Requirements for Filing as a First Year Resident of New Mexico

The southern part of the United States has the lovely state of New Mexico. You might be unsure of the requirements if you recently moved to New Mexico and intend to file your taxes for the first time as a resident. Some of the key considerations are listed below.

To submit taxes in New Mexico, you must first be a legitimate resident of the state. This indicates that you intend to live there permanently and have made the state your home. Furthermore, you couldn’t have been a resident of another state during the relevant tax year.

You must have made money in New Mexico throughout the tax year; this is a crucial condition. This can include self-employment revenue, earnings from a job, and other kinds of taxable income. If you meet other requirements, such as receiving unemployment benefits or having taxes taken from other income, you could still need to submit a tax return even if you earned no income in New Mexico.

You must be acquainted with New Mexico’s withholding tax structure before submitting your taxes there. The sum of money deducted from your paycheck by your employer to satisfy your federal and state income tax liabilities is known as withholding tax. Employers are required to deduct state income tax from employees’ paychecks in New Mexico at a rate of 4.9%.

The amount of federal income tax, social security tax, and Medicare tax deducted from your employees’ paychecks must be reported on a form 941 each quarter if you are an employer in New Mexico. The Internal Revenue Service (IRS) requires you to complete this form, which helps to ensure that you are abiding by your tax obligations as an employer.

There is a standard deduction available to taxpayers in New Mexico when it comes to deductions. The standard deduction for solo filers in 2020 is $5,500, and for married couples filing jointly, it is $11,000. Taxpayers do have the option to itemize deductions if they think doing so will result in a reduced overall tax burden.

Finally, it is important to note that New Mexico does not typically tax social security income. Other retirement income, however, can be liable to state income tax. For instance, you might have to pay state income tax on the pension you receive from a former employer.

In conclusion, you must be a legal resident of New Mexico and have earned money there during the tax year in order to file taxes for the first time as a resident of the state. In addition, if you are an employer, you should be familiar with the state’s withholding tax system as you might be required to submit quarterly reports. Although there is a standard deduction in New Mexico, taxpayers also have the option to itemize their deductions. Last but not least, some forms of retirement income may be liable to state income tax in New Mexico even if social security income is often exempt from it.