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Differentiating Federal & State Taxes

12 May

Learn The Difference Between The Claim Processes For Federal & State Taxes; Resolve Them Both With Software Download Options

Are you aware of the difference between federal and state taxes? Some believe that these taxes are one and the same – this is not true.

As you file your final return, one will be sent to the IRS and the other to your state’s department of revenue. In short, this means that you are actually filing two separate returns. That being said, your information will remain pretty much the same.

The main difference between federal and state taxes is how much you will owe. State tax is always less than federal tax, just how much less depends on the state in which you live.

Regardless of your location in the United States, you will pay federal tax based on the tax brackets set in place by the government. State taxes, though, are paid on the state level and differ from one location to the next.

In fact, there are several states that do not have any state tax. They include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

Filing Federal and State Taxes

If you are working on your own taxes, you need assistance on both your federal and state return. Every tax software program includes the ability to file a federal return. Along with this, most give you an option to file your state return as well – but this will cost you. TurboTax Deluxe Federal, a popular choice, can assist with the filing of your state return for a small fee (usually around $29.99).

Once you complete your federal return, the process for doing your state return is simple. Your information automatically transfers to your state return, and then you are asked a few additional questions based on your location. From there, you can either print and send your return or e-file (again, for another fee).

Even though there are differences between federal and state tax returns, a quality tax software program can help with both. Whether starting with a free federal program and then upgrade, or purchase a tax program outright, there are options to suit any situation and budget.