Guide to filing a New Mexico state tax return

Brightly colored hot air balloons rise above the Albuquerque landscape during the annual festival in New Mexico, where residents must consider if they must file a New Mexico state tax return.Image: Brightly colored hot air balloons rise above the Albuquerque landscape during the annual festival in New Mexico, where residents must consider if they must file a New Mexico state tax return.

In a Nutshell

Due to the COVID-19 pandemic, New Mexico has extended its filing and payment deadline for 2019 income taxes to July 15, 2020.  
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This article was fact-checked by our editors and CPA Janet Murphy, senior product specialist with Credit Karma. It has been updated for the 2019 tax year.

Whether you’re a retired Santa Fe artist, a Chaves County cattleman, or a balloon pilot who takes part in the annual hot air balloon fiesta in Albuquerque, if you earn money from a New Mexico source, you probably need to file a New Mexico state tax return.

In 2019, New Mexico legislators passed a law significantly changing the tax code. Some of the law’s provisions, such as the addition of a fifth tax rate and bracket for personal income taxes, won’t affect your 2019 taxes. But others — like the creation of a dependents deduction and a working families tax credit — apply to 2019 tax returns.

Here’s some information to help you file your taxes in the Land of Enchantment.

What are some basics of New Mexico state taxes?

If you have to file a federal income tax return, and you lived in New Mexico or received (or lost) any income from businesses or other organizations in the state, you’ll probably need to file a New Mexico state personal income tax return.

Taxing body

To file and pay your New Mexico state taxes, you’ll be working with the New Mexico Taxation and Revenue Department. Here is the agency’s contact information.

New Mexico Taxation & Revenue Department
1100 South St. Francis Drive
Santa Fe, NM 87504

If you prefer to contact the department by email, you can send a message on its Contact Us page. There are also five district field offices that operate Monday through Friday, 8 a.m. to 5 p.m. Check out a list of the offices, with their phone numbers and addresses, here.

Filing and payment deadline

For 2019 state taxes, the state has extended the filing and payment deadline. New Mexico residents now have until July 15, 2020, to file their state returns and pay any state tax they owe for 2019. As with the federal deadline extension, New Mexico won’t charge interest on unpaid balances between April 15 and July 15, 2020.

You don’t need to do anything to get this extension. It’s automatic for all New Mexico taxpayers. But keep in mind that if you’re expecting a refund, you might want to go ahead and file as soon as possible. During the coronavirus crisis, the state is continuing to process tax returns and issue refunds.

Filing statuses

New Mexico uses the same filing statuses as the federal income tax system. In fact, you must use the same filing status on your New Mexico state tax return as you did on your federal return. Just as a reminder, those filing statuses are …

  • Single
  • Married filing jointly
  • Married filing separately
  • Head of household
  • Qualifying widow(er) with dependent child

New Mexico income tax rates

For 2019, New Mexico has four tax rates, ranging from 1.7% to 4.9% of taxable income. Things will change in 2021, when a fifth tax rate will be added. A rate of 5.9% will apply to income in excess of $210,000 for single filers; over $315,000 for heads of household, surviving spouses and those married filing jointly; and over $157,500 for those married filing separately.

Learn how your federal tax filing status affects your tax bill

What are some New Mexico deductions and credits to know?

New Mexico offers a lot of potential tax breaks, especially to lower-income people and seniors.

Standard deduction and dependent deduction

New Mexico generally follows federal tax laws for its standard deduction and personal exemptions. Because it conforms to certain Tax Cuts and Jobs Act provisions, New Mexico no longer has a state personal exemption for taxpayers. The state’s standard deduction amounts mirror the federal amounts.

  • $12,200 for single filers (as well as married filing separately)
  • $18,350 for heads of household
  • $24,400 for married couples filing jointly and qualifying widow(er)s

And starting with the 2019 tax year, New Mexico taxpayers filing as either head of household or married filing jointly can take a $4,000 deduction for all but one dependent.

Itemized deductions

If you itemized deductions on your federal return, your New Mexico itemized deductions are basically the same — except you must add back all or part of the amount you deducted on your federal return for state and local taxes.

