Rating States According to Complexity

[Davc]

Sometimes I wonder how out-of-state preparers can really do a good job with unfamiliar states. .

Many don't. At a minimum a preparer should review a hard copy of the unfamiliar state while reading the instructions for each line. I once got a call from the OK Dept of Revenue congratulating me on picking up the additional depletion deduction on the OK return. She told me about 1/2 of the paid preparers in OK miss it.

[veritas]

Or better yet

review the state information in The Taxbook All States version.

[Zee]

My information may be out of date because the last time I had to deal with a client who had resided in MS it was 1997 or earlier. I was working in Durham NC for a company which had a couple of people who handled all the returns for states other than NC.. There was a notebook in the back that I would have to get and look up each state to make sure that he had all the necessary information about the client for that state. MS at that time had the possibility of itemized deductions. I don't remember what impact if any the decision to itemize on Federal had on MS.

Now here is the way I see the issue of States' Complexity. The simplest states are TN and FL because all you do is list certain investment class assets by their market value on a particular date and calculate the correct percentage. This is a one page form not a lot more complex than most local returns.. Next come NC and SC. They both start with Federal Taxable Income and tweak that just a bit then have a few tax credits all of which are simple to calculate and the most common ones are derived from Federal Counterparts. There may be other states which are as simple as these. It may also be that from the standpoint of someone who is used to MS or NY or CA NC and SC are more complex than they appear to me. Other factors that make States seem difficult to me but are common are credits for home owners and/or renters (and yes I know SC has a home owner's credit) earned income credit, and itemized deductions. I consider it especially complex if certain credits or other elections may or may not be available depending on the Federal Return. When I start getting really busy I may offer a discount for States having deadlines after 4/15 when the taxpayers are willing to wait until the day before the deadline to receive their forms or have me efile the returns.

Florida is now even simpler. There is no intangible tax for individuals.

[erchess]

I've had an idea

Someone in this thread questioned how anyone could do a good job on all the different States. I agree that it is difficult and I have thought of something TTB could do about it. What if TTB could set up a way for us to hep each other on specific returns. For example, I use Intellitax so instead of doing a CA return that I had I would ask my client to sign a document giving me permission to email the return to someone in CA who uses Intellitax. TTB could provide a worksheet I would fill out and also send. Or, instead of the other person doing my foreign state return, I would do it and then convey, perhaps by fax or fast courier a hard copy of the Federal Return, all the State Returns, and the Worksheets and someone with experience in all those States could check my work. Obviously we would pay each other for our time and there would have to be a contract between us and TTT specifying that liability was between the two of us and TTB had no increase in its exposure from having put us together.

[erchess]

Does Florida have

Florida is now even simpler. There is no intangible tax for individuals.

any sort of income tax now? I thought that their Intangibles Tax was the closest thing they had to an Income Tax on individuals.

[Zee]

any sort of income tax now? I thought that their Intangibles Tax was the closest thing they had to an Income Tax on individuals.

Here's what they say on the Florida website:

Florida's Intangible Personal Property Tax (IPPT)

"Beginning January 1, 2007, individuals, married couples, personal representatives of estates, and businesses are no longer required to file an annual intangible personal property tax return reporting their stocks, bonds, mutual funds, money market funds, shares of business trusts, and unsecured notes. The Legislature has repealed the annual tax on these properties.

The last annual intangible tax return that these taxpayers were required to file was the 2006 return that was due by June 30, 2006. Any intangible taxes owed to the State for that return or prior years are still due.

Not all intangible taxes have been repealed. The intangible tax on leases of government-owned real property and the one-time intangible tax on notes secured by a mortgage on Florida real property are still in effect".

[David1980]

Of the prepares I've worked with, the majority take the "let the software do it and clear any warnings" approach to out of state returns. I don't think many even look down the actual form. They'll spend a lot of time on the federal and then just click the button to add a state and hope the software does it half decently (which of course it can't when there's special forms, credits and questions that need to be filled in for the state.)

I would imagine the prepares that frequent this board are much better than that though.

[S T]

Out of State

Seems like I do a lot of different State returns, as I have been very fortunate to retain California t/p that migrated to other states. So it has been an education.

Yes, as a frequenter of this board, I don't just let the tax software guide me, I utilize TB All States Book, and often also refer to the that particular State Pubs and go down the line items.

Only one I so far have had a letter on discrepancy in reporting was PA. New York I really don't like, but some of the others are not so bad.

Sandy

[joanmcq]

I do audits for all states, so I get to be familiar at least with many of them. I got to be the office 'PA expert' since I'm originally from there and did my dad's return, and a couple years worth of audits down the road I think I'm pretty good at them...but the local taxes are a pain. I also have NC (love em), SC, GA, LA, NY (not too bad), MA (icky for PY/NR), VT, ME, AZ & ID. Luckily one of my coworkers is from Ohio, so guess what state he gets to be expert in? And somehow he gets NJ too...I think just because he likes to complain a lot!