Part year MA tax credit

[pufl]

Hello, I lived in MA up until Aug 1st and then moved to NC for the rest of the year. It happened that my employer hasn't changed my taxable address and continued to make contributions to MA instead of NC for the rest of the year. I ended up with a W2 where all state taxes went to MA instead of part MA and part NC. I realized this while working on my taxes now and managed to calculate my exact taxable wages for MA and NC using my paystubs. The problem I am facing though is getting the MA part from (Aug1-Dec31) refunded and then use that to pay to NC. Where do I declare this distinction ? Please help. I have turbotax desktop and is unable to find a place in MA tax return to mention how I overpaid to MA and get it refunded.

Turbotax says that my filing status for MA would be MA non-resident & Part year tax return - is this correct ?

[TomK2023]

You will need to file a part-year tax return for both MA and NC.  Be sure to indicate in the Personal Info section that you lived in more than one state in 2022, and the date you moved.  When you enter your income information for your Federal return, the correct amounts will automatically be allocated to each state respectively.  You  will get credit for any taxes paid to MA in error.

If you're a part-year resident with an annual Massachusetts gross income of more than $8,000, you must file a Massachusetts tax return.

You are an individual part-year resident if you:

• Move to Massachusetts during the tax year and become a resident; or
• Move out of Massachusetts during the tax year and end your status as a resident.

Part-year residents use Form 1-NR/PY: Massachusetts Nonresident/Part-Year Tax Return.

Massachusetts Department of Revenue 

Every part-year resident who received income while a resident of North Carolina or who received income while a nonresident that was (1) attributable to the ownership of any interest in real or tangible personal property in North Carolina, or (2) derived from a business, trade, profession, or occupation carried on in North Carolina, or (3) derived from gambling activities in North Carolina and whose total gross income for the taxable year exceeds the amount shown in the Filing Requirements Chart for Tax Year 2022.

North Carolina Department of Revenue   

[pufl]

Understood. So the Turbotax MA state based on my Federal return selected "Massachusetts Non-resident  & Part-Year Tax return" - is that not correct ?

Note that my W2 only shows state taxes being paid to Massachusetts for all year on it and nothing for North Carolina. Do I explicitly edit my imported W2 to fix the taxable wages for MA and add in new NC section and put in appropriate taxes. Is that how I am supposed to fix this situation ? The state returns inherit these values, so me not fixing in Fed section messed up the state return.

[pufl]

Also the NC return is importing all the wage date from my Fed. Which only has MA income/tax data. Turbotax is not allowing me to add in NC wage data only to my NC return - It says its inheriting data from the fed return and I am unable to provide NC specific wage data when I do my NC state return.

[kencyn7]

Since you moved, you were definitely a "part year resident" of Massachusetts.  That tax return should only calculate what you owe that state for the months you lived there based upon the wages you earned while a resident of Massachusetts.  It will be the same for North Carolina since you  were only a "part year resident" there also.  Watch for questions that ask you how many months of the year you lived in the state - you will need to purchase the additional state software.  Unfortunately, you may have a penalty to pay in NC since you didn't catch that your employer didn't change your withholding; you should have been asked to complete the NC state withholding forms or make the change online with your employer when you moved.

[AmyC]

MA begins with state defined income while NC begins with the federal AGI. As you go through NC, it ask you to define which income was received while a NC resident. You must enter those amounts.

@pufl 

[pufl]

Hi AmyC,

The Turbotax Premier Mac doesnt even give me a field to add North Carolina Resident Income for Wages/Salaries. Here is an example.

The previous page where it shows Wages, I see my full wages show up as Non NC Source Income. It does not show / allow me to add any PY NC Source Income.

[AmyC · Accepted solution]

Thank you!  Since you are using the desktop version, you can switch to Forms mode. Locate  Part-Yr/NR Wks. Part 2 - Income Allocation, line 1 has the entry for your NC income during residence. Enter the correct amount there.

You should be able to switch back to step by step and complete your return.

[pufl]

Thank you. I was able to resolve that by overriding the value using "Forms" in the software. One last question, I have capital losses in MA that I am not able to fully use in my MA return. Is it possible that I use the balance in my NC return ? Or do those transactions have to line up with my stay in NC for that

[MayaD]

You need to allocate the capital losses to the state that you lived in when you received them.

If you received the losses while you were MA resident, then you should report it on MA return.