Tax return when you owe $0 Tax

[btenny]

I finished my taxes over the weekend and find that I owe $0 state taxes. I did not pay or have any state tax deducted. In past years I ended up paying $1K or slightly more. This year we made about the same money but due to various deductions and tax credits we owe Zero.. SO the question is do I turn in a return???

Turbo tax did not say what to do nor did they supply an address to mail a paper return. They just tried to get me to pay $25 to file electronically.

Any suggestions??

[rkhusky]

The state instructions should say who needs to file. Perhaps you need to document the tax deductions and credits so the state knows why you aren’t paying the usual $1K in taxes.

[Harmanic]

If it were me, I would file. One less thing to worry about.

[Bigsmith]

The requirement to file both federal and state returns depends on your income, not whether you owe any tax. Eg in Illinois you must file a state return if you filed a Federal return, regardless of your Illinois tax liability. Other states have different rules. I would not assume that zero state tax liability means you don't have to file a state return.

[toddthebod]

I finished my taxes over the weekend and find that I owe $0 state taxes. I did not pay or have any state tax deducted. In past years I ended up paying $1K or slightly more. This year we made about the same money but due to various deductions and tax credits we owe Zero.. SO the question is do I turn in a return???

Turbo tax did not say what to do nor did they supply an address to mail a paper return. They just tried to get me to pay $25 to file electronically.

Any suggestions??

The filing requirement is likely based on income, not tax owed.

[Stinky]

I finished my taxes over the weekend and find that I owe $0 state taxes. I did not pay or have any state tax deducted. In past years I ended up paying $1K or slightly more. This year we made about the same money but due to various deductions and tax credits we owe Zero.. SO the question is do I turn in a return???

Turbo tax did not say what to do nor did they supply an address to mail a paper return. They just tried to get me to pay $25 to file electronically.

Any suggestions??

Look at your tax instruction booklet. I expect that there’s a section near the front saying “who must file”.

I expect that the filing threshold is based on income, at a pretty low number like $10k or $20k. It’s not based on how much you owe in taxes.

I’ll bet you need to file.

(By the way- one of the very first questions I posted on this Forum, almost a decade ago, was this same question.)

[livesoft]

I never own any NY state tax, but I always file. And whether I file or not I always get a nastygram from NY State that I owe them money. I always send the same explanation each year [which incidentally I always include with my original tax return but they never read it] and they always say "Sorry, our bad, Case closed" even if it takes them 2 years to do so.

[CAsage]

You likely want to show those credits! It's very cheap to print and mail in your tax return. May need to attach Federal 1040.

[JimmyfromSunPrairie]

Do you have an HSA and made a contribution or had a distribution? You would have to file a Form 8889 along with a 1040 even if you owe no tax.

[bobn60014]

In Illinois, though we don't owe any state tax (pension, IRA, social security, etc are not taxed) we always file a return. In reality the state wants to see what the feds are seeing to ensure we're "qualified". Never have had a issue doing so.

[enad]

I would print & mail the returns, just to have peace of mind

[humblecoder]

Each state has its own requirements for who needs to file. However, in every state I have lived in, the criteria wasn't based upon taxes owed. It was based on INCOME. So I strongly suspect that you will need to file even if you don't owe any money.

[grabiner]

Each state has its own requirements for who needs to file. However, in every state I have lived in, the criteria wasn't based upon taxes owed. It was based on INCOME. So I strongly suspect that you will need to file even if you don't owe any money.

And for nonresidents in most states, it is based on total income. In most states, if your total income is over the minimum that would require a resident to file a tax return, and you earned $1 with a source in the state, you must file a state tax return. (And the way nonresident taxes work, you may even owe state tax in this situation, although it will round to zero if your income is just $1; you might well owe $1 in state tax if you earn $10 in a state.) Some states have a larger de minimis limit, deciding that it is not worth requiring non-residents to file a state tax return with a $10 bill that will cost more than $10 for the state to process.

[HueyLD]

I finished my taxes over the weekend and find that I owe $0 state taxes. I did not pay or have any state tax deducted. In past years I ended up paying $1K or slightly more. This year we made about the same money but due to various deductions and tax credits we owe Zero.. SO the question is do I turn in a return???

Turbo tax did not say what to do nor did they supply an address to mail a paper return. They just tried to get me to pay $25 to file electronically.

Any suggestions??

I remember you reside in Arizona. If so:

You must file an Arizona tax return if:

Single AND gross income is more than $14,600.
MFJ AND gross income is more than $29,200.
MFS AND gross income is more than $14,600.
Head of Household AND gross income more than $21,900.

[bombcar]

I have always filed a return for any year that I had income, even if there was no withholding and no tax due.

TurboTax should have a Print option somewhere.

[RickBoglehead]

In TT you have to check that you are not filing, it will then give you an option to print the return, and provide an address.

[btenny]

Thanks everyone. I printed out the AZ state return and will mail it today.

[mjg]

Thanks everyone. I printed out the AZ state return and will mail it today.

I don't know your type of income, but with no state tax owed you are likely in scope for using a VITA site to prepare your taxes (fed and state) and have them prepared and efiled for free.

FYI, I'm in second year of being a VITA volunteer in CA. Gives me something to do in retirement.

[alfaspider]

On a separate note, it's generally always a good idea to file even if not technically required because it establishes your tax position and causes the statute of limitations to start running.

[celia]

I finished my taxes over the weekend and find that I owe $0 state taxes. I did not pay or have any state tax deducted. In past years I ended up paying $1K or slightly more. This year we made about the same money but due to various deductions and tax credits we owe Zero.. SO the question is do I turn in a return???

Well, your state doesn't know anything about the bolded part unless you file. Right? . . .

[stan1]

In Utah my mom had to file for years even though she owed $0 federal or state tax because she had RMDs and interest income along with relatively low SS income.

You have to look through what each state requires.

[snic]

I never own any NY state tax, but I always file. And whether I file or not I always get a nastygram from NY State that I owe them money. I always send the same explanation each year [which incidentally I always include with my original tax return but they never read it] and they always say "Sorry, our bad, Case closed" even if it takes them 2 years to do so.

Why does NY always think you owe? Is there some "red flag" that alerts them to that possibility?

[livesoft]

Why does NY always think you owe? Is there some "red flag" that alerts them to that possibility?

Yes. I contribute 100% of my NY State income [and indeed ALL my earned income] to my 401(k) which I assume the NY State software that looks at my return does not find reasonable even though the instructions say to attach an explanation. I assume the computer algorithm is not programmed to figure out explanatory attachments, so it punts instead.