We always think of taxes as federal income taxes. Yes the U.S. Government takes the biggest chunk each year, but the differences in state tax law, from one state to the other can cost you about the same if you step, and think before you do it. The ingredient is planning.
In New Jersey, only 401 k’s are currently not taxable. That means if you have lived in New Jersey your entire life, and have a 403 B, 457, IRA, you have been paying taxes on your retirement contributions. That means when you withdraw the funds, you should not be paying taxes to the state on these contributions. The majority of New Jersey Residents are very generous to the state by paying taxes on it.
The same can be true with S Corporation income when the state filing for S Corporation has not been filed. Just because the tax program passes the income to your state return, does not mean it is correct for you. Income tax programs are not perfect; they cannot tell you the rules for each state or for every instance. That is why a C.P.A. is constantly learning and not just what is interesting, but what is necessary.
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