State tax filing

You should not delete the W-2 for box 16 for Massachusetts.  The state just does not allow e-filing when there are multiple W-2s.

Under G.L. c. 62, § 6(a), Massachusetts residents who work and pay income taxes in other states are generally entitled to a credit against their Massachusetts income taxes in an amount equal to the tax paid to the other state. The credit is claimed on the employee's annual return, Form 1, Schedule F. Because of the credit, the Massachusetts tax on the income is reduced, and reduced withholding is authorized under 830 CMR 62B.2.1(3). The lower withholding amount is calculated by the following steps:

1. determine the amount of Massachusetts withholding that would be required for a payroll period if the employee worked in Massachusetts

2. determine the withholding required for the payroll period by the state in which the employee works;

3. if the normal Massachusetts withholding amount determined above is greater than the amount required to be withheld by the other state, subtract the other state's amount from the Massachusetts amount and withhold and pay only the difference to Massachusetts;

4. if the normal Massachusetts withholding amount determined above is equal to or less than the amount required to be withheld by the other state, do not withhold any Massachusetts taxes from the employee's wages.

Since you are a resident of MA all income earned in NY will be taxed in MA and NY. You will need to file a non-resident return for NY and a resident for MA. To ensure accurate calculations, always complete the non-resident (NY) return first because your resident state (MA) will give you a credit for taxes paid. 

As a Massachusetts resident, all wages earned are taxable to Massachusetts. When a Massachusetts resident works out of state, those wages are still taxable to Massachusetts. Some employers will list on Form W-2, Box 16 the amount that is taxable to the state where the wages were earned and will also report the amount of wages that are taxable to Massachusetts, due to the employee's state of residency. Typically there is withholding reported for both states in this situation. This becomes an issue for residents using MA Form 1 because the amount of taxable wages is often greater than it should be. This occurs because Massachusetts residents are taxed on all wages, regardless of which state they are earned in. Because the wages were listed twice on the W-2, they are now also listed twice on MA Form 1. 

One option is to request a corrected W=2 showing only the amounts in Box 16 attributable to the State in which they are earned, and not to each state for which the wages are taxable. This will be difficult to obtain so you may have to paper file your MA return. 

See the links below for more information:

Same State Income 

MA Directive

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