Understanding federal and state tax returns

Your federal and state returns are separate

You file your federal individual income-tax return with the Internal Revenue Service. A state income-tax return, where one applies to you, goes to that state's own tax agency under that state's law.

The two are connected — a state return often starts from your federal figures — but they are prepared and filed separately, and their rules are not the same.

Why where you live and work matters

Each state applies its own rules to these questions. That is why two people with similar federal returns can end up in very different state positions.

• Where you lived during the year, and whether that changed
• Where you physically performed your work, which is not always where your employer is based
• Where any income-producing property or business activity of yours is located

When more than one state may be involved

If you moved during the year, worked remotely across state lines, or hold property in another state, your position depends closely on the facts and on each state's rules. Situations like these are reviewed individually rather than assumed.

If you live in Texas

Texas does not impose an individual state income tax. That on its own does not remove obligations elsewhere: as a Texas resident you may still have to file in another state, for example where your income is connected to that state.