Non-taxable state income from taxable w-2 income at federal level

Forum|Forum|2 years ago
March 21, 2024
1 reply
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In Massachusetts, the state allows up to $1500 earned through the Senior Tax Work Off program as non-taxable income. However, the same $1500 is taxed at the federal level. Since a wW2 is issued to file with the federal IRS, how do I prevent Turbo-Tax from including the $1500 as taxable income at the state level?

CatinaT1

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51maryAuthor

My problem has not been resolved. TurboTax has a flaw in that it does not allow state level non-taxable w-2 income to be excluded in Form 1 of the Massachusetts Income Tax program. I already spent 2 hours on the phone last week with 3 different people from TurboTax. One of your CPA's called me on Sunday night (Palm Sunday) claiming she has a temporary work-around for me and wants me to allow her to change my tax return to temporarily fix the problem. She refuses to email me the instructions so I can make the change myself. I think TurboTax needs to provide a permanent update to the software to recognize the Massachusetts Senior Tax Work Off W-2 income as non-taxable. As of today, TurboTax still automatically inputs all W-2 income from the Federal forms into the Massachusetts Form 1. At this point, I will have to file my state manually with hard-copy forms. I think TurboTax owes me a refund. I don't know how many Massachusetts filers are impacted, but I do know that thousands of seniors participate in the Senior Tax Work Off Program. PLEASE DIRECT MY REPLY TO THE INTUIT PROGRAMMERS TO FIX THIS ASAP. The following info is directly from the Massachusetts website - For state income tax purposes, the earned property tax credit is not considered income. However, the IRS has ruled that the credit, in the form of an abatement, are wages subject to federal income tax and Medicare withholdings. - Here is the website link - Highly Recommended: Tax Work-Off | Mass.gov

AmyC

Employee

Since you have talked to people, the best I can do is give you a workaround. File the federal return, make sure it is accepted. Save a copy of your return. Delete the w2, file your state return.

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