Exemptions and adjustments

Additionally, you may be able to make other income adjustments on your state return that could lower your state tax burden. For the 2019 tax year, these include the following:

  • The New Mexico low- and middle-income exemption up to $2,500 for each qualified exemption
  • Medical care expense deduction for you, your spouse or a dependent
  • Deduction for federally taxable contributions (made by you or your employer) or qualified withdrawals for a New Mexico medical care savings account
  • Deduction for contributions to a New Mexico 529 college savings plan
  • Deduction for your pay, if you worked full-time for the armed forces (including the National Guard) or were on active duty

New Mexico tax credits

The state offers multiple tax credits for taxpayers, including the following:

  • Working families tax credit The 2019 legislation increased the amount of this credit and made it applicable for tax years starting Jan. 1, 2019, and later — which means eligible taxpayers can claim the credit for their 2019 taxes. The state-level credit is based on the federal earned income tax credit and follows the same qualifying criteria. Qualifying taxpayers can get a credit of up to 17% of their federal EITC amount. But you can’t claim the credit if your filing status is married filing separately.
  • New Mexico child day care credit  This credit is only available to working parents making less than a certain income-threshold amount. It’s also not available to people who are on certain public assistance.
  • Refundable medical care credit for people 65 or older  This credit is available to seniors who spent $28,000 or more in unreimbursed and uncompensated medical bills during the year, either on themselves, their spouse or their dependents. The credit amount is $2,800 for joint filers ($1,400 for those married filing separately). The credit can be refundable, meaning if it reduces your tax obligation to zero, you can get the balance of the credit as a refund. In addition, you may also be eligible to claim an exemption of $3,000.
  • Special needs adopted child tax credit  Did you adopt a special needs child during the year? If so, the adoption agency should have given you a certificate that you’ll need to send in with your tax return to qualify for this credit. The credit is worth $1,200, or $600 for married-filing-separately couples.

How can I file a New Mexico state tax return?

The easiest, most secure and fastest way to file your return is to do it electronically.

You have two options for electronic filing.

  • You can file your New Mexico state tax return at the same time as your federal tax return through the federal/state e-file program.
  • You can file it separately through the New Mexico Taxpayer Access site.

If you hire someone to prepare your taxes, chances are they’ll use one of these two options.

If you prefer to file a paper return, you can find and print copies of any required forms from this website.

You can mail your return to the following address:

NM Taxation & Revenue Department
P.O. Box 25122
Santa Fe, NM 87504-5122

But take note: If you owe any taxes, you’ll need to mail the payment separately to this address:

NM Taxation & Revenue Department
P.O. Box 8390
Santa Fe, NM 87504-8390

What if I owe and can’t pay?

The state of New Mexico does allow you to set up payment plans if you can’t afford to pay your tax bill in full by the due date. When you owe the state taxes, the Taxation and Revenue Department will try to contact you through mailed notices, phone calls and possibly even in-person visits from field agents. Once you’ve established contact with the department, you can request a payment plan.

You can either request a short-term payment plan that gives you 12 or fewer months to pay off your tax debt, or an installment agreement for up to 72 months. While the state won’t normally file a tax lien if you have a short-term payment plan, longer installment agreements do require liens or some form of security.

You’ll still owe a penalty of 2% of the amount due per month (up to a max of 20% on the unpaid principal of tax due) plus interest while your debt is outstanding. The state may require you to complete a financial assessment, or to show that you’ve applied for loans or credit to pay your tax bill and been denied before it will approve you for a payment plan.

How can I track a New Mexico tax refund?

If you have your Social Security number or Individual Taxpayer Identification Number and the amount of your refund handy, you can track the status of your return on New Mexico’s Taxpayer Access Point website.

It generally takes six to eight weeks to process your return if you filed electronically, or eight to 12 weeks if you sent in a paper New Mexico state tax return.

Bottom line

New Mexico’s shifting political climate brought several changes to New Mexico’s tax code. New Mexico individual income tax rates aren’t scheduled to change until tax year 2021. But before you file your 2019 income tax return in 2020, be sure to read up on any changes in the state’s tax code that may affect your 2019 return.

A senior product specialist with Credit Karma, Janet Murphy is a CPA with more than a decade in the tax industry. She’s worked as a tax analyst, tax product development manager and tax accountant. She has accounting degrees and certifications from Clemson University and the U.S. Career Institute. You can find her on LinkedIn.

About the author: Lindsay VanSomeren is a freelance writer living in Kirkland, Washington. She has been a professional dogsled racer, a wildlife researcher, and a participant in the National Spelling Bee. She writes for websites such a… Read more.