Why do I have to explain 'Total income exceeds Massachusetts income by more than 10%' when filing a non-resident MA return?

[almargahi]

I do not live in MA, I'm filing a non-resident return. Why does MA care about this? Please note, I filed non-resident first, then resident (AZ), and got this, when I experimented and deleted both states, then started with resident first then MA (non-resident), I did not get this question. 

[almargahi]

@PatriciaV Would you be able to help on this or is there someone you can ask to help me on it, please?

[BillM223]

The instructions for Massachusetts Form 1-NR/PY Line 14 state: "Line 14f Add line 14d and line 14e. If your total income in line a exceeds the amount reported in line 14f by more than 10%, you should enclose a statement explaining the reasons for the difference."

Line a is line 14a, which is the total 5.0% income. Line 14f is line 14a plus interest income plus capital gains plus non-Massachusetts source income. The point of this is to calculate the Deduction and Exemption ratio. Please see the instructions for line 14 on page 15 at this MA page.

So go look at what amounts are in lines 14a through 14f and explain what causes line 14a to be more than 10% greater than 14f. The explanation might be quite innocent, like the difference could be due to a spouse's income (included on federal but not on state), or it could be due to income taxable at the federal level but not taxable at the state level.

[jlb566]

Related situation to this. I have a gap of about $40K between the two amounts as far as I can tell because I stopped accruing state tax-eligible wages in the last third of the year when I moved to a no-income tax state. Is that a sufficient explanation? Or should I go in there and somehow add those wages from the non-tax state to make them add up to the federal amount? 

[AmyC]

Wages on federal but not on state due to move is a fine explanation.

@jlb566 

[jlb566]

Thank you! I noticed that if I include the extra $40k or so in income so that my W2 income matches my state wages, i owe about $5 more in tax. So no big deal. But does MA consider wages sourced in a no income tax state as a non MA resident to be considered "state wages" for the purposes of this calculation?

[AmyC]

States tax differently based on prorated method or determining state tax liability. MA taxes based on AGI while in MA. MA is not entitled to tax Texas state wages if you were a nonresident.

@jlb566