Did you know 9 states do not require residents to pay a personal income tax? Folks that live in Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, are exempt from this bill. Furthermore, 7 other states simply enforce a flat tax rate. So what's the moral to the story? People who live in these states are able to buy more stuff because they pay less tax.
But for the rest of us, residential income tax is a necessary evil, one that takes a serious bite out of our disposable income. And while the forms are designed to collect the same data, they're all constructed differently. What follows is a breakdown of Form PIT-1, the New Mexico Individual Income Tax Return. If you don't live in New Mexico, not to worry, we'll be tackling the other 34 states soon enough.
At two pages and 38 lines, the New Mexico's PIT-1 is a work of art. It's short and therefore you won't have to keep repeating the same information over and over again. The verbiage is easy to understand and makes sense. Generally, it's just a well-constructed form. So we're giving the PIT-1 a solid 7 of 10 on our user-friendly meter. It doesn't get much easier than this.
Begin by filling in your name, address, Social Security number, and residency status at the top of the form. Then you can take care of your exemptions, filing status, and dependents before proceeding on to the meat of the form. Capiche?
On Line 7 enter your federal adjusted gross income. You get this from Line 38 of your Federal 1040, Line 22 of your 1040A, or Line 4 from you 1040EZ Form. If you itemize, enter the amount of your state sales tax deduction, which you can find on your Federal Schedule A, Line 5. If you need to make other state specific additions, enter the total amount on Line 9, just be sure to include a PIT-ADJ.
Enter your federal standard or itemized deduction on Line 10. If you itemized, check box a and if you used the standard deduction, check box b. Your federal exemption goes on Line 11; you can find it on Line 42 of your 1040 or Line 26 of your 1040A.
If you've qualified for a New Mexico low- and middle-income tax exemption, fill it in on Line 11. And any other subtractions (AKA deductions) get reported on Line 12. If you've earned a medical care expense deduction, include it on Line 13 and if you're due unreimbursed medical care expenses, report them on Line 13a. Now you must subtract the sum of lines 9 through 13 from the sum of Lines 6 through 8 to yield your New Mexico Taxable Income, which goes on Line 14.
On Line 15 enter the tax due based on your income; just be sure to state whether your got the amount from the tax table or from PIT-B. If you needed to pay an additional tax for a lump sum distribution, include it on Line 16. If you paid taxes to another state, you're due a credit, just enter it on Line 17 and include a copy of the other states return. Enter any nonrefundable credits from Schedule PIT-CR on Line 18. To figure your net New Mexico Tax, add Lines 15 and 16, then subtract Lines 17 and 18, the balance goes on Line 19.
Reenter your Social Security number and carry forward the amount of Line 19 to Line 20 at the top of page 2. If you worked through Schedule PIT-RC (because you're due credits or a rebate), enter the amount on Line 21. If you've earned the working family tax credit, enter it on Line 22. Just don't forget to include the amount of your federal earned income credit on Line 22a.
On Line 23 enter the amount of your New Mexico withholdings and any income tax from the proceeds of fossil fuels on Line 24. If you had any tax withheld from a pass-through entity, attach RPD-41359 and enter the amount on Line 25. If you made estimated tax payments they go on Line 26 (and if you made any other misc. payments), record them on Line 27. Now add Lines 22 through 27 on Line 28 to yield your total payments and credits.
Now comes the fun part. If Line 20 is greater than Line 28, enter the difference on Line 29, this is amount of tax that you still owe New Mexico. And if you've incurred any penalties or interest, you'll have to work through the next few lines. Now you can add Lines 29, 30, 32, and 33 to see the total amount of tax (with penalties) that are due.
But if Line 20 is less than Line 28, enter that difference on Line 35. This is the amount of your overpayment. If you want to donate, you'll have to work through Schedule PIT-D before including it on Line 36. If you want a portion of Line 35 to be applied to next year, enter the amount on Line 37. Now you can subtract Lines 36 and 37 from Line 35 to get your refund, which goes on Line 38.
All that's left is to fill in your direct deposit information, name, address, phone number, and email at the bottom of the form. If you had a tax pro help you they will do the same.
You won't feel like you're in the pits when you fill out the PIT-1 because it's really not that hard. If you're organized, this thing shouldn't take you more than an hour to complete. Which will leave you time to take a ride on the Sandia Peak Tramway, which I hear is beautiful.