Understanding the Order- Do State Taxes Typically Follow Federal Taxes in the U.S.-

Do state taxes come out after federal? This is a common question among taxpayers, especially those who are filing their taxes for the first time. Understanding the order in which taxes are calculated and paid is crucial for accurate tax preparation. In this article, we will explore the sequence of federal and state tax calculations and help you determine whether state taxes are due after federal taxes.

Federal taxes are the first to be calculated when filing your taxes. The Internal Revenue Service (IRS) requires taxpayers to report their income, deductions, and credits on their federal tax return. The federal tax calculation is based on the income tax brackets, which determine the percentage of tax owed on your income. Once you have determined your federal tax liability, you can then move on to state taxes.

State taxes are calculated separately from federal taxes. Each state has its own tax laws, rates, and brackets. Some states have a progressive tax system, where the tax rate increases as your income increases. Others have a flat tax rate, where everyone pays the same percentage of their income in taxes. To calculate your state tax liability, you will need to use your federal adjusted gross income (AGI) and apply the appropriate state tax rates.

The order in which you calculate federal and state taxes is important. You must first determine your federal tax liability before calculating your state tax liability. This is because your state tax calculation is based on your federal AGI. If you have already paid state taxes, you may be able to deduct them on your federal tax return as a state tax deduction.

Now that we have established the order of tax calculations, let’s address the question: Do state taxes come out after federal? The answer is yes, in most cases. You will pay federal taxes first, and then, if applicable, you will pay state taxes. However, it’s important to note that some states may have different rules regarding the order of tax payments.

Here are some common scenarios regarding state and federal tax payments:

1. If you live in a state with a state income tax, you will pay federal taxes first, followed by state taxes.
2. If you live in a state without a state income tax, you will still need to file a state tax return, but you won’t owe state taxes.
3. Some states offer a credit for paying federal taxes, which can reduce your state tax liability.

In conclusion, do state taxes come out after federal? Generally, yes. You will calculate and pay federal taxes first, followed by state taxes, if applicable. It’s essential to understand the tax laws and regulations in your state to ensure accurate tax preparation and compliance.

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