Short Term Capital Gains from NH Account Reported as MA Earning

[BarryS]

Hello,

My wife and I live in New Hampshire. My wife works in Massachusetts so we must file a Mass State Tax Return as a non-resident. When the data is imported into the MA State Tax from the US Federal, it includes some Dividends and Short Term Capital Gains received from a New Hampshire based investment account through my New Hampshire bank. It recognizes the Dividends as non-Mass earned income and is thus excluded. But the Short Term Cap Gains it listed as Mass income and is included it as taxable. I don't believe this is correct. Does anyone know if I am correct in my thinking? If so, how do I adjust. I found mothing in the TT program to allow me to designate that Cap Gains as non-Mass income. 

[MaryK4 · Accepted solution]

Massachusetts does not include the dividends in state gross income.  It includes the capital gains in the calculation of tax rate, but only applies the tax rate to the Massachusetts income.  (Massachusetts first prepares the return as if you were a resident, but only taxes to the Massachusetts income).

[BarryS]

Thank you for your answer. This is what I suspected should be true.  But this is the first time I have had to report Capital Gains of any kind in a few decades and I was unsure of the law.

If I may, can I as a follow-up question based on your answer. Since the current imported MA tax form shows the capital gains as taxable income, how can I change that to report it as non-Mass income so I don't take the tax hit from it? I did not see any area in the Turbo Tax program to note this as non Mass based income. Do I have to make a manual edit? Or is there an easier way? I will check FAQs to see if these is anything there.

[BarryS]

I found the answer to my question regarding how to change the short term cap gains as non-Massachusetts based. It was tedious as I had to Edit each and every transaction during the year from the Mutual Fund like investment account, there was 3 to 4 dozen, and click on the Non-Massachusetts Source. But it worked!!!!😁