2022 Massachusetts cannot efile due to W-2 box 16 multiple state wages

[swanky3]

I'd appreciate any help to allow me to efile.

I received the following popup message (screenshot):

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I'm a resident of MA and worked in NY, and imported the W-2 with the following:

Turbotax initially showed the sum of both box 16 amounts (100316) as federal income, but I got to an input screen (that I cannot find now) that seemed to cover this situation and allowed me to delete one of them. However, in Forms View, the W2/W2G Summary Box 16 still shows the sum (100316) as total state wages. 

I've tried deleting the input screen W-2 box 16 MA amount but that makes things worse (incorrectly increases the MA refund since there is no MA income).

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Tutbotax premier 2022 desktop

macOS with latest update

[HopeS · Accepted solution]

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

@swanky3

[swanky3]

With the info in HopeS's reply I was able to efile the MA return by doing the following:

• copied the TurboTax .tax2022 file to another folder in case the flowing actions corrupted the return and I needed to restore the original (TurboTax seems to save the file automatically when changes are made, even when I don't want them saved)
• on the W-2 input screen, I entered $1 in box 16 for MA wages (entering $0 caused TurboTax to delete the entire W-2 MA entry)
• on the screen asking if I wanted to delete the MA box 16 wages to avoid double-counting, I clicked No (clicking Yes prevents efiling the return)

I reviewed the results to confirm the refund/due and other amounts were the same as on the return I was not able to efile.

[jgg8]

I am having a similar issue this year. Did this end up working out for you?

My current situation, in case anyone can help answer:

MA resident. CA non-resident.

Using made up numbers...

W2 Federal box 1 = $100k

W2 CA box 16 = $20k

W2 MA box 16 = $100k

Going through CA non-resident, everything worked out fine.

Going through MA resident, I get to the page that asks about accuracy of the wages pulled from the federal w2 and it tries to pull the $20k from CA and $100k from MA = $120k. This is double taxing the $20k from CA.

I am unable to e-file if I ask TurboTax to use MA box 16 ($100k), which is accurate. Tax credit is applied for the taxes paid to CA on the $20k and taxes owed is correct, but I am forced to file by mail.

I found a lot of other folks with similar issues, including ones that shared recommendations from Tax Act: Massachusetts - Duplicate Wages Entered in Form W-2 (Residents Only) (taxact.com).

Would it be advisable to manually edit the MA W2 box 16 to be $80k so that TurboTax correctly pulls the $100k for MA and allows e-file? This results in the correct tax breakdown.

I'm still not sure whether this is a W2 issue, a TurboTax issue, or a MA tax e-file limitation.

Can anyone please advise? 

[AmyC]

You are correct that you need to edit the w2 entry. The federal and states also have a copy. The state section in the program is for you to make changes to match reality. You will need to correct the MA state to 80k, - in your example. This allows the full taxable MA wages to pull through without excess.

We see W2 forms issued in many ways.  We just work with what we get 🙂