I'm a resident of MA with W2s from jobs located in both MA and NY, and am confused about how TT is using the MA Tax Credit Worksheet to calculate how much of a credit on my MA state tax I can claim (i.e. how much I can reduce my MA state tax) from the amount I have paid for NY state tax.
Specifically, on the MA Tax Credit Worksheet:
Line 4 (5% income tax) = 5133
This matches the amount on
Form 1-Line 19 (5% Income after Exemptions): 102651 (102651*0.05=5133)
I wanted to check that this was the correct number to be using, and not
Form 1-Line 21 (Total taxable 5% income): 102878
Form 1-Line 22 (Tax on 5% income): 5144
Can anyone explain why TT is using what looks like a subtotal of my total 5% income to calculate the 5% income tax amount on Line 4 of the MA Tax Credit Worksheet?
Thanks!
If you are a Massachusetts resident, you should be getting a credit for the amount of tax you pay to New York on your Massachusetts return, and not the other way around. If you work in New York but live in Massachusetts, you pay tax to where you work first (the nonresident state) and then your resident state (Massachusetts) gives you a credit for what you must pay to the nonresident state. Is this your situation? Please clarify.
Yes, that is correct: I have paid income tax to NYS on my job located in NYS, and TT has filled out the 'MA Tax Credit Worksheet' to reduce my MA state tax (via a credit for the NY state tax I have already paid).
On this worksheet, I'm wondering why TT appears to have calculated the '5% income tax' (line 4) from Form 1-line 19 (5% Income After Exemptions) and not Form 1-Line 21 or 22 (Total Taxable 5% Income and the corresponding Tax on 5% Income). Is it correct to use Line 19 and not Line 21?
(edited my original post to hopefully describe the situation a little more clearly)
I found the answer to this after lots of digging, in the 2020 MA Form -1 instructions (page 14). The full description for what is listed as '5% Income Tax' on Line 4 of the MA Tax Credit Worksheet is: "Multiply Form 1, line 19 by 0.05" - in case its helpful for anyone else.