With the tax season underway, many of us are seeking out answers from a professional tax advisor. One common question that arises in New Hampshire revolves around filing personal income taxes. NH is one of the nine states in the U.S. that does not require residents to file an income tax return. Although reportable wages and salaries are not subject to income tax, the state does have its share of reportable tax requirements. Below are a few common, and maybe not so common, items that should not be overlooked.
Interest and Dividend Income
Did you know that interest earned over the amount of $10 is required to be reported? Interest is per entity: per savings account, per CD, etc. A 1099-DIV will be sent to the individual informing of the exact amount earned from the particular company that holds the funds. The state of NH requires an income tax return be filed if the amount of reportable interest is over $2,400 ($4,800 if filing jointly). Residents are then taxed 5% on the total amount reported. Although this is typically is not the primary source of income for most, it is still considered income.
Like most things, there are exceptions to this rule. Individuals aged 65 years or older may receive a $1,200 exemption. Along with this group are those individuals who have been deemed unable to work, and those who are blind or have other disabilities.
If you are a resident of New Hampshire, you are fully accustomed to paying property taxes. The state ranks third in the U.S. for highest property tax rate. New Jersey and Illinois are the only two states with a higher standard. The calculation on property tax is based on the fair market value of the home, which is always changing. For most, the annual rate seems to increase each assessment.
Say what? Yes, timber. Growing of woodland for future business interests is taxed 10% by the town or city which the wood is being produced. The value is based on the tree stump size and amount of wood that will be usable.
These are just a few of the items taxed in New Hampshire. Food and beverage, room and board, tobacco, and utilities are few more. So to answer the question, is NH income tax-free? It’s safe to say, yes and no. When in doubt, a full-service company like abc Payroll is there to help. Contact them today to discuss your income tax options at 978.251.3003.