Work in Massachusettes moved to Rhode Island and turbo tax asks questions that are different than the Rhode Island form!

[CubFantoo]

I work in Boston, Ma but moved from Mass. to Rhode Island in April of 2023.  I still work in Boston. I take the train in 3+ days a week and work from home when I don't go to the office.  My understanding is that all my wages are taxable in Mass because that is where my work is based.  My W2 only withheld Mass state tax as well.   I filled out a part year resident return for Mass and showed all wages. 

I also filled out a part year return for RI.  When I went through the interview Turbo Tax asked  "Enter the portion of your $xxx,xxx in wages and salaries that you earned from Rhode Island sources while you were a resident of Rhode Island.  If no amount, enter 0."  I entered 0.  It then asked for the portion of Rhode island sourced income while I was NOT a resident of RI (0) and continued these questions for interest and dividends,business income, adjustments etc.

Here's the rub.  When I look at the actual RI form it has 4 columns (A,B,C,D.)  Column A is Federal income, Column B is income from column A during RI resident time (no source mentioned), Column C is income from column A during RI nonresident time and column D is income from column C from RI sources.   The Turbo Tax request for "wages and salaries that you earned from Rhode Island sources while you were a resident of Rhode Island" response goes into the box in column B asking for the portion of your Federal wages earned during your RI resident time - the RI form doesn't care about source. 

So what gives here?  If I follow turbo taxes interview I only show RI sourced income, interest, dividends, business income etc.  But it clearly is not what RI is requesting on its form and may have some downstream/background tax table or deduction limiting impacts.  If I follow the instructions on the actual state form I have to do it manually, lose turbotax's calculations and then file a form attaching my Mass return for revenue taxed by another state to prevent RI tax on the income taxed in Mass.  Or I can ignore the turbotax instructions and fill in what the state form requests and manually double check the math to see if it worked right.

Why are the Turbo Taxes questions different than the state tax form?  What should I do here?

[DianeW777]

Let's try to simplify this for your entry. Your situation is not unusual, however the move and change in residency does cause an unusual experience. You file two part year resident returns and also must pay tax to Massachusetts (MA) on the wages from your MA employer all year. 

1. Although the question is not exact, you do want to add your wages from your MA employer for the Rhode Island (RI) residency period in the question:
   • 'Enter the portion of your $xxx,xxx in wages and salaries that you earned from Rhode Island sources while you were a resident of Rhode Island'- residency period.
2. The portion of the income from wages that belongs to RI must be tracked to determine the amount of tax on MA that is actually for the same wage income taxed to RI.
   • Divide the RI portion of the wages by the total wages from the MA/RI employer, this will give you the percentage to use on the MA total tax which will provide the total tax on MA that should be a credit on RI.
3. When you do the RI return, you will need to use 'Credit for taxes paid to another state'.  Enter the MA wages and MA tax calculated above and RI will give you credit.
   • This is a bit complicated for automation which makes it a manual process in your situation.

General Rule for Credit:

The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.  As the resident state all worldwide income must be included.

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state 

[CubFantoo]

Thanks. I did that and followed the turbotax questions for the credit; however, the resulting credit from RI was quite a bit less than the taxes added to RI for the “joint” income. So here is my question:

In the turbotax interview for the credit for Mass taxes paid it asks me to “Enter the amount of tax that you paid to MA on income that was also taxed by Rhode Island”. I prorated the MA tax for the “joint” income and entered the number.

BUT ON THE ACTUAL RI FORM this item reads “Tax due and paid to other state” and it is then used along with the total MA AGI to apportion those taxes based on the “joint” income amount and calculate a maximum tax credit allowed. The RI form also calculates a maximum credit allowed based on RI information and tax rates and then allows the lower of the two. But in the turbo tax interview the MA calculation appears to always come out lower because of the entry for tax that you paid to MA on income that was also taxed in RI.

If I enter the total MA tax paid in this field the math seems to make sense. So is the turbo tax question incorrect here? I think I should ignore it and enter the full MA tax paid as the RI form seems to request. Thoughts?

[TomD8]

"I still work in Boston. I take the train in 3+ days a week and work from home when I don't go to the office. " 

MA will tax you as an RI resident only on work actually (physically) performed within MA.  Income you earn on the days you work remotely from RI is not taxed by MA. 

The income you earned on the days you lived in RI and physically worked in MA is the only income that is taxed by both states.

The income you earned prior to your move to RI is taxable only by MA.

Note that when you are filing two part-year resident state returns, TT recommends that you complete the "old" state return first, before you do the return for your current state.

How do I file a part-year state return? (intuit.com)

[CubFantoo]

How do I document the days worked from home (RI)?  Is a hand written log or a spreadsheet that tracks those days sufficient?  Then would I just do the math to identify a proportion of my salary/bonus to assign to those days?  I'd presumably need to do similar math for SS and medicare deductions with MA cares about.

[TomD8]

If you’re audited, it’s generally safe to assume that any type of reasonable documentation will suffice.  And yes, you’ll have to do most of the pro-rating and calculating yourself.