File state taxes if net is a loss?

[Chris Ivy]

Hi all, I have an out-of-state rental in Oklahoma.  It's net income is a loss due to high turnover costs, management fees, etc.  If my net income (rents- expenses and mortgage) is below $0 do I still have to file in Oklahoma?  Thanks!

[Account Closed]

Oklahoma may require you to file a state tax return regardless of your income level. States often have their own rules and regulations regarding tax filing requirements.

Even if you have a loss, you may still need to report the financial activity from your rental property to the state for tax purposes. This could include reporting expenses, depreciation, and other relevant information.

Filing a tax return allows you to take advantage of any available deductions or credits that could offset other income or reduce your tax liability in future years.

[Benjamin Weinhart]

Hi Chris, as Kislay said, I would highly recommend that you file a state tax return even if your income may be $0 or negative. I'm not sure if Oklahoma requires filing or not, but it's good practice to do as you'll be able to accumulate carryover losses that will offset future tax years where you do have income.

[Chris Ivy]

Thanks guys!  That settles it, I'll go ahead and file in OK.  I appreciate your feedback

[Michael Plaks]

Quote from @Chris Ivy:

Thanks guys!  That settles it, 

It does not settle anything, actually. :)

OK has a peculiar requirement for non-residents: you need to file if your "OK-source gross income" is above $1,000. But the meaning of "gross income" in this context is subject to interpretation. I interpret it as your total rent collected before any deductions. Conclusion: do file.

[Chris Ivy]

Hi Michael,

I agree with you, and it seems TurboTax and the state of Oklahoma do too.  One question I now have is the following: do states typically allow you a Schedule to deduct expenses like maintenance and repair, or is that just a federal thing?  It seems like on my OK return they're just looking at my gross rents as a percentage of my AGI and taxing me without looking at any expenses I had.  Is that typical?  Thanks as always- you guys are an incredible resource!

[Michael Plaks]

Quote from @Chris Ivy:

Hi Michael,

I agree with you, and it seems TurboTax and the state of Oklahoma do too.  One question I now have is the following: do states typically allow you a Schedule to deduct expenses like maintenance and repair, or is that just a federal thing?  It seems like on my OK return they're just looking at my gross rents as a percentage of my AGI and taxing me without looking at any expenses I had.  Is that typical?  Thanks as always- you guys are an incredible resource!

For OK state taxation, your rental income is your NET income (or loss), just like for Federal. Gross income creates a filing requirement, but it does not create an actual tax.

As to "typical" - all states have different approaches, no consistency at all.