When the State is demanding a tax return…

“HELP!  The State wants me to file a return when I have no filing requirement!” are the words I often hear from folks who receive a surprise notice from a State demanding a tax return be filed.  While the Taxpayer may be correct, the State may have reason to believe otherwise.

Depending on the State, there are different things that trigger these notices, such as:

1)      You retired and now make less than the filing threshold, but still make a mortgage payment.  The State (*ahem* California) decides that you cannot possibly be making less than the filing threshold and proposes to file a tax return for you where they have calculated your income to be much, much, more.  How do they do that???  Well, it seems that they take the Form 1098, the year-end form that tells you how much interest you paid to your mortgage company, extrapolate how much they think your monthly mortgage payment is, and decide that your income is THREE TIMES that amount for the month and multiply it by 12.

2)      You live out of State but own a second home in the State that sent the demand for tax return.  If you own real estate there, maybe some of your income is theirs?

3)      Your employer is located in a different State and is required to withhold State payroll tax there even though you don’t live or work in that State (I believe Massachusetts is one of these States, but I could be thinking of Maryland – or both).

There are other triggers, but the process is the same:  The State sends a demand for tax return or claims they will file one for you and proposes the amount of tax you will owe.  They give you a deadline to file the return on your own, or accept their tax due.  If no action is taken, you owe the tax and they begin collections activity.

Allow me to help you end this tax nightmare.  Feel free to call or text (916) 439-9373.

Related video here https://www.youtube.com/watch?v=1EQW3joG1f0