I'm a MA resident but also worked from our vacation home in ME for part of 2020. Do I file with both states?

[jpendle]

My primary residence is in MA and I own a vacation house in ME. During 2020 I worked from "homes", splitting my time between the two roughly evenly. Do I need to file in ME as well as MA, and if so, as a nonresident?

To complicate things, in the past I've split my time between my employer's office in MO and my home in MA. In 2020 I was only in MO for a few days. My W-2 has both MA and MO income and withholding. Do I need to get it corrected to show no MO income?

[DanielV01]

You have three states involved, so I'll try to give guidance on each.  My answer presumes that your job is located in Massachusetts, but if that is not correct please let me know.

Massachusetts:  You are a resident of Massachusetts, so all of your income is taxed in Massachusetts no matter where you earned it.  When income is taxed in Massachusetts and another state, Massachusetts will allow you to claim a credit for tax you must pay to the other states on income earned there.  Because of this credit, always prepare Massachusetts last.

Missouri:  Do not correct the W-2.  If the company made a mistake and over-withheld Missouri tax, you must file a Missouri nonresident return receive a refund of any excessive withholdings.  If the actual income reported on the W-2 for Missouri is not accurate, you can use Missouri tax screens to correct the amount to the actual amount you earned while physically in Missouri.  Prepare this return first.

Maine:  It depends and it's complex.  The first issue is whether or not you are a statutory resident of Maine.  If you spent 183 days or more in Maine, and you owned a residence (a vacation home is a residence), then you would be considered a statutory resident of Maine, which would require you to file a Maine resident tax return.  If that is the case, then all of your income is taxable in Maine, but then any tax you must pay to Maine can be (potentially) claimed as a credit on your Massachusetts return).  And the tax you pay to Missouri is a credit on your Maine return, to reduce the Maine tax somewhat.  If this is your situation, prepare this return second, and use the Maine income (should be the same as the Federal amount), as well as the tax due to Maine for the out-of-state tax credit on the Massachusetts return.

However, if you do not meet the definition of a statutory resident, then you shouldn't need to file a Maine return at all.  Due to the temporary tax provisions the state adopted during the coronavirus emergency, Maine was not requiring other states to withhold Maine tax on Maine residents who were telecommuting from their Maine home for an out-of-state employer.  The income of these workers is still taxable in Maine (as Maine residents), but the income is considered as priority-taxed in the state where the employer is located, and Maine would issue a credit against that (again, for Maine residents).  But the way the provision reads would mean that a nonresident physically working in Maine, but teleworking for a company located outside of Maine, is not generating income that is taxable to Maine.  So if you are not a statutory resident of Maine, it would appear you do not need to report any of this income to Maine at all.  The best source of information on this (and it's not 100% clear, mind you), is found at this link:  MAINE TAX ALERT - Maine.gov

[jpendle]

• Thank you very much for such a thorough answer! Two things: 1) my company/office is in Missouri, and in a normal year I spend every other week there, working from home in MA the rest of the time. In 2020, I only spent two-three weeks there, splitting the rest of the time between MA and ME. I did not spend 183 days in ME, so I’m relieved to hear I don’t need to file there. 2) What are the Missouri tax screens? When you say to correct the MO income amounts, do you mean just do that in TT? Wouldn’t that raise a cross-check issue if MO compares my W-2 to my return?

Thanks again, I really appreciate the help!

[AmyC]

MO income on w2 with MO tax makes sense. You will prepare a nonresident MO return.

Your resident state taxes all income but gives a credit for income taxed by another state.  Please carefully follow these directions.

You will need to prepare the states in a special order. You may need to delete both states and begin again.

1. First, prepare your non-resident MO return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. THEN prepare your resident MA state return and it will generate a credit for your income already being taxed in the non-resident state.
3. The credit will be the lower of the state tax liabilities on the same income. You may owe your resident state.

It isn't possible for the program to create a credit before it knows the liability. Your returns may be wrong if you do not prepare the states in this order.