Federal Returns for Houston Households
With no state income tax, a Houston household files one income tax return, the federal Form 1040, but what goes on it varies widely across a metro of more than two million people in the city alone. An engineer at an energy major may have restricted stock and a year abroad, a nurse at the Medical Center may work overtime at two hospitals, and a retired couple in Kingwood may own mineral rights and a rental house. BOMCAS prepares federal returns for Houston residents remotely and keeps the supporting records organised for next year.
Community property, homestead rules and moving to Texas are covered under Texas personal tax preparation. This page deals with the returns we see most often in Houston.
Energy-Sector Pay and Stock Awards
Many Houston employees receive restricted stock units, performance shares or employee stock purchase plan shares. RSUs are taxed as wages when they vest, and the shares then have a basis equal to the value already taxed. Brokerage forms often show a lower basis, which leads people to pay tax twice when they sell. We adjust the basis on Form 8949 using the vesting records. Severance packages during industry downturns raise their own questions about withholding, timing and retirement plan rollovers.
Returning From an Overseas Assignment
Houston energy and engineering companies send staff to the Middle East, West Africa, Asia and the North Sea. While abroad, a U.S. citizen may qualify for the foreign earned income exclusion and housing exclusion on Form 2555, or may do better with the foreign tax credit. Tax equalisation payments, home leave and relocation allowances all have to be reported correctly. Foreign bank and pension accounts can also require FBAR and Form 8938 filings even after you come home.
Property Tax, MUDs and the SALT Deduction
Houston homeowners pay property tax to the county, school district, city and often a municipal utility district, and in many suburbs the MUD rate is a large part of the bill. Those taxes, together with general sales tax if you itemise, count toward the federal state and local tax deduction, which is capped at $40,000 for 2025 and slightly more in later years, with a lower cap for higher incomes. Because Texans have no state income tax to deduct, the sales tax option often matters. We compare the standard deduction with itemising every year.
Hurricanes, Floods and Freezes
Harvey in 2017 and Beryl in 2024 showed how many Houston households can be affected at once. An uninsured loss from a federally declared disaster may be deductible, and it can be claimed on the return for the year of the disaster or the year before. Flood insurance proceeds, FEMA grants and repair costs all affect the calculation, and the IRS usually extends deadlines for affected counties. We keep the claim documentation with the return.
Rentals, Royalties and Second Homes
Houston investors often own single-family rentals in Katy, Cypress or Pearland, and some families inherit royalty interests in East Texas or the Permian Basin. Rental income goes on Schedule E with depreciation, property tax and insurance. Royalty income is also reported on Schedule E, usually from Form 1099-MISC, and percentage depletion may reduce it. Short stays in a Galveston beach house or a Montrose apartment can bring state and local hotel tax.
Medical Residents, Students and Researchers
Residents and fellows at the Medical Center, graduate students at Rice and the University of Houston, and visiting researchers each have different filing rules. Stipends, fellowships and education credits need care, and researchers who are not U.S. citizens may file as nonresidents for a time and claim treaty benefits.
What to Send
- W-2s, 1099s, brokerage statements and equity award vesting reports.
- Property tax statements from Harris, Fort Bend or Montgomery County and any MUD bills.
- Rental income and expense records, royalty statements and closing documents.
- Insurance claims and repair invoices after a storm.
- Last year's return and any IRS letters.
Houston Personal Tax Preparation Questions
Do Houston residents file a state income tax return?
No. Texas has no personal income tax, so the federal return is the only income tax return for most Houston residents.
Why is my RSU sale showing a large gain?
Brokerage forms often omit the income already taxed at vesting. We correct the basis so the same income is not taxed twice.
Can I deduct my MUD tax?
MUD tax is a property tax, so it counts toward the federal state and local tax deduction if you itemise, subject to the cap.
Can I claim a hurricane loss on last year's return?
For a federally declared disaster, you can generally elect to claim the loss in the year before the disaster, which may speed up a refund.
Talk to BOMCAS About Personal Tax Preparation in Houston
Owners need the business return and books finished first. A nanny goes through household payroll, a short-term rental owes hotel and sales taxes, stock and property decisions belong in planning, missed years in late filing, and Canadian accounts under cross-border tax. Statewide, we also cover business tax preparation, sales and use tax, bookkeeping, payroll, tax planning, back taxes and late filing and cross-border tax, all reachable from the Texas overview.
Tell BOMCAS about your Houston business or household and we will reply with next steps and what we need for a quote. Use the contact page or the form below, call 780-667-5250 or email info@bomcas.ca. Every Houston service is on the Houston overview. This page is general information, not advice for your situation.