South Dakota "Residens"

rynosback · March 3, 2016

This is my first year on the road full timing. We have lived there on paper the whole year. My wife and I only received 1 paycheck in MD. I was told by the person at my mailing service that SD does not have any tax forms and that all I would need to fill is fill Fereraly. Is this true? Thanks for any incite.

Yarome · March 3, 2016

all I would need to fill is fill Fereraly. Is this true?

True.

don&penny · March 3, 2016

Yes it's true. Since SD has no state income tax, there are no state income tax forms to fill out.

Of course, you will have to pay state income taxes to MD, on the money you earned there.

Don

teacher's pet · March 3, 2016

Two of the reasons we switched to SD when we went full time, in 2005, no state income tax and no state inheritance tax. Still have to pay taxes to Indiana on rental income and property tax, on our rentals there, however as non-residents at a higher rate.

Kirk W · March 3, 2016

Seven U.S. states currently don't have an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. And residents of New Hampshire and Tennessee are also spared from handing over an extra chunk of their paycheck on April 15, though they do pay tax on dividends and income from investments.

No income tax means nothing to file.

bigjim · March 3, 2016

This has made me wonder. I use 2 different credit unions that are located in states that have income tax. I am a resident of Texas. Does that mean I should be filing a return in their state on my dividends? One is Navy FCU and has branches in many if not all states. Another is AF related but does not have extensive branches. Likly I would fall under the minimum thresh hold on the income but would like to understand the process if I ever get rich. :blink:

Kirk W · March 3, 2016

This has made me wonder. I use 2 different credit unions that are located in states that have income tax. I am a resident of Texas. Does that mean I should be filing a return in their state on my dividends?

While TX doesn't care one way or the other, the two states where your money is kept might if they discover it. If the institution has a branch located in TX, I would simply ask to have my records moved to that TX location, just to be sure. Most likely there is someone in each of your banking institutions who would know if they report your income to the state where they are located. Since each state has their own set of tax laws and also banking laws, it will depend upon the laws of those states.

Pretty much all states that have an income tax do require the reporting of income accrued inside of their boundaries. For example, if you owned a house that was rented out, the income from that rental would probably be taxable after deduction of expenses on the house, so you would have to file in that state. Bank accounts can be different though so it may not be the same. In most states there is also a minimum income level before you start to be taxed and often that level is more than you would ever make, even sometimes with seasonal employment. We received hourly pay for some of the extra things that we did in a KS state park and that was taxable income there and we did have withholding and a W-2(each of us). We were told that we could file with the state and get it all back because our annual KS income was under the state minimum. Since the total amount that had been withheld was just over $3 for me and about $1.50 for Pam, we didn't bother to file.

skp51443 · March 3, 2016

I had money in a couple credit unions, Navy and Tower, while we were SD residents. I never paid state tax to where I had opened the accounts (Maryland and Virginia) regardless of the state I resided in or when overseas. I did pay tax to the state I was a resident of as that is where the credit unions sent my state copy of the 1099 data.

When leaving Arizona for South Dakota we did move our main bank account from AZ to SD since we'd opened it in AZ and we wanted a clean break from the state. All that took was a five minute visit to a branch of the same bank in SD and a bit of paperwork. We particularly did not want our retirement checks coming to an AZ address as that might trigger the AZ tax folks.

rynosback · March 4, 2016

Thanks for the feedback guys. So just a Fed tax return it is.

docj · March 5, 2016

You can get taxed by states in which you earn income and states in which you live (domicile). "Storing" money in a bank is not "earning" it; there's no rationale in the world why you would be taxed regarding your account. We still have a credit union account in Maryland where we used to live and no one cares how much money we keep in it since it isn't being "earned" by a Maryland resident.

Kirk W · March 6, 2016

"Storing" money in a bank is not "earning" it; there's no rationale in the world why you would be taxed regarding your account.

Actually, there is and it is called interest. Of course nowadays it would take a very large account balance to earn enough of that to matter. It also used to be that we often had some money in CD's in our bank but even that don't pay much today.

docj · March 6, 2016

Actually, there is and it is called interest.

But, unless you are using a bank or CU that has branches within only one state, the "location" of your money isn't specified. For example, our Wells Faro account was opened in Nevada and the routing and transit numbers on our checks relate to that location. But the 1099 from Wells doesn't have a state designated except the one we live in which is SD (yes, I know that neither NV nor SD have state income tax, but the 1099 would be filled in the same way regardless of that if the "location" of the money was relevant.) In other words the interest reported on the 1099 is assumed to have been earned in our state of residence.

skp51443 · March 6, 2016

Even if your bank only has offices in one state like my Tower credit union did for many years they still report the interest income, savings, checking, CD and investment accounts to the state you designate in your account profile as your domicile.

Income from banking activities has never seemed to be a problem for me, no questions on any of that. Income from other activities that generate tax reporting being delivered to a state you are not a resident of may be a problem. It was for me (retirement check) and it turned ugly fast and if I hadn't gotten lucky by being to meet every demand the tax folks came up with to prove I was a non-resident and not subject to taxes, penalties and interest it would have been expensive too.

To be clear, the problem I had appears to be just from income that generates a W2, not income from deposits, CD purchases or investment accounts as long as they show the correct state of domicile.