4 Steps to Master State Income Tax Filings

Written by: Sarah Creekmore—Director, State Income Practice Lead & Matt McCord—Managing Director, State Income

State income tax compliance is a shared hurdle that most tax professionals face. Staying ahead of legislative changes, optimizing deductions, and meeting filing deadlines are all crucial to your organization’s financial health. This authoritative article will delve into four essential considerations that every tax professional—from tax managers and directors to vice presidents and executives—must address to maintain a robust state income tax compliance strategy.

Here are the four steps your team should be taking to master the compliance process:

1. Gather Essential Data

Accurate and comprehensive data is the cornerstone of successful state income tax compliance. The following critical components of gathering the necessary information for your state tax filings should include:

• Apportionment Data—Collect and analyze sales, payroll, and property information
• Updated Attribute Schedules—Keep attribute schedules current because details on NOLs, tax credits, and carryforwards impact calculations
• Modification Support—Material state modifications (i.e., bonus depreciation, foreign dividends) should be well-documented
• Document Changes—Regularly review records and document any shifts in business operations, because organized records are your compliance shield

2. Stay Informed of Legislative Changes and Court Cases

State tax laws are constantly evolving. Legislative updates and court decisions can significantly impact your tax liabilities. DMA’s experts recommend keeping a vigilant eye on changes specific to each state where your business operates. For example, are there new credits or deductions available, or are court rulings affecting your industry?

Failure to stay informed of tax law changes and developments can lead to missed opportunities or unexpected liabilities. Subscribe to reliable tax news sources and attend industry conferences to help your team stay ahead and informed.

3. Resources: Do You Have Enough?

Preparing and filing state income returns can be daunting, especially if your company operates in multiple states. Having the right resources in manpower and advanced technology solutions will help your team effectively manage the workload associated with state income tax compliance.

State income tax compliance comes with a burdensome workload and strict time constraints.  Use your team’s expertise wisely by co-sourcing less valuable tasks to free up precious time for more strategic work. DMA’s remote co-sourcing service offers a customizable solution for your unique business needs. Our experienced state income and franchise tax professionals collaborate with your team to achieve successful results and share specialized knowledge without overburdening your in-house team.

4. Uncover Every Possible Deduction and Credit

Tax deductions and credits are your secret weapon and directly impact your bottom line. Are you maximizing every deduction and credit available to your business? From industry-specific credits to overlooked deductions, our state income tax compliance experts can identify every credit and deduction opportunity available. Our Current Year Compliance service combines expertise with efficiency—we reassign smaller tasks, maximize your existing resources, and relieve compliance season stress. Additionally, when leveraging DMA’s dedicated tax recovery team, we help to ensure you secure every applicable deduction, leaving no money on the table.

DMA: Your Trusted Partner in State Income Tax Compliance

At DMA, we’re more than just consultants—we’re an extension of your tax team. Our seasoned professionals understand the nuances of state tax regulations across all jurisdictions. With our remote co-sourcing approach, you gain:

• Expert Guidance: Leverage our experienced professionals to navigate the complexities
• Budget Optimization: Manage your tax department budget effectively
• Stress Relief: Let us handle compliance while you focus on value-added projects
• Resource Access: Tap into the resources needed for seamless compliance

Let DMA be your strategic partner in mastering state income tax compliance. Together, we’ll keep you compliant, on time, and financially secure.