caldermd
New Member

Investors & landlords

Nope, you didn't do anything wrong.  I had the same worry as you.  Since I wasn't laboriously listing all my schedule D items for my home state, I was concerned that I was underpaying, it turns out it was just a little bit subtle.

I worked my taxes once with the stocks and bonds allocated to my non-resident state and once without.  Then I compared them discovering the mechanism....  My two states were CO (home) and WI (non-resident).

 - WI capturing my schedule D items:  CO: -$217, WI: -$298

 - WI excluding my schedule D items: CO: -$445, WI: -$47

You can see I didn't dodge any taxes by moving the items off of my NR state.This happens because the federal schedule D income is already included in your federal income line.  So your home state implicitly taxes your stocks and bonds.  When you let turbo tax allocate them to your NR state, that income ends up being excluded for your home state in the form of "tax paid to another state" which calculates a ratio of non-home income versus the federal number.  So when I did my taxes with WI capturing my stocks and bonds, then those were being taxed at WI income rates.  When I exclude them from WI, they get taxed at CO rates (which are lower).  And legally it belongs on your home state unless...

Looking at the instructions for Massachusetts form 830 CMR 62.5a.1 Non-Resident Income Tax...

"...  blah blah ...    All types of income, including investment income, derived from or effectively connected with the carrying on of a trade or business within Massachusetts are Massachusetts source income ..."

If you sell your shares of coca cola, that is not business within Massachusetts.  If still concerned look at the following Rhode Island instructions and example and see how your percent from State 'A' went down leaving a larger portion of your federal income to be taxed by Rhode Island.

http://www.tax.ri.gov/regulations/other/pit98-12.php

Also note that if you make changes to your non-resident state return, you need to revisit your resident return's calculation worksheet for out of state taxes...  I'm pretty sure TTax prompts you but it is good to be aware that these numbers travel to your other state return.

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