Double taxed income with three states (CA/GA/MA)

[kyungchulha]

Hello,

I am a graduate student who has worked in two states (Georgia as a teaching assistant, and Internship in California). My permanent residence is my parents home in Massachusetts and I have not made any earnings in Massachusetts. It seems like I am being double taxed in massachusetts from the income in california and georgia for state tax, as I set up the turbotax state tax system for all three states. How do I make sure I am not being double taxed?

Thank you.

[MayaD · Accepted solution]

As MA resident, you pay taxes on all your income. However, as Massachusetts resident who work and pay income taxes in other states you are generally entitled to a credit against your Massachusetts income taxes in an amount equal to the tax paid to the other state.

You need to file Non-resident  CA and GA returns and MA resident return. To ensure accurate calculations, always complete the nonresident returns first.

For more information, check: How do I file a nonresident state return?

mass.gov

[kyungchulha]

Hi, 

If I am understanding this correctly, just like you said, I have massachusetts as my resident (domicile), and CA and GA as non resident. When it comes to the state tax portion of my tax form, I have forms for all three and filled out the non resident, CA and GA forms first.

When I do this, I am owed the 5% income tax of my total earnings to MA, and I get some credits that deduct partial the amount of taxes that I paid to other states. With this I have few hundred dollars I owe to the state.

The confusion I have is the underpayment penalty. How do I pay the amount without incurring this penalty?

[DMarkM1]

The MA credit for taxes paid to other jurisdictions is the smaller of:

• The amount of taxes due to other jurisdictions (net of certain adjustments), or
• The portion of your Massachusetts tax due on your gross income that is taxed in any other such jurisdiction

The CA tax rate is likely 4% or higher on your income and most of your GA income will be taxed at 5% or more.  So the MA credit should offset most of your MA taxes and therefore no (or very little) underpayment penalty should be due. Check your MA forms to verify the other state income and other state tax liability numbers. 

You may need to recheck your state income allocations on the nonresident returns if the income or tax liability showing seems low.   

For online versions you should first check your state tax summaries (online steps below) and if necessary for more detail you may need to print/download your online return to better see those calculations (print steps below).  

If you are working on desktop (CD/download) product switch to "Forms Mode" and check the MA Tax Credit Worksheet(s) and Other Jurisdiction worksheet to see how the math is working for the other state credit (CA and GA).  

View an online Tax Summary:

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu

5. Select "MA Tax Summary" to see the MA tax and the credits applied

6. Select "CA Tax Summary" to see the income taxed and CA tax liability

7.  Select "GA Tax Summary" to see the income taxed and GA tax liability

To print/download online:

1. Select "Tax Tools" in the left hand menu
2. Select "Print Center"