State income tax on rental income? (credit, profit, paying, tax return)

[wankel7]

I live in state that doesn't have income tax. However, I do have a rental home in a state that does have income tax.

This is my first year doing this. Will I have to pay the rental home's state tax on the rental income?

Thank you !

[Boompa]

Seems you want someone else to pay your way. You are the one making the profit

[jdm2008]

Originally Posted by wankel7

i live in state that doesn't have income tax. However, i do have a rental home in a state that does have income tax.

This is my first year doing this. Will i have to pay the rental home's state tax on the rental income?

Thank you !

yes

[manderly6]

Did you check that state's tax website? They most likely have this addressed.

[MrRational]

Originally Posted by wankel7

Will I have to pay tax ... on the rental income?

1) What income?
2) IRS Schedule E Learn it inside out

[old_cold]

Generally speaking, any income produced in a state is subject to taxes in that state.
You then receive credit for that amount in your home state.

[aneftp]

Originally Posted by old_cold

Generally speaking, any income produced in a state is subject to taxes in that state.
You then receive credit for that amount in your home state.

True but it isn't anywhere near a $1 for $1 credit

When I lived in Maryland (8.95% state local taxes). Than did 1099 work in California and paid 9.25% state income
there. After accounting for credits my true state income tax rate was close to 14% for that 1099 income earn

You factor in being self employed paying 15.6% self employed taxes plus at least 25-28% fed income taxes for first $100k taxes.

That means the rental profit can potentially be close to 50% taxed. That is why you need to reduce your rental profit as much or close to zero as possible.

[wankel7]

Boompa - fun to assume but youre wrong.

I am losing money every month on it.

Thank you for the info!

[FrugalYankee]

If the rental income exceeds the trigger amount for that state then you have to file a state income tax return for the state your rental is located in. Usually you allocate income, meaning that if 5% of your total income comes from the rental, whatever tax you would owe based on your total income is multiplied by 0.05.

The credit only applies if you live in a state that has an income tax.

[NY Annie]

The rental is a business - if your expenses are greater than your gross, your net is a loss. Ergo, no income.