Property sold that was located in Virginia (VA) is fully taxable to VA. Since you were living Massachusetts (MA), it will also be taxed there.
Your resident state of MA will give you a credit for tax paid to another state on the same income. Since they are both part year resident state returns, be sure to have the amount of income and tax that is included on both state returns.
- Take the income taxed from the property sale and divide it by total income taxed on the VA return. Next take that percentage and multiply it by the total tax liability on the VA return. This will be the tax portion paid to VA on that income. Be prepared in the MA return to enter this credit.
State Returns - Your resident state requires you to include all worldwide income. Assume both states require income tax returns to be filed:
- Report the income on each state return that is from the nonresident state
- Report it on your resident state and receive credit for taxes paid to another state.
Credit for taxes paid to another state is allowed by a resident state when the same income is being taxed to another state. Your resident state does not want you to pay tax twice on the same income. The credit that is allowed 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
@GaryS
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
