My Daughter's Tax Filing

[bhavanikishore]

We are from Massachusetts and my daughter is doing undergrad from College in Newyork state. She has some income from college as Teaching Assistant (Income in Newyork State). She also did internship in San Francisco, California during 2023 summer.  She does not have any income in Massachusetts. Please let me know, how to file her taxes.

[Hal_Al]

She has to file three state tax returns. She files a non-resident CA return and pays tax on the income she earned there. She files a non-resident NY return and pays tax on the income she earned there.  She files a resident MA return and calculates tax on all her income for the year. But she gets a credit (maybe only a partial credit) for the tax paid to the other two states. Do the non resident returns first. 

This is the general rule: The income is work state (WS) source income since it was earned there. Resident States (RS) tax all their resident's income, regardless of where earned. You will file a non-resident tax return for the WS and report the WS income. You will file a full year resident return for the RS, reporting all your income. The RS will give you a credit, or partial credit for any tax paid to the WS.

For state filing requirements, the WS does not, usually, go by what you earned in their state but by your total income . For example, if WS has a $10,000 filing requirement and your total income for the year was $15,000; you would be required to file even though you may have had only had $300 of income in that state. But if your total income was $9,000 you would not need to file.

Filing Requirements: https://ttlc.intuit.com/questions/2903200-do-i-need-to-file-a-state-return

[bhavanikishore]

Thanks for the immediate response..

[BillM223]

In the case of Massachusetts, the draft instructions state:

If you were a resident of Massachusetts and your gross income was more than $8,000 — whether received from sources inside or outside of Massachusetts — you are required to file a Massachusetts income tax return. If your gross income was $8,000 or less, you do not need to file a return. See page 5 of Massachusetts draft 2023 Instructions.

So Hal_Al's always excellent advice needs to be tempered by us not knowing how much your daughter earned.

[hbl3973]

One quick note:  as the Hitchhiker's Guide to the Galaxy states: Don't Panic.  While each of the non-RS states will first base their tax calculations on your daughter's total income as if she were a full time resident, their tax is prorated essentially by the fraction of the income that was earned in that state.  And, as Hal_Al notes, the taxes paid to the non-RS states are used to compute a credit on the RS return for taxes paid to other states.  Finally, it is very likely that even if a non-RS return is not required, your daughter will still want to do so to claim any refund due her.

(One thing to be thankful for is that you do not mention any non-wage income such as from investments.  That could have created a new layer of complexity with the so-called Kiddie Tax.)