We've all been there: you find a tax document tucked into a book or under the passenger seat in the car after you've already filed your taxes. If it's additional income, such as a 1099-G for unemployment benefits, a state tax refund, or certain other government payments and offsets, you have to file an amended federal return on Form 1040X. But do you also need to file a state return? That depends on a few key issues.
Thanks to the United States Constitution, state tax laws are different for each state, and several don't even have an income tax. Check with your state's tax authority to see whether you are required to file an amended state return when you file a federal amended return. In most states, you only need to file if your state tax liability changes or if there was an error on any item reported on the state return.
Changes in Federal Adjusted Gross Income
State tax returns generally begin with your federal AGI then make additions and subtractions specific to the state. If your federal AGI changes as a result of the 1099-G, you'll want to work through the state amended return to determine whether your state tax liability is affected. Depending on the type of payment, the 1099-G income may not be subject to state tax, leaving your state tax liability unaffected, meaning you may not need to file an amended return.
Changes in State Tax Liability
All states require an amended return if your state tax liability changes. That includes even if you get a larger refund or owe less state tax than originally calculated. If you overpaid on your original return, the state will send you a refund. If you underpaid, be sure to send a check or make other payment arrangements to avoid having future refunds withheld by your state taxing authority.
Which Forms to File
Each state has a special form for an amended return, often denoted with an X, like the federal numbering system. Massachusetts is one exception here: the individual income tax return is filed on Form 1, and the amended return on Form CA-6.
You cannot file an amended return electronically. You will need to include paper copies of your amended return and the missing 1099-G. You may be required to include copies of the federal amended return as well. Consult the filing instructions for your state.
You must file the federal Form 1040X before filing a state amendment. Verify the specifics with your state, but generally you have a specific amount of time to file an amended state return, based on the date you file the federal amendment. In California, you have six months to file a state amendment after filing the federal 1040X. In New York, you only have 90 days to file the amendment. Be careful if you owe additional tax due to this amendment; your state tax board may impose a penalty for a late amended return.
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