Do I need to file state taxes for occasional income earned in other states?

[jfis]

I occasionally portray an historical figure for special events, schools, etc. I am sometimes asked to speak to a group out of state. When I am only paid a couple hundred dollars for a gig, is it necessary to file a state tax return in every state where that happens? I am retired, so this is more of a hobby than a business. Sometimes I get a 1099 from the entity that hires me, sometimes I don't.

[carolineb]

Hi @jfis, 

That sounds like a lot more fun than preparing taxes! To answer your question, each state has a standard deduction amount that, if exceeded, would warrant filing taxes in that state. Since standard deduction amounts differ for different states, your best bet is to research the standard deduction amount for each state in which you earn money, and if your earnings fall below the standard deduction amount, no need to file a return for that state. 

[jfis]

Thanks! Is that something TurboTax keeps track of? When it asks if I've earned money in other states, is that the point at which I should say no (if I'm under the standard deduction for a given state), or do I say yes and let TurboTax tell me if I should file a state return?

[Katherine S 63]

Great questions:

I have a few answers.  

One concerning hobby vs business.  Here is some information on that:  https://turbotax.intuit.com/tax-tips/self-employment-taxes/4-tax-tips-for-money-making-hobbies/L89qz...  If you think your business is a hobby, beginning in 2018, the IRS doesn't allow you to deduct hobby expenses from hobby income. you must claim all hobby income and are not permitted to reduce that income by any expenses. .  If a business, keep track of all your expenses so that your Self employment tax will be lower.  

As for the other state issue, here is a link that talks about that topic:  https://turbotax.intuit.com/tax-tips/state-taxes/multiple-states-figuring-whats-owed-when-you-live-a...

Having said all that, it is important to remember that if your next Self Employment income is under $400 you do not need to report that on a return.  

If you have net earnings of $400 or more, you're required to file a Federal tax return. The IRS does this in order to collect your self-employment tax. You won't owe income tax if your earnings are that low, but you might still owe self-employment tax.  If you have no other income, you might not owe anything for Federal and/ State taxes but will just owe for Social Security and Medicare. 

The state return will depend on the state rules.   Some states do not even have state income tax.  I would look at each state that you earned the income in and see if they have a minimum filing requirement.

Here are my favorite Self Employment links:

Self employment tax

Self employment tax hub with calculator

Self Employment income and expenses

Please look at the links above because they talk about all of this and are very helpful.

Thanks again for the great question!!

Katie S

[carolineb]

Yes @jfis ,

TurboTax has programs for each state that requires an income tax return. If you answer Yes to the question "Did you make money in any other states", TurboTax will prompt you to enter in your income earned as a non resident in that state.  If it turns out that there is no liability because your income was below the standard deduction for that state, you can simply delete the state return so you do not have to pay the additional fee for that state return. 

Or, if you Google the standard deduction amount for that state and the amount that you earned is below that standard deduction amount, you can simply answer No to the question regarding making money in another state.