We live in NH but my wife and I both work for the State of MA. We are allowed to work from home on Fridays all the time, but starting in March of 2020 we were told to work remote full time.
Questions:
1. Should we have been apportioning our wages every year?
1a. If yes, CAN we amend prior years state returns? How far back?
Mass issued a State of Emergency and this: "https://www.mass.gov/technical-information-release/tir-20-10-revised-guidance-on-the-massachusetts-tax-implications-of" TIR 20-10: Revised Guidance on the Massachusetts Tax Implications of an Employee Working Remotely due to the COVID-19 Pandemic | Mass.gov
2. Does that affect us or am I reading too much into it?
3. Can we apportion all of our time home or only the time BEFORE March? Can we apportion any?
4. What about holidays, vacations and sick time?
5. Is a calendar (like my Outlook) from my employers email system adequate as a backup or do we need more?
At this point in time you should not be apportioning your wages every year. Massachusetts currently taxes remote employees. New Hampshire has filed a court challenge to that practice.
Massachusetts is one of six states which follow the “convenience of the employer” rule. Under the rule, your wages are taxable to Massachusetts even when working from home on Fridays because it is not mandatory to work from home. It is your option and therefore, not for the “convenience” of your employer.
Massachusetts expanded the rule with COVID-19 to include all remote work due to the pandemic.
All compensation received for services performed by a non-resident who, immediately prior to the Massachusetts COVID-19 state of emergency was an employee engaged in performing such services in Massachusetts, and who is performing services from a location outside Massachusetts due to a Pandemic-Related Circumstance will continue to be treated as Massachusetts source income subject to personal income tax.
File your tax return as normal, reporting all your MA income on a nonresident MA return.
Fila a Protective Claim
Wait until your MA return is accepted and you receive a refund or MA accepts your payment for any tax owed.
File an amended MA tax return as a protective claim. Change your MA wages to $0 so you get back all your MA tax liability. In the explanation state that you are filing a protective claim to preserve your right to refund in the event the U.S. Supreme Court rules that Massachusetts cannot tax New Hampshire residents for income earned while working in New Hampshire.
On the top of your amended return write “Protective Claim for refund under State of New Hampshire versus Commonwealth of Massachusetts”
Related Resources
I'm late to responding, but my understanding is that MA's "Convenience of the Employer" rule was put in place specifically for the pandemic and is effective until mid-September 2021. I have known folks who worked in MA and worked remotely in NH or other states on a regular weekly basis, who would apportion their income. I would think if you work for the state of MA, they can opine that you worked remotely one day a week before the pandemic at your NH home. This would allow you to apportion your income. See a couple of links to articles I have posted below.
https://www.mass.gov/directive/directive-21-1-personal-income-tax-guidance-for-employees-who-telecommuted-in-2020-due-to-the-covid-19-state-of-emergency (This is state guidance. See Section III. Directives)
Hello ErnieSO,
can you provide an update on the options for NH resident who worked fully remote from NH for a MA employer, since the Massachusetts emergency order pertaining to payroll tax withholding had expired on September 13th, 2021.
Thanks AF
Massachusetts is no longer taxing New Hampshire residents as you pointed out @atkinson54 after September 13.
MA says: "After September 13, compensation earned by non-resident employees will be sourced based on where they actually work, regardless of where they worked prior to the COVID emergency."
Updated FAQs available on non-resident telecommuting and 830 CMR 62.5A.3: Massachusetts Source Income of Non-Residents Telecommuting due to the COVID-19 Pandemic
Hi there Ernie,
Immensely helpful thread here for someone going through this. Is the protective claim still relevant today, when filing a 2021 return?
My wife and I worked remotely from New Hampshire through 2021 for a job that was based in Massachusetts prior to the pandemic. My understanding is that we would calculate the % of taxable income from 01/01/2021 - 09/13/2021, then submit the protective claim as described in your first reply.
Is this a correct understanding?
Thank you!
Brian
No. You do not have to file a protective claim @brrowie.
New Hampshire lost its case before the US Supreme Court meaning the case is dead. The motion for leave to file a bill of complaint was DENIED on June 28. The is no way to appeal a Supreme Court decision so New Hampshire residents cannot get a refund on MA tax.
It's a surprise the court decided so quickly.
Good morning,
I have been approved to WFH in NH since Feb 2020 and paying MA taxes.
When I moved to NH from MA, I did not realize I even had the option to no longer pay MA taxes so I did not request payroll update my work profile. That error has now been retified with payroll at work reflecting my WFH status since Feb 2020. Can I recoop any of the taxes I paid MA?
@ljkater --
For the period March 10, 2020, through September 13, 2021, Massachusetts applied emergency pandemic income sourcing rules to wages or other compensation paid to employees who worked remotely (working from home or a location other than their usual work location) due to the COVID-19 Pandemic. Scroll down to Employees working remotely in this reference for the details:
The "emergency income sourcing rule" was that such wages were subject to Massachusetts income tax even though the taxpayer was working remotely from another state.
So wages you earned remotely outside that time period would not be subject to MA income tax. If you had MA taxes withheld outside that time period, you would be eligible to have them refunded.