How to Apportion non resident income for Massachusetts in Turbotax?

[nashuaoem1]

I'm having trouble with my Massachusetts state return on TurboTax, it's definitely not as straightforward and intuitive as the federal section of the site. I live in NH and started a new job in Massachusetts on 11/1/2021 that is primarily remote. Between 11/1 & 12/31, I only worked in Massachusetts 7 days. Because I started in November, I don't believe the special COVID income sourcing rules apply since they ended in September of 2021.

On the Nonresident Apportionment screen, it lists my new Massachusetts job in addition to all of my wife and I's jobs in NH.

I edited each of the NH positions using the "working days" option to:

Total Working Days Outside Massachusetts - 365

Total Working Days Inside Massachusetts - 0

Total Income Being Apportioned - 0

Question 1: Is this the correct way to have these excluded from MA income tax?

For my Massachusetts job, I used the "working days" option to list:

Total Working Days Outside Massachusetts - 358

Total Working Days Inside Massachusetts - 7

Total Income Being Apportioned - $19,829 (Turbotax put this in by default from my federal return and is the number that shows up in Box 5 of my W-2)

Question 2: Should working days outside MA be 358 or 33 (the number of actual M-F workdays since 11/1 that I worked remote from NH)?

Question 3: Does the total income of $19,829 need to be adjusted manually or should the default from my federal return stay in this field?

On the "Wages you earned outside of Massachusetts" screen, it provides a number for "Total wages earned outside of Massachusetts". I don't know how this number was calculated. It seems close to the total of all my NH income but off by a couple thousand dollars.

Question 4: How is this number calculated and does it need to be adjusted manually based on the apportionment of my MA wages?

On the "Non-Massachusetts Portion of Deductions" screen, I've identified $2,350.24 total withholdings of medicare and retirement for my new MA job. I would then take the "all states" number of $10,686, subtract this MA job of $2,350.24 from it to get a "non-MA portion" of $8,336.

Question 5: Do I need to take that $2,350.24 and divide that between MA and NH time before calculating the non-MA portion?

After going through the state return, Turbotax is saying I would see a refund of my entire state income tax withholdings...that doesn't seem right since I worked 7 days in state. Something seems off somewhere.

[DMarkM1]

Question 1: Is this the correct way to have these excluded from MA income tax?  First note that for here and all the allocations below, whenever the question asks about working days, that excludes weekends/holidays/vacation days.  Therefore you are not starting with 365 but rather something around 260.  The other category answers for MA non-resident wages should be seven working days in MA as a non-resident and the income being apportioned is the MA job W2 box 1.    

Question 2: Should working days outside MA be 358 or 33 (the number of actual M-F workdays since 11/1 that I worked remote from NH)?

The working days should only be the working days available for the MA job.  So if you worked outside of MA for 33 days on that job then that is the correct number and 7 is definitely correct for working days in MA.

Question 3: Does the total income of $19,829 need to be adjusted manually or should the default from my federal return stay in this field?

You should not need to adjust that amount.  It should be all the wages from on your MA W2 box 1 (or box 16 if you have a MA withholding line on your W2).  

Question 4: How is this number calculated and does it need to be adjusted manually based on the apportionment of my MA wages?

You may need to adjust this number.  That should be your NH only wages plus the NH part of the MA job wages.  

Question 5: Do I need to take that $2,350.24 and divide that between MA and NH time before calculating the non-MA portion?

Yes, that 2350 should be allocated between the 33 and 7 days in and out of MA for the MA job.  

[nashuaoem1]

@DMarkM1  Thank you so much for the thorough response. Here’s what I’ve done.

Question 1:

Yes, that makes sense regarding removing holidays and weekends. However since these other jobs are related to NH income, I’m just looking to completely remove them from the return. None of the days were working in MA, and they are not from MA employers. It would be nice if TurboTax had the option to select “100% Non-Massachusetts Income” similar to how they have a button for “100% Massachusetts Income”.

Question 2:

This seems to make things better. Instead of 358 days, I put in 33 days for outside of MA workdays and it did increase my tax liability so that I’m not receiving a refund of the entirety of the state withholdings. 

Question 3:

Sounds good, I’ll leave the default $19,829 in this field. It doesn’t match Box 1 (which is $17,766.49) but it does match Box 16 which appears to include my retirement.

Question 4:

OK, if I add up all Box 5 on all of my NH W-2s I get to a total of $173,462.60. Then I just need to add my NH share of my income from my MA job W-2.

To get that, I calculated my working in MA time to 17.5% and my out of MA time to 82.5% (7 days in MA, 33 days in NH). By dividing my MA job W-2 Box 16 ($19,829) based on those percentages I get $3,470 in MA and $16,359 in NH.

Add the $16,359 to the $173,462.60 and the total outside of MA wages should be $189,821.60.

I’m still not sure how Turbotax calculated $180,830 attributed to out of MA wages.

The help prompt for this screen is very convoluted:

Massachusetts requires you to report your wages earned outside of Massachusetts that would have been reported by you if you had been a Massachusetts resident that you received from non-Massachusetts sources to calculate your nonresident exemption and deduction ratio.

If you have multiple states on your W-2(s), some other states may have additional income that is not taxable in Massachusetts or may not have income that would have been taxable had you been a Massachusetts resident.

If Massachusetts income is not reported on your W-2(s), the wages on box 1 of your W-2(s) may be greater than or less than the wages that may or may not have been taxable to you had you been a Massachusetts resident.

Question 5:

OK, as described above, I calculated my working in MA time to 17.5% and my out of MA time to 82.5%. I took the $2,350.24 worth of deductions from my MA job and divided it across both states: MA: $411.25 & NH: $1,938.75

The $1,938.75 plus the remainder of my deductions gets me to $10,274.75 out of the $10,686 worth of deductions reported on my federal return. This change also increased my tax liability helping the numbers seem a bit more realistic.

Let me know if that seems to make sense? Thanks again for the help.

[nashuaoem1]

@DMarkM1 One other finding related to Question 4:

If I use Box 1 instead of Box 5 to calculate total income for my NH W-2s I get to a total of $164,440. Then when I add my NH share of my income from my MA job W-2 Box 16 ($16,359), it gets me to a total of $180,800...a lot closer to TurboTax's calculated $180,830 attributed to out of MA wages (instead of my calculation of $189,821.60)

Should I be using Box 1 or Box 5 to calculate my total income from my NH returns?

[DMarkM1]

You should be using box 1 numbers for total income calculations.  The box 5 numbers are only used for social security calculations and reporting.

[drivr]

If you work a job that is basically on call every day and will be expected to work weekends if needed. can you then claim total working days to be 365? I've worked weekends and holdays numerous times.

[ErnieS0]

It depends on your state. Replicon provides a useful state-by-state list at: "Rules of On-Call work and Shift work in the United States of America & Canada."

@drivr