Question

Massachusetts Non-Resident Income Apportionment

Forum|Forum|4 years ago
February 6, 2022
1 reply
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Prior to the pandemic, Massachusetts allowed non-residents to report only that income earned while working in Massachusetts. With the pandemic, Massachusetts passed a law that said if you were working outside the state solely due to the pandemic, you could not take advantage of that provision. See https://www.mass.gov/guides/personal-income-tax-for-nonresidents.

This provision was supposed to expire 90 days after the Governor ended the state of emergency. This occurred on June 15, 2021 (see https://www.mass.gov/info-details/covid-19-state-of-emergency).

Can anyone confirm that non-residents working from home due to the pandemic can exclude from Massachusetts income that income earned while working from home outside the state for roughly the last three months of 2021? There does not appear to be an update on the Massachusetts DOR web page. If so, how is this done in TurboTax?

R

RaifH

Yes, you are correct. For tax year 2021, due to Massachusetts’ COVID-19 state of emergency, all compensation paid for services performed prior to September 16, 2021, to nonresidents who would generally perform such services in Massachusetts but for a pandemic-related circumstance, will be treated as Massachusetts-source income. From September 16, 2021 through December 31, 2021 this will no longer be taxable by Massachusetts if you do not reside nor work in Massachusetts.

To apportion your income and determine how much is taxable to Massachusetts, you can look through your pay stubs to determine how much was earned Year to Date through September 15 or, if you roughly earned the same amount throughout the year multiply your entire wages by 70.411% (257 days / 365 days).

In order to file a non-resident tax return for Massachusetts, you will want to start that tax return before you work on your resident state. After confirming nonresident status, the system will ask if you want to Apportion Your Wages? Answer Yes then for Apportionment Method, select Other and for description, enter COVID-19 Telecommuter. Enter the Massachusetts amount in the Inside field with the remaining in the Outside field.

W

wt1022

Filing Your Massachusetts Return
As a nonresident, you must file Form 1-NR/PY if your Massachusetts source income for 2021 exceeded the smaller of your apportioned personal exemption, or $8,000.

Does this mean that the amount earned outside of Mass needs to be more than $8,000 from 9/16/21-12/31/21 to qualify to apportion the out of state income?

Or does it mean that the amount earned inside Mass needs to be more than $8,000 from 9/16/21-12/31/21 to qualify to apportion the out of state income?

Or does it mean the total earned inside and outside Mass needs to be more than $8,000 from 9/16/21-12/31/21 to qualify to apportion the out of state income?

DMarkM1

First you must establish if you were a nonresident all year or a part-year resident of MA.

Then, the proration formula is the number of days counted as physically working in MA divided by 365. That ratio is then multiplied by the personal exemption amount on your MA return. Generally, 4400 for single filers and 8800 for MFJ plus 1000 for each dependent. The number of days counted as physically working in MA includes days up to 16 Sep that you were remote due to pandemic.

With that in mind.

You must file a return if you were a part-year resident and either your total income all sources in and out of MA for the year exceeded 8,000 or exceeded your prorated exemption amount.

You must file a return if you were nonresident all year and either your MA source income only exceeded 8000 or exceeded your prorated exemption amount. MA source income includes income earned up to 16 Sep working remote due to Pandemic.

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