You are filing with both states, one as a resident and the other as a nonresident. Prepare your nonresident state first. There will not be double tax however review the details below to understand how it works for your situation.
Rhode Island (RI) and Massachusetts (MA) do not have a reciprocal tax agreement. As a result, if you live in one state and work in the other, you are generally required to file tax returns in both states, though you can usually claim a credit in your home state for taxes paid to the other.
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
In most cases complete your nonresident state first.
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