Let's try to simplify this for your entry. Your situation is not unusual, however the move and change in residency does cause an unusual experience. You file two part year resident returns and also must pay tax to Massachusetts (MA) on the wages from your MA employer all year.
- Although the question is not exact, you do want to add your wages from your MA employer for the Rhode Island (RI) residency period in the question:
- 'Enter the portion of your $xxx,xxx in wages and salaries that you earned from Rhode Island sources while you were a resident of Rhode Island'- residency period.
- The portion of the income from wages that belongs to RI must be tracked to determine the amount of tax on MA that is actually for the same wage income taxed to RI.
- Divide the RI portion of the wages by the total wages from the MA/RI employer, this will give you the percentage to use on the MA total tax which will provide the total tax on MA that should be a credit on RI.
- When you do the RI return, you will need to use 'Credit for taxes paid to another state'. Enter the MA wages and MA tax calculated above and RI will give you credit.
- This is a bit complicated for automation which makes it a manual process in your situation.
General Rule for Credit:
The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income. As the resident state all worldwide income must be included.
The credit for tax paid to another state on the same income will be the lesser of:
- the tax liability actually charged by the nonresident state, OR
- the tax liability that would have been charged by your resident state
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