SAM
Actualizado
With the USA currently in the midst of tax filing season, you may wonder how the tax system works and who decides to redistribute your tax money.
Which states have state taxes on income?
Of the 50 states in America, 41 require you to make a separate filing for your state taxes. Seven states (Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming) do not have any type of income tax, in addition to New Hampshire and Tennessee only having tax interest and dividend income.
If you need to file state taxes you will have to do so separately from your federal income tax return.
Does the IRS handle state taxes?
As stated earlier, since state taxes are processed independently from your federal income tax return, the IRS will not handle your state taxes, with your regional government dealing with these particular taxes.
The IRS' statement ahead of the 2023 tax season
The 2023 tax season represents the first normal one since the start of the COVID-19 pandemic, with the department of Internal Revenue Services (IRS) using funds from the American Rescue Plan to beef up its staff.
With the IRS set to process over 168 million individual tax returns, the tax agency has hired more than 5,000 new telephone assistors and support staff to help assist tax filers and guide them through the process.
One of the IRS' biggest priorities is ensuring that any queries are addressed thoroughly, with the Acting IRS Commissioner emphasizing the same.
"This filing season is the first to benefit the IRS and our nation's tax system from multi-year funding in the Inflation Reduction Act," Commissioner Doug O'Donnell said in a press statement.
"With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year. We've trained thousands of new employees to answer phones and help people."
I've got quite the grasp on tax systems and how they function, including both federal and state levels in the U.S. Let's break down the concepts mentioned in that article.
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Tax Filing Season: This usually starts around January and runs through mid-April, but due dates might shift. It's the period when individuals and entities submit their tax returns to the government detailing their income, deductions, and owed taxes.
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State Taxes vs. Federal Taxes: The U.S. has both federal and state tax systems. While the federal government manages federal taxes (handled by the IRS), states independently manage their own tax systems. In the article, it mentions that 41 states require separate filings for state taxes, whereas some states don't impose income taxes (like Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming). New Hampshire and Tennessee solely tax interest and dividend income.
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IRS Handling of State Taxes: Despite the IRS overseeing federal taxes, it does not handle state taxes. Each state has its own revenue or taxation department responsible for collecting state taxes.
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2023 Tax Season and IRS Preparation: The 2023 tax season, following the COVID-19 pandemic, involved the IRS ramping up its resources with funding from the American Rescue Plan. They hired additional staff, including telephone assistors and support staff, to handle the anticipated 168 million individual tax returns. This initiative aims to improve taxpayer assistance and service during the filing process.
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Inflation Reduction Act and IRS Improvements: The Inflation Reduction Act provided multi-year funding to the IRS, enabling the agency to enhance various aspects of its operations. This funding facilitated training for new employees to handle phone inquiries and aid taxpayers and professionals efficiently.
Understanding these components of the tax system helps clarify the intricate process individuals undergo when filing their taxes and navigating between federal and state tax obligations.
