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Level 3
posted Oct 10, 2023 9:46:57 AM

State taxes on non-resident state return - whether to exclude business income?

I'm finalizing my taxes, and filing a non-resident MA return because of one rental property in MA. I was not in MA at all in the year in question. Regarding my primary (non-rental) income, TuboTax desktop is asking me "Exclude this business?" "Should this business income be excluded from the Massachusetts return?" on my full business income from other states (to be clear, there is no business income from MA, as I lived and worked elsewhere). This income it's asking about excluding is 95% of my total full income. 

I have no idea how to answer. Does MA want to see my full income, and will that be handled correctly as it calculates the tax on my MA rental income? Or do I need to exclude this business income for things to be handled correctly? Thank you in advance. 

1 6 1691
6 Replies
Level 3
Oct 10, 2023 9:49:52 AM

Update 1: On a subsequent screen here, it's also asking me to "confirm or adjust your Massachusetts income", and it's starting by displaying my full, total income from all sources, all states. Is this where I should knock the number down to just my MA rental income? 

 

Level 3
Oct 10, 2023 9:54:20 AM

Update 2: Now it's asking about all my business deductions. It seems I should either a) remove all non-MA income and all non-MA deductions, or b) keep all income and all deductions. I have no idea which is proper. Sigh. 

New Member
Mar 27, 2024 8:22:09 AM

Ignore this duplicate response. poor cell reception

New Member
Mar 27, 2024 8:24:31 AM

Curious.. Did you ever get an answer on this?

 

Either way, I'snt it also included on your resident return? So does the refund from a loss get issued by the non-resident state? Or the resident state? 

Level 3
Mar 30, 2024 3:39:11 PM

Hey there. I asked it a different way and got these responses: 

 

https://ttlc.intuit.com/community/taxes/discussion/is-it-necessary-to-manually-exclude-income-from-a-non-resident-state-return/00/3098222

 

BTW, this was while I was using the desktop (downloaded) version of TurboTax. I think I'm going back to the online version this year... 

Expert Alumni
Apr 3, 2024 4:20:56 PM

Yes, the resident return includes all income while the nonresident return only includes income from that state. The resident state will give a credit for the nonresident state tax paid.

 

You get credit for the lower state tax on the lowest taxable amount.

  • Each state calculates taxable income differently. 
  • Each state has its own tax rate/ system.
  • You get the lowest of both categories as a tax credit.

2. A refund from a loss, like on a rental or business in that state? A loss just reduces your income, it doesn't create a refund.

3. A loss reduces your income, just like on the federal.

@taxingtaxes