 situation since you will not really know for sure that you are not required to file a state tax return until you have actually gotten all your numbers together and mostly filled out the forms.

I have just sent in paper returns to my state with zero taxable income and zero due. I do not pay the extra cost to electronically file the state tax return.

One reason I do this is to help prevent identity theft where someone sends in a fake tax return trying to get bogus refund.

I also figure that filing the state tax returns will make it easier if I ever need to do something like provide my financial records to get into long term care or Medicaid if I spend down my nest egg , a loan application, or for some lawsuit.

I also get 1099s for various things which the state would get copies of too. If I did not file a tax return I can picture that these might trigger the state department of revenue to question if I should have paid some state taxes.

Having the state tax returns may also make things easier for whoever settles my estate when they are going through my paperwork and filing my finial tax returns. If they see the 1099s for things like IRA withdrawals for prior years they may wonder if I should have filled the state tax return but didn't.

I am not sure just how it works but if I do owe state taxes in some future year because of a windfall or something having filed the state tax return should help be establish that I do not have to pay an under withholding penalty since I met the safe harbour rules for the state.

Statistics: Posted by Watty — Sun Mar 10, 2024 7:41 pm — Replies 14 — Views 678

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