Massachusetts 401K deductions

[Garry_NewEngland]

Tax regulations in Massachusetts allow 401K contributions to be deducted from

Massachusetts taxable income.  How does this work, when the state form is

generated along with the Federal?  Thank you.

[JohnB5677]

Yes, Massachusetts does allow the 401-K deduction.

The W-2 is the standard form for recording 401-K contributions. 

• This will be recorded in Box 12 with Code D.
• You will note that Box 1 will be less than Box 5
  • Box 1 is earned wages less deductions (Like 401-K contributions)
  • Bos 5 is Medicare wages which is the total wages
• You will find that Box 16 State wages will match Box 1, which does not include the 401-K deduction.

[Garry_NewEngland]

THank you for your reply.

I am referring to solo-401-K contributions, which are taken from business profits.  In this case,

there is not a W2, so it's handled in a different way.

[Garry_NewEngland]

Were you able to look into that?  When I file for MAssachusetts taxes,

the solo401-K contributions have to carry over to the form

for Massachusetts, as a deduction.

[MayaD]

Contributions made to a 401(k) plan by self-employed individuals are not deductible for Massachusetts income tax purposes

For taxable years beginning on or after January 1, 2008, this Directive clarifies and prescribes the Massachusetts personal income tax treatment of contributions made on behalf of partners and other self-employed individuals under a so-called 401(k) plan. As explained in this Directive, under G.L. c. 62, § 2(d)(1)(D), partners and other self-employed individuals are denied any deduction for contributions to their 401(k) plans, irrespective of whether the contributions are elective contributions or matching contributions made on their behalf. mass.gov