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Who is subjected to personal income tax in Delaware?
You are only subjected to personal income tax in Delaware if your income sources are within the state.
If you have any gross income from sources inside the state during the tax year, then you must file a tax return.
If you don’t have any income that is generated inside of Delaware and your spouse files a married separate return, then you do not have to file a Delaware tax return.
You are obligated to file the tax return if:
(1) While being a resident of Delaware, you have income that is generated within the state, or
(2) As a non-resident, you had income from Delaware sources.
For part-year residents, you can choose whether to file a non-resident form or a resident form. Therefore, opt for the one that brings more benefits.
Now, the important question arises: which one is more beneficial?
Let’s take a quick example to best illustrate this situation
Vivian is a part-year resident in Delaware. She has streams of income from Delaware during her period of non-residency during the tax year. In this case, filing Form 200-01 R will bring her more benefits.
However, if during her period of non-residency, she earns her income from other states or even outside of the US, filing Form 200-02 NR will be more beneficial.
What are Delaware personal income tax rates?
Personal income tax rates in Delaware are based on 7 tax brackets, from 0% to 6.6%. As mentioned, those having income from a Delaware source, including a resident, or a Delaware non-resident but received income from the state source, will be subject to personal income tax.
Specifically, Delaware’s personal income tax rate depends primarily on your taxable income. Your applied tax rate shall be as follows:
- 0% for taxable income under USD 2,000
- 2.2% for taxable income from USD 2,000 to 5,000
- 3.9% for taxable income from USD 5,000 to 10,000
- 4.8% for taxable income from USD 10,000 to 20,000
- 5.2% for taxable income from USD 20,000 to 25,000
- 5.55% for taxable income from USD 25,000 to 60,000
- 6.6% for taxable income exceeding USD 60,000
A detailed breakdown of Delaware taxation in just under 10 minutes
Get a closer look into the taxation system of Delaware with our detailed and easy-to-understand article. It has all the information you need to stay compliant with the regulation in Delaware
What forms to file and when to file?
To non-residents, you need to file the 200-02 NR form to comply with the personal income tax law in Delaware.
However, as mentioned above, as a part-year resident, you can choose between 200-01 R or 200-02 NR forms to file, whichever is more advantageous to you.
The due date for filing your individual income tax return is on or before April 30th each year. You can extend the time of filing by submitting Form 200EX before the due date.
What is the process of filing personal income tax in Delaware?
Step 1: Complete the federal income tax and other states’ taxes
To prepare to file your Delaware personal income tax, you have to finish your federal tax return as well as that of other states. This is a crucial step to prepare for filing your individual income tax in Delaware according to the determined tax rate.
Step 2: File the top boxes with the most essential information
File your names and address then mark the corresponding boxes.
You can file as a single taxpayer on December 31st of the last year. In this case, please use Filing status 1.
Filing statuses 2 and 3 are for married taxpayers. You can file joint or separate returns. However, if only one of you works in Delaware or both of your gross income in Delaware exceeds $9,400, you should opt for separate returns as it brings more benefits.
Lastly, if you pay taxes as the head of household, choose Filing status 5.
Step 3: Proceed to fill in the back of the form
After finishing the front, turn the form over and start filing the back of it. Here is a quick instruction on how to file it:
- Column 1 – Your federal tax
From Line 1 to Line 17 of this Column, 1 should match each line of your Federal Form 1040 and 1040 schedules (except for Filing status 3).
- Column 2- Delaware Source Income and/or Loss
List out all streams of income, gain, loss, or adjustment that is generated inside of Delaware. To part-year residents, don’t forget to include all your income from any other sources besides Delaware.
Step 4 – Finish your filing with the attached documents
After filling in all the necessary information, don’t forget to attach the corresponding documents to your Delaware tax return. Please read the next part to get insights into what documents should be included.
Step 5 – Send your Delaware income tax return
The last step to finalizing your tax return is to sign and date your report. Then send it to the addresses below.
- Submitting with the payment or balance due: State of Delaware, Division of Revenue, P.O. Box 508, Wilmington, DE 19899-508
- Submitting with the refund due: State of Delaware, Division of Revenue, P.O. Box 8710, Wilmington, DE 19899-8710
- Submitting the tax return alone: State of Delaware, Division of Revenue, P.O. Box 8711, Wilmington, DE 19899-8711
Please keep in mind that your income tax return is not considered complete if it is not signed and dated. Plus, it is advisable to enclose your phone number on the tax return.
What documents to include with your Delaware income tax return?
The following documents are necessary to attach to your Delaware income tax return:
- DE Schedules I and III, if completed
- W-2 Form(s) issued by your employer and all 1099R Forms to receive credit for Delaware tax withheld
- A copy of your Federal 1040 Page 1 and 2 and all 1040 schedules (1, 2, 3, etc.)
- A copy of all federal schedules you are required to file with your federal return (for example, Schedule C, D, E, etc.)
- Delaware Schedule A (PIT-NSA), if itemizing deductions
- A signed copy of other states’ income tax return(s), if you claim credit for taxes paid to another state. Note: Don’t use the amount from your W-2 form(s)
- A copy of Form 1100S, Schedule A-1, if you take a credit for taxes paid by an S corporation
- A copy of Form DE2210, pages 1 and 2, if you completed Part 3 of the DE2210 or if the calculated estimated tax penalty is greater than zero
- A copy of Form 700, Delaware Income Tax Credit Schedule, Form 1801AC, and/or Form 2001AC, if applicable
- A copy of the Delaware Schedule W Apportionment Worksheet, if applicable. You must include pages 1 and 2
- A copy of Form 5403, Real Estate Tax Return, if individuals declared and paid estimated taxes on the sale of real estate owned in Delaware
What is the possibility to extend the time of filing?
Though there is no way you a non-resident can extend the time of the payment of tax, the extension for the time of filing is possible.
You can extend the time of filing by filing the Application for Automatic Extension (Form 200EX) before the due date of your income tax return.
In conclusion, a solid understanding of Delaware’s personal income tax is crucial for any non-resident looking to conduct business within the state. Although it may initially appear overwhelming, fear not, as the process becomes more manageable with familiarity.
Should you have any questions regarding Delaware personal income tax matters, simply get in touch with one of our friendly consultants, who will be sure to offer the most practical advice and helpful guidance for your queries.
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
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