How many states will require you to file a nonresident tax return this year?

If you worked in, sold to customers in, or own property in another state, pay attention to avoid nasty penalties, legal action and collections.

Seven states that do not require individual tax returns filed are Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. That filing exemption goes for individual residents and non-residents*. Most other states are moving toward more aggressive enforcement of nonresident non-filers who earn income in their state after federal case law clarified their legal right to act against nonresidents.

While the Wayfair SCOTUS ruling slowly opened a floodgate of multistate sales and use tax collection obligations, that 42-month-old major tax law ruling is now also affecting income tax liability that taxpayers have to other states.

Many individual taxpayers who worked in, sold to customers in, or have property in another state are not yet aware of the stepped-up state tax enforcement programs aimed at nonresidents. States increasingly take an aggressive ‘we aren’t playing around’ approach when it comes to tracking down tax returns and payments from non-residents that can cause more emotional stress than other tax compliance matters.

The best advice: make sure that your tax service includes a scan for all state filing requirements and file multiple state tax returns when required to do so.

* Not necessarily true for nonresident businesses. This post does not address multi-state business taxes. For an introduction to this topic see this 2018 article from BDO but be aware that much has changed in policy and enforcement since then. This post does not address any specific state filing requirements, reciprocity, exemptions, coordination, or limitations under any state law.