You can certainly file your state tax return before you file federal taxes. If all you have is one or two W-2s and no other income, you can file your state because it will be no different when you file your federal taxes. However, most states use your adjusted gross income (AGI) from your federal tax return to calculate your state income tax. In fact, most tax programs ask you to do your federal taxes first.
Ajusted Gross Income
Your adjusted gross income is the total of all income and losses for the year. It includes all things such as business income, student loan interest deductions and business income. Lines 23 to 37 on the first page of Form 1040 comprise your adjusted gross income. You need to calculate your adjusted gross income first before filing out your state income tax return to ensure that it is correct.
State Return
Your state adjusted gross income may differ from your federal return because of specific state deductions and credits. Use your federal adjusted gross income as a base to make deductions or additions to calculate your state adjusted gross income. For example, if you included interest income from state-issued bonds on your federal return, you can subtract this income your state tax return. Interest income earned from investing in state-issued bond is nontaxable for state residents. Likewise, you can deduct interest income from U.S. government obligations that you included as income on your federal taxes.
Exceptions
You may not have to file a federal return if your income is below the gross income threshold. For example, if you are single and made less than $9.350, you don't have to file federal taxes. In this case, you can go ahead and file your state tax return. However, you should still file your federal taxes to take advantage of tax credits that may be available to you that could earn you a refund.
Considerations
If you know you have a federal tax liability, you can put off filing federal taxes and just file your state return, particularly if you anticipate getting a state refund. However, you should file an extension with the IRS to avoid late penalties. Finally, if you simply can't afford to file your federal taxes, you can file your state first.
- SmartMoney; In Some Cases, You Don't Need to File a Tax Return Read more: In Some Cases, You Don't Need to File a Tax Return; Bill Bischoff; February 2010
- Internal Revenue Service; Do I have to File a Tax Return?; January 2011
- Barganeering; Buying Municipal or State Bonds; Jim Wang; April 2009
- Internal Revenue Service: Form 1040