I am a NH resident and work in MA. This year I sold a rental property and have to pay capital gains. Do I also have to pay capital gains tax in MA on the NH property?

[rmatto]

I live in NH and work in MA, so I pay income tax, but it looks like TT is including the capital gains in the MA earnings even thought the property isn't located in MA.

[maglib]

see screen shots below.   

[maglib]

No you only pay taxes to the non-resident state on income sourced to the non-resident state. When going throught the MA interview there will be a section where you should be allocating out capital gains, dividends, interest, etc.

As long as you answered the ADJUSTMENT section  part Health Care Coverage , additions and deductions portion of the MASS interview., it should calculate correctly.

[rmatto]

There was a section to exclude the capital gains from MA, which I checked the box for, but when I get to the overview for the MA state taxes, it is still including the capital gains amount in the gross MA earnings causing my taxes due to be higher than it should.

[maglib]

Actually what MA is doing is grossing up your income computing a tax and then crediting you for the MA source income only.  So it taxes you at the higher tax rates for all income, then multiplies the tax calculated by MA source/total income.  See form 1-NRPY deduction and exemption ratio is the calculation which I beleive is line 14g.
As long as you answered the ADJUSTMENT section  part Health Care Coverage , additions and deductions.  it should calculate correclty.

[rmatto]

If I understand you correctly, the higher amount I see due is because it is calculating the tax rate based off the capital gains being added, but then the capital gains is removed, but the higher tax rate is stilling being applied?

[maglib]

basically....  they do this in most states so they tax you as a higher income earner rates..

[rmatto]

It doesn't seem like that is it. On the "Botton Line" page for my MA review, the total taxable income is my taxable wages in MA plus the capital gains which says it would be taxed at 5.1%. If you calculate 5.1% of that taxable income, subtract the state income tax that was withheld, that equals the total amount I'm being told is due. Underneath that it show taxable income at 12% is $0. Based on that, it appears that it is including the capital gains in my taxable income even though I check the box that it is not MA related.

[maglib]

go back through the interview section ADJUSTMENT section  part Health Care Coverage , additions and deductions.   make sure you identified each items as non mass source.  You need to click on every item individually. On your summary MA Income and Deductions summary this should not be being reported.

[rmatto]

I've gone through to verify it's all right about 5 times and it keeps adding in the capital gains. I've got an email out to MA DOR to verify I don't have to pay it. I may need to reach out to TT to see if they have any input on it. I'll update this thread if anything else arises. Thanks for your help!

[maglib]

Why I suggest always using desktop version of TT, you can drill down and enter forms mode to see where a problem is....  Most superusers would never using online TT, there is always something where you want to be able to see the calculation.  (so you saw all the screen shots below areas and clicked each individually, you didn't put an amount in the question about other income within that section....).