work in one state, live in another

[Donna1957]

I work full time in Massachusetts.  All my income comes from Massachusetts.  However I live full time in Rhode Island.  What forms do i include in my return?  How do i calculate deductions (non-Mass portion of deductions page from TT Desktop)?  Thanks so much in advance

[maglib]

 Massachusetts and Rhode Island NOT have a tax reciprocity agreement therefore as you live in one state and work in the other, you must file non-resident tax returns in the state where you work and resident returns in the state where you live.  You first must complete your non-resident state tax return, then you complete your resident state return.  You normally get a credit for taxes paid to another state on your resident return although it is not dollar for dollar, it is based on income and tax rates.  Make sure during the Rhode Island interview you may have to select to remove a W-2, which you would remove the MASS one.

TT will walk you through the returns.

Did your employer withhold Rhode Island and Mass taxes?  They should be and if they don't, you may need to start paying estimated taxes to the state they don't withhold from.  

@Donna1957

[Donna1957]

I'm really confused.  Some of the community said I have to declare income from w2 on all state returns, resident and non (where 100% of income comes from).  then u say "Make sure during the Rhode Island interview you may have to select to remove a W-2, which you would remove the MASS one."  Does that mean entirely remove all income (that shows on MA W2) from RI return which would then show$0 income for both returns??  Sorry to be so dense...

[DaveF1006]

There is no need to apologize! Multi-state taxes are notoriously confusing because the software often makes it look like you're being taxed twice or reporting things incorrectly. It doesn't help when you receive confusing answers.

No, you do not remove the income from your RI return. As a Rhode Island resident, you must report 100% of your income to RI, regardless of where you earned it. The "removal" or "selection" you are hearing about refers to a specific step to prevent double-counting the same income. Here is how to file your Massachusetts and Rhode Island returns.

1. After completing the federal return, begin to prepare your Massachusetts non-resident State return first. As you complete it, make note of the allocation screens so that you only report the W2 wages being taxed and not other parts of your income.
2. Secondly, prepare your Rhode Island return.

What will happen is your MA Non-Resident Return will show 100% of the wages earned in MA. Your RI Resident Return will also show 100% of those same wages.

RI will then apply a "Credit for Taxes Paid to Another State." This credit works like a coupon, lowering your RI tax bill by the amount you already paid to MA.

Hopefully, this will ease some of the confusion you may have felt. Write back if you have additional questions.

[Donna1957]

Can u say more about “make note of the allocation screens so that you only report the W2 wages being taxed and not other parts of your income.”.  I’m unclear what exactly I’m to report where.  For example, RI return (resident state, no income) asks for income earned in RI which is zero.  Are you guys saying I provide MASS income as RI income also??

[RogerD1]

For situations like yours, where wage income was earned in a non-resident state, the most crucial thing is to make sure that the non-resident state return is completed and finalized before beginning the resident state return.

If you have income other than wage income, the wage income is the only taxable income to Massachusetts.  Some key screens to look out for in Massachusetts:

• Wages you earned outside of Massachusetts - for you this will be zero since all you wages were earned in Massachusetts
• Non-Massachusetts portion of income - if you had received a Pensions and Annuity distribution, a screen will appear to allocate the income.  The Non-MA Portion box should have the amount show for the All States box
• Interest and Dividends = if you had interest and dividend income, none of it will be allocated to Massachusetts
• Non-Massachusetts Portion of Deductions - this is a deduction of FICA tax from your wages - the Non-MA Portion of this will be zero because all these taxes were deducted from your wages.

There may be other screens for allocating other income as well.  On the MA Income and Deductions Summary page, you will see a Deduction for retirement payments - this is a deduction for the FICA tax that you paid on your wages - it is limited to $2000.

If you made any changes to your Massachusetts return after working on your Rhode Island return, you will need to delete and start over on your Rhode Island return.  If you need to delete and start over on Rhode Island follow these steps:

In TurboTax desktop:

1. Click on the State Taxes tab, then click Continue
2. Click File on the black banner, then click Remove State Return from the dropdown
3. On the pop-up box, click on the Rhode Island return, then click Remove, then click Yes to confirm deletion

In TurboTax online:

1. Click State on the left side menu then Go to state return in the lower right
2. Click the trashcan icon to the right of the Rhode Island return, then click Delete on the pop-up to confirm deletion,
3. Click +Add another State, then select the State from the dropdown menu, then click Continue

On your Rhode Island return, you will get a screen Tax payments to other states.  It will show the state of MA the wages you made in MA and a state credit amount.  This credit amount will necessarily be different from the income tax liability to MA because of differences in tax rates between Rhode Island and Massachusetts.  But it will be calculated automatically for you.  If most or all of your income is wage income from Massachusetts, you should have very little tax liability to Rhode Island.

[Donna1957]

there is no black box to click on remove a state.  cannot figure out how to delete state or stop TT from filing in based on feder return

[BillM223]

Donna, are you using TurboTax Desktop on a MAC? If so, look for FILE on the upper left and do a pulldown. I am sorry that I do not use a Mac so I am not sure what you are seeing.

[Donna1957]

Hi DaveF1006, how do I handle interest/div income vis a vis 2 state returns?

[AnnetteB6]

All of your interest income will be allocated to your resident state of Rhode Island.  The only income that should be taxed by your non-resident state of Massachusetts is the wage income earned in that state.

@Donna1957