MA state tax and out-of-state student internship

[Rogerdavis99]

My son is a MA tax resident (drivers license, registered to vote; parents home), goes to college in MI, and worked an internship in WA over the summer. I received the W2 from the internship showing $40K federal income and $5K MA state income with withholding, and lists the apartment address while he was working in WA. My guess is that he switched address with the employer from his permanent address in MA to the local address in WA after the first paycheck. I have 2 questions: 1). Does my son needs to report the entire $40K as taxable income in MA or should he report only the amount listed on the W2? If he needs to report the $40K, can this be done without requesting a revised W2 - for example, can the balance of $35K be reported as other income with no withholding? 2). I am claiming my son as a dependent and used a 1099T ($59K) to offset a 529 1099Q showing earnings of $8K on my taxes. Can my son use the balance of the 1099T (no double-dipping) as a deduction on his MA tax? Form Y states that this can be done for full-year MA tax residents - does he count as a full year tax resident when the majority of his time was sent in MI & WA? Thank you

[MaryK4 · Accepted solution]

Yes, your son would be required to report the entire income to Massachusetts because he is a resident.  A domicile, or legal residence, is the true home or main residence. You can't choose to make your home one place for general living purposes and in another for tax purposes, and you cannot change your domicile by taking a temporary or longer than expected absence from Massachusetts. You must not intend to return. Also, "temporary absences" of dependents for attendance at school is not considered a change of domicile.  

In general, nonresidents pay state taxes on income earned in the state and residents pay income tax on all income regardless of where he earned it.  To offset double-tax on the income, the resident state allows a credit for any income tax paid to the nonresident state, but in this case Washington state does not have an income tax so there is no offset.

When you complete the Massachusetts tax return in TurboTax, it will automatically assign all the wages to Massachusetts if you indicate in the Personal Info section that he was a resident of Massachusetts (if it does not, it will give you the opportunity to enter the correct amount) so you do not need a new W2 (and the employer would not be required to provide one because they only withheld on the $5,000 as shown on the W2).

Because he is a full-year resident, he would be able to take the tuition-- For qualified tuition payments to be deductible, payments must be for college tuition of the taxpayer or a dependent of the taxpayer.

[Rogerdavis99]

Thank you!!   I really appreciate your help.   Your answer was what I anticipated, but your confirmation has saved me a huge amount of time.    Really appreciated.