Living in 2 states TX and MA

[DarenG]

I lived in Texas for 6 months and Massachusetts for 6 months. Do I have to pay tax in MA on my entire salary. When I try to file state tax it test me to entire the amount I earned in Texas and is trying to tax me on it?

[hbl3973]

DarenG,

Massachusetts is not truly taxing you on your Texas income.  They use the unitary taxation procedure to determine your state tax.  In this method, they first calculate the MA state income tax they would have imposed had you earned your income and lived in MA the whole year and then they prorate it proportional to the percentage of income actually earned in MA.  Note that this is different, and generally a larger state tax bill than if they just directly taxed your MA-specific income because MA has a progressive income tax table with higher incomes taxed more heavily.

Unitary taxation was devised a long, long time ago when it was discovered that millionaires were carefully splitting their sources of income across many individual states.  The the tax laws at that time calculated each small piece at the lowest tax rate for each state, effectively claiming poverty-level income rates. 

[DarenG]

Thank you. Looking further there seems to be an error in the TurboTax submission as it fails to allow me to enter the Out of State tax amount in the form submission. It relies on a value in worksheet to perform the calculation but TurboTax is not allowing me to enter the amount to correct the situation. Is there a way to bypass the error?

[hbl3973]

DarenG,

My apologies for a late reply.  I also volunteer with AARP TaxAide and was tied up for the last few days providing remote assistance for folks preparing their taxes.  I assume you already pored over the various state tax credit options quite thoroughly.

If the version of TurboTax that you are using has a Forms view, then you can go to forms and worksheets to directly override many values.  (I use a version that is installed on my PC.)

[hbl3973]

DarenG,

Looking back at your reply, TX does not have income tax, so there would be no "out of state" tax to credit against your MA tax.  While you can deduct TX sales tax on a federal return, that is not an income tax for the purpose of an MA tax credit.

Let me know if you ended up shoehorning an incorrect tax credit into your MA return and I can guide you through the amendment process.

[TomD8]

Be aware that Massachusetts considers you a full-year resident for tax purposes (making ALL your income subject to MA taxation) if you maintain a permanent place of abode in Massachusetts, and spend a total of more than 183 days of the tax year in Massachusetts, including days spent partially in Massachusetts. (Do not count days spent in Massachusetts while on active duty in the U.S. armed forces.)

https://www.mass.gov/service-details/learn-about-legal-and-residency-status-in-massachusetts

You can find the definition of "permanent place of abode" in the same web reference.

[GoodShip]

So I moved from Texas to MA in May of 2019. While living in MA I  earned about 2/3 of my Federal Income that year. Turbo Tax completed  From 1, MA return but determined only the MA income as taxable(W2 form).. I filed the return FORM1 Massachusetts Resident Income Tax Return. I just got a bill from MA DOR saying I owe 1800 more in MA tax for 2019 . They are using my Federal or "total income" for the 2019 year, not just the MA portion of the W-2. Are they right(MA DOR) to bill me this additional tax due??? Turbo tax did not prepare the MA return that way. Thanks

[Hal_Al]

(Deleted)

[GoodShip]

Massachusetts has 183 RULE. More than 1/2 days of the year in MAss, you are considered full year resident. So filed as such.