Working in RI, living in MA

[unsung040482]

I live in Massachusetts. The last two months of the year, I worked in Rhode Island (I worked in MA the rest of the year). So far, because my previous manager (in MA) has not transferred my info to the new manager (in RI), I have not had to pay any RI taxes from my paycheck. With 2016 over, should I not worry about the fact that I work in RI when doing my 2016 taxes and just wait until the transfer is finally done before I concern myself with that? Or should I fill out a special form for that when I do my taxes?

[DS30]

Because you have RI source income (for the 2 months that you worked in RI) but live in MA, you will need to file a nonresident RI state income tax return and a resident MA state income tax return.

The fact that you did not have any RI state withholding will just mean that you may owe taxes on your RI nonresident state income tax return and may get a refund (or owe less) on your MA resident state income tax return

You will be taxed on your wages both where they are earned (RI)(2 month's worth) and in your home state (MA). However, you will get a tax credit for the RI taxes (nonresident state) you paid with your RI nonresident state income tax return on your MA state income tax return (resident state). This is how the states avoid double taxation by allowing a state credit in your home state. Towards the end of the state information, you should see a list of other state tax credits. If RI is not listed, you can add the RI state income taxes paid as a credit in this section. (Just remember that you will not get a tax credit on your nonresident state return for taxes that you pay in your resident state)

You will need to file as nonresident for RI to report your RI source income only (If your employer did not allocate your income between the 2 states, you will need to allocate your income between the 2 states based on the number of days worked in each state). You will also need to file a MA resident state tax return (for all income from all sources including RI). .

You will want to work on your nonresident RI state tax return first. You will then be able to take a tax credit from your nonresident RI state return on your resident MA state tax return. (Please note that you will only get a tax credit for your RI taxes up to the amount of MA taxes that would have been paid if the income was earned in MA). 

Just follow the TurboTax guide when working on your states (remembering to do your non-resident state return first) and TurboTax will do all the calculations for the credit to your resident states return

Here is additional information about filing in multiple states

https://ttlc.intuit.com/replies/3300797

[takihiroi]

I am in the same situation.  Turbotax asks me if I wanted to count only MA source income when working on MA state tax.  If I say yes, my tax decreases.  However, I answered no and paid more tax.  Is this option something I can take?  If so, what is the consequence?  Do I pay tax to RI?  I still pay some tax for my RI income as a nonresident there.

[DianeW777]

Yes, you will pay some tax to Rhode Island (RI) as a nonresident.  You will be taxed only on the money that was earned in RI.

For your resident return of Massachusetts (MA), you are required to pay tax on all of your worldwide income.  They do not want you to pay tax on the same income twice so they have a credit for taxes paid to another state on the same income. As the resident state, because all worldwide income must be included, the credit allowed is the lesser of:

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

Complete the nonresident state (RI) first, then complete your resident state (MA).  TurboTax will calculate the credit automatically on your resident state when you complete them in the right order.