Treatment of Internship Stipend for Nonresident State Income Tax Purposes

[Luna_Tax]

Hello everyone,

My Son had an unpaid internship with a federal government agency in Massachussetts last summer.  He got this internship through a university scholar program that is based in New Jersey (this is NOT the same college that he attends during the school year).  This program pairs up college students with government agencies for a 2-3 month summer internship throughout the US.  The scholar program pays the student an internship stipend while the agencies that are matched do not pay anything.  The program stipend covered rent, travel costs, etc. for the summer.  My son is a resident of FL (which has no state income taxes) but attends an out-of-state college (neither in MA nor NJ).

The scholar program sent him a Form 1099-Misc for the full stipend amount.  For federal purposes, he is reporting this income on his Form 1040.  Does he also need to report this stipend in MA and pay MA state income taxes as a nonresident taxpayer?

Thank you in advance for your time and expertise.

[DaveF1006]

Yes, this would  be taxable in Massachusetts because it is Massachusetts-sourced income.  It doesn't matter where the income originated from. What matters is that your son carried out this study in Massachusetts thus it becomes Massachusetts-sourced income under state law. 

830 CMR 62.5A.1: Non-Resident Income Tax

[Luna_Tax]

Thanks Dave.

Two additional questions.  He should file his MA state return as a "non-resident", correct? 

The stipend was paid as Form 1099-Misc.  As such, he cannot deduct items such as tolls while driving to work, correct? He is taking the standard deduction on his federal return since he doesn't have any itemized deductions, not sure if that is different for MA state return.

[MaryK4]

There is not a Massachusetts state deduction for miscellaneous expenses related to the stipend.  @Luna_Tax 

[Luna_Tax]

Thank you.