MA state tax double counting income

[koshy2000]

I had W2s from MA and RI since I live in MA and work in RI most of the year. These each show an amount in box 16 for State wages. When going through TurboTax the RI process goes smoothly and uses the correct box 16 amount. When going through the MA process, the amounts in Box 16 from both W2s are added together in determining the total MA income. I believe the Box 16 from only the MA W2 should be used for this calculation? Is there any way to manually change this?

[KarenM90]

If you are saying the one W2 showed MA wages in box 16 and the other W2 was from a different employer and showed Wages in Box 16 for the amounts earned only in RI, then what you are seeing is correct.

All of your income from all states/sources will be taxable in the state in which you are a resident. (Your MA, as well as RI wages, are taxable in MA.)

Only your RI wages (or a calculation based on the percent of total wages they represent) will be taxable in RI.

TurboTax recommends that you prepare your RI tax return first, then your MA return, as the MA return will calculate a credit for taxes paid to RI.

[dngraham37]

I have a similar question regarding Massachusetts and double counting. I worked for one company, but some of the work was done in MA and the rest was in DE.

On my W2 I have two state copies, one for MA and one for DE. The one for MA shows my total earnings as reported on my federal return, and the DE one shows just what I earned in DE. 

In TurboTax, these are listed as a single W2 with multiple entries for lines 15-18. When I file my MA return the software is combining the MA and DE totals to a total larger than my entire earnings, and calculating my tax on that number. 

It seems that it should be calculating tax on my federal earnings for MA, and then subtracting what I worked in DE. 

[JohnB5677]

If you live in MA, 100% of your income is taxed in MA.  Down on line 30 you will see Income tax due to another state or jurisdiction.  This is where the adjustment is made for taxes paid to another state.

[dngraham37]

Thanks - but my question is should TurboTax be calculating on 100% or 150% of my total income, assuming 50% of my income is from out of state?

Example: 100K total income on my federal form
MA = 100K

DE = 50K

TurboTax is calculating my MA tax at 150k x 5.05%

[DaveF1006]

Massachusetts generally will tax on all income, apply the tax rate, and then determine the ratio of Mass income/total income.  Once the ration has been determined, then it is multiplied by the tax liability generated from all income. In this case, ($150,000)(5.05%)(100/150)= $5050

This is just an example on how Massachusetts tax income when some of it is from out of state.

[dngraham37]

Thank you - but that sounds like MA is taxing me on $150k even though I only made $100k total working in MA and DE. 

So MA does tax on income that you didn't earn. Based on that premise, I can assume that if I didn't work anywhere in 2020 and made zero dollars and filed federal taxes of $0 earnings, MA will tax me on $50k of income.

[MaryK4]

Massachusetts has a progressive tax system which means that the more you make the more you pay in tax.  To determine your TAX RATE, the total o=income is used.  That TAX RATE (%) is applied to your Massachusetts income only.  

@dngraham37

[dngraham37]

Thanks to everyone for responding - I don't want to sound ungrateful but I already understood what everyone is saying, and those answers don't address or answer the question I was asking.

Fortunately other software besides TurboTax was able to answer the question and I have posted a link to what was suggested on their thread in case anyone is interested in not letting TurboTax incorrectly calculate their state taxes.

[dngraham37]

It looks like my earlier post was deleted so I'm reposting. Here is the answer to the question that I have been asking but has not been answered by anyone on this TurboTax thread.

"

The Massachusetts Department of Revenue informs us that this W-2 is compiled in error, and the correct course of action is to request a corrected W-2 showing only the amounts in Box 16 attributable to the state in which they are earned, not each state for which the wages are taxable. 

If the employer will not issue a corrected Form W-2, there are a couple options available to complete your tax return reporting the correct amount of wages that are taxable to Massachusetts. "

From https://www.taxact.com/support/1504/2018/massachusetts-dupli[product key removed]ed-in-w-2-box-16-re...

[FrankSTein]

Hi @dngraham37 , so using your example you basically just cut the MA down to $50k?

I’m having the same problem but I n my case 100% of the income was earned in RI. So I should zero the income showed in box 16 for MA. 
Am I getting this right? Thanks for your help.

[AmyC]

Your resident state taxes all income but gives a credit for income taxed by another state. MA will automatically add all W2 state money together to be taxed. The employers have already sent the states a copy of your w2 information. The states know what you have earned. The program is where you correct the w2 information to reflect your situation.

If all of your income was earned in RI, only enter RI and income on the W2 screen.

If part was MA and part RI, enter both states and the amount earned in each state. Your w2 state section in the program does not have to match your w2. It should match real life.

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  return. This creates your tax liability for the non-resident state. How do I file a nonresident state return?
2. THEN prepare your resident 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.

If either state questions you, show them the other state return and that all income was taxed. Most states talk to each other over these situations so you probably won't have any communication.

[FrankSTein]

Thx for your reply. I’ll change state income to $0 and only leave taxes paid. Hope that helps but will circle back if it doesn’t. 

[FrankSTein]

Worked for me. Thanks @AmyC 

For folks out there having the same problem here is a quick recap:

Work in RI and live in MA. 100% of my income is made in RI but my W2 reports State Wages for both RI and MA, therefor when I was doing the MA state return it double counts my income. Tried multiple options suggested in the forum and the only thing that worked was changing the MA State Wages in Box 16 to $0.

This is correct because RI shows all my income which was made there. If you had income in another state and have this problem, you will need to edit box 16 for all states, making sure that sum is correct.

With this I was able to e-file. If you let Turbotax grab only the MA portion of the W2 instead of manually editing your W2, you won't be able to e-file your State Return.

Final caveat, make sure your box 16 is $0 and not blank or it will create issues with your Federal Return.

Cheers!

[AmyC]

Glad you were able to finish up!