If you live or work in one of the 41 states or the District of Columbia you are required to pay a state income tax. Majority of states align the due dates to file taxes with the federal requirements so if you happened to file for extension to file taxes, October 17 is also the due date for the state returns.
When are the state income tax returns due?
The following states do not have a state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Majority of states grant taxpayers automatic exemptions along with the federal taxes, which are due on October 17. As usual there are some exceptions, namely:
– Hawaii – 10/20/16
– Indiana – 11/15/16
– Iowa – 10/31/16
– Louisiana – 11/15/16
– Virginia – 11/1/16
Consequences of not paying state taxes
States fund its programs and operations through multiple forms of taxation one of which is personal income tax. The most common consequences are penalties for filing the taxes late and interest on the amount owed. The longer you postpone the process, the higher the overall burden will be.
In more severe cases the state can put liens on your property or resort to garnish wages or lay a claim on your federal refund.
What if I can’t pay state income tax?
States are prepared to work with individuals who are in financial distress by offering different payment options. Some of them include:
– Installment agreement – this is one of the most common and viable options to settle your tax obligations; it is not granted automatically and the state representative will try to work with you to find other means for you to get money and settle your liability. Typically if you owe less than $25,000 you may qualify to make monthly payments for up to 60 months
– You may also delay a payment for a period of time (often no more than 30 days); bear in mind that fees and interest will be added to your outstanding amount during that time period