RI resident working remotely for Ma employer, do I apportion income?

[BUFTEAURELIA22]

I live in RI but work remotely for a company in MA. Mass taxes were deducted from my paycheck and they reflect on my W2 form. How do I file my state taxes? Am I able to apportion or do I just pay Mass taxes and get a refund from RI for taxes paid to another state?

Thank you!

[MayaD]

Your income is taxable in RI. The state you live in. 

You need to file Non-resident MA state return to receive a refund for taxes paid. 

Make sure you've filled out the Personal Info section correctly:

1. With your return open, select My Info in the menu.
2. On the Personal info summary screen, scroll down to Other State Income, and select Edit.
3. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.

 To ensure accurate calculations, always complete the nonresident return first.

On MA return enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.

How do I file a nonresident state return?

[BUFTEAURELIA22]

Thank you for your reply. There isn't a page where I can claim zero. The only way I can claim 0 in Massachusetts is following the apportion steps and claiming zero days worked in Mass, is that the way to do it? Thank you again!

[LindaS5247]

When entering your information into the TurboTax program, carefully answer all question regarding your state residency.  TurboTax will determine what Forms you are required to file.

It sounds like you need to file a Nonresdient return for Massachusetts.  Prepare this return first.

Then prepare you residential state return (Rhode Island).

Your resident state (Rhode Island) will tax all of your income no matter where you earn it.  Your nonresident state will tax any income you earn in that state.  

Make sure you've filled out the Personal Info section correctly:

1. With your return open, select My Info in the menu.
2. On the Personal info summary screen, scroll down to Other State Income, and select Edit.
3. At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
4. Select Continue to return to your Personal info summary.

After you finish your federal return, you'll automatically move to the State tab, where you'll see your nonresident state(s) listed (Massachusetts) in addition to your resident state (Rhode Island).

Note: In some cases, states have a reciprocal agreement that allows you to be taxed only in the state you live.  If RI and MA had a reciprocal agreement, then you would get back all of the MA withholdings. But these two states do not have a reciprocal agreement.

You must file tax returns to both states on the same income. However, your resident state will grant you a credit for the amount of tax that the nonresident state taxes the income earned there.  You will prepare the Massachusetts return first, so that TurboTax can calculate this credit on your Rhode Island return. 

Also:

• Select the long form (if the option is available) even if TurboTax defaults to the short form.
• Only report the income attributable to the nonresident state.
• If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.
• If you live in a reciprocal state, consider submitting an exemption form to your employer so you don't have to file a nonresident return next year.

Click here for information on how to file a nonresidential state return.

Click here for information regarding when you would have to file a nonresident tax return.

Click here for additional information on filing multiple state returns

[supersure]

I do not see a definitive answer to this question here. One response says to modify the apportionment to show $0 income in MA to get a full refund from MA of the amount withheld. Another response says to leave the apportionment as it is on the W-2 and to get a credit on the RI return.  These are clearly not the same and in fact RI will only credit you part of the MA tax because the tax rate is higher in MA. What is the CORRECT way to do this?

Thanks!

[TomD8]

@supersure --

Assuming that you never physically worked within MA, @MayaD 's original answer is correct.

You must file a non-resident MA tax return on which you show the MA withholding and on which you claim zero MA income.  This will result in your receiving a full refund from MA.

Your income, including your earnings from MA, is 100% taxable by your home state of RI.

MA does not tax non-resident remote workers who never physically work within MA.

[supersure]

Thanks @TomD8,

What if the employee was physically in MA for a minimal amount of time, for things like training or work functions at the company HQ, but 99+% of their time was working remotely from RI. Would those few hours then need to be apportioned out? 

Thanks again

[TomD8]

@supersure --

Your obligation to file in MA depends on your Massachusetts gross income.  This is explained in this MA tax reference under the heading Non-residents:

https://www.mass.gov/info-details/who-must-file-a-massachusetts-personal-income-tax-return#nonreside...

[supersure]

@TomD8,

Thank you for pointing me to that reference. From there I followed it to:

MA Gross, Adjusted Gross, and Taxable Income for Nonresidents | Mass.gov

According to this reference, activities such as training, conferences and management reporting are considered "ancillary activities" and do not count as conducting business in MA. Therefore, apportioning the MA sourced income by hours or days should not be necessary and I believe the MA wages can be set to $0 as you and @MayaD have described.