Working remotely, how to apportion non resident state returns?

[kkox]

Hi All,

I am filing a married joint tax return for the first time for my spouse and me. We both live in VA. My spouse's employer is in VA, while I work remotely and the employer is in MA. From what I understand about state returns, we would need to file one non-resident for MA and one resident for VA.

During the process of filing the non-resident return for MA, it is asking me to "Apportion Your Wages?". I noticed two things here:

1) If I click "Yes", I see a third income listed under employer name "Income from Non-Taxing states". This is where I am extremely confused about how Turbotax got this name and its income number. How did Turbotax come up with this employer name and its income number?

2) If I click "no", it shows the total wages earn outside of MA. I have no idea how Turbotax calculated this number. By quick calculation, it appears to be the total of my spouse's VA state income and "Income from Non-Taxing states".

How do I apportion my MA income correctly so that I only want to report my MA wages (even though we both live in VA all of 2021)?

[MaryK4]

If you worked remotely in Virginia, you would not have to file a Massachusetts nonresident return.  (If you worked in Massachusetts you would have to apportion some income to Massachusetts.)  By chance, what states are listed on your W2 Boxes 15-16-17?

[kkox]

MaryK1101,

Thank you for your response. On my W2 Box 15 is MA, my spouse's W2 Box 15 is VA.

Turbotax is indicating to me that I need to file a non-resident return for MA and a resident for VA, which confuses me according to your response.

[MaryK4]

Because you had Massachusetts withholding, you will need to file a Mass nonresident return to report zero income to get your withholding refunded.

If you work both inside and outside of Massachusetts, determine your Massachusetts gross income. The only part of your income that gets taxed is the amount you get within Massachusetts.  

Employees compensated hourly, daily, weekly or monthly: Multiply gross income by the number of days spent working in Massachusetts, including days treated as being in Massachusetts due to COVID-19, and then divide by total working days. Total working days exclude weekends, holidays, sick days, vacations, and paid or unpaid leave.

NOTE: There were special rules in place because of Coronavirus, for employees who worked remotely, but if you were hired as a remote employee, you may want to contact your human resources to change your state withholding. See Rules for employees who work remotely due to Covid-19.  (Many employees who were hired during this time had this automatically applied, but if you were hired as a remote employee on a permanent basis the rule should not have applied.) 

@kkox

[kkox]

MaryK1101,

Thank you, we figured it out. One last question: One of my W2s from the same employer Box 1 is blank, but BOX 16 & 17 are filled. Do I need to report that in my federal return? Add it to my main W2?

[MayaD · Accepted solution]

Yes, report it on your federal return and add it to the main W-2.