Remote Working Plus a Relocation

[klsmolko]

I am struggling to figure out using TurboTax how I file my state income taxes...here is my situation:

Lived in Missouri January - August 2021

- Made small amount of income from Missouri based company in January; paid income taxes to MO

- Hired into a new company in Massachusetts and worked remotely from Missouri due to Covid (delayed relocation); paid income taxes to MA

Then in August, moved to Massachusetts and continued to make income in MA.

I know I have to file in both MO and MA...but I am trying to figure out how not to be double taxed on the same income.  When I try to use MO-CR to get a credit for income taxes paid to MA, I am not clear on how to fill it out since I lived in MA mid Aug - December 2021.

Thanks for any help you can give.  I called MO tax number and they say they don't know - what the heck!

[Vanessa A]

Are you getting a refund from MA for the time you lived in MO?  If so, you are not being double taxed.  

Since you lived in both states you will owe taxes to both states, but the amount of your credit should only be the amount that you were taxed by both states while you lived in MO.  

For instance, if you made $100,000 total. $40,000 from the first company, $60,000 from the second company. You started work for the MA company in July, then moved to MA in August, so you only have on month that you would have paid to MA while living in MO.  If you had $3,000 withheld for MA total, but you are getting a refund of $500 for the time you lived in MO, then you would not be eligible for a credit from MO since you didn't pay any taxes to MA (you did, but you are getting it back) during the time you lived in MO. 

Did you look at your forms to see if you are getting a refund or if something is wrong?

You can see your forms by clicking Tax Tools>>Tools>>View Tax Summary>>Preview My 1040. You can click on the state in this section and see if you are getting a refund from MA, which, again, would eliminate your credit for MO. 

[klsmolko]

According to everything I read, MA taxes on all income made by non-residents...so I worked for a MA company for 8 months while living in MO.  There doesn't seem to be a way to reclaim from MA...I looked through forms.  Thoughts?

[ThomasM125]

Missouri does have a credit for taxes paid to another state on income taxed in Missouri. You will see this option when you work through the state tax section for Missouri. It would be helpful if you prepared your Massachusetts tax return first in TurboTax, as you will need the tax paid in Massachusetts to enter on your Missouri tax return.

@klsmolko

[klsmolko]

Yes, the way I see it - I pay taxes to MA on all income earned from MA based company.

I use MO-CR to get a credit in MO for taxes paid to MA.  Then the only open question that even the tax department for the state of MO couldn't answer for me is:

- MO TurboTax form brings in my total income, not just the amount made while living in MO (lived in MO 8 months, form wants to base tax on full 12 months).  Is this correct?

- MO-CR indicates I should only claim taxes paid to MA while I lived in MO...but if MO is taxing me on full 12 months, wouldn't I get credit for full 12 months paid to MA already?

Thanks for any help!!

[RaifH]

Yes, you should only claim a credit for the income you were taxed on by MA while living in MO from January through August. Once you moved to MA in August, from that point on, that is not taxable income to MO. 

The net effect is the same because whether you claim 8 months' worth or 12 months' worth, the credit for the tax that MA collects will wipe out any tax you owe MO. 

[klsmolko]

But how do I get the Income to show correctly on the MO forms?  TurboTax is pulling my total (MO + MA) in - which has been a struggle.

[RaifH]

Begin with your MA return. For any income from sources besides your wages that were not sourced in MA, be sure to exclude them from your MA tax return by selecting Not Massachusetts sourced. In the Income Adjustments screen, enter your income earned from your new job but prior to your move in the Massachusetts Income While Nonresident field. Enter the income earned while you lived in Massachusetts from August through December in the Massachusetts Income While Resident field. Do not enter the income from your other job in January anywhere. On the Your Massachusetts Bottom Line screen, take note of Income Tax under Taxes and Credits. You will need this later.

In MO, select Part-Year Resident Filing as a Resident as Your Missouri Resident Status. When you get to the Out of State Tax Credit, select Massachusetts. Only enter the income that you earned while living in Missouri that was also taxed by Massachusetts, the amount you earned from your new job from January through August. To determine how much that was, you can either look at old pay stubs, or determine it by multiplying your total income by the fraction of the time that was earned while living in Missouri. So if you earned $50,000 for the year from the new job and were in Missouri for about 2/3 of that time, you would enter $50000*2/3 or $33,333.

For the income tax paid to Massachusetts, you want to enter the tax you paid to MA solely on that income. On the Your Massachusetts Bottom Line summary screen, TurboTax lets you know how much income tax you owe to Massachusetts. Once again, if 2/3 of that amount was earned in Missouri, then you would enter 2/3 in the Income Tax field. If MA taxes $2,100 on the $50,000 then you would enter $1,400, 2/3 of the tax MA imposed. This will correctly apply the credit to the amount you owe Missouri.

[klsmolko]

Great - will try this tonight to see if it works in TurboTax...the system was forcing to carry my total income from all states from the Federal form.  Will follow-up if I have issues!

[klsmolko]

Still having trouble and I think it might be a TurboTax issue - somewhere I need to adjust down the MO income...but the system wants to continue to bring in my total federal income and will not let me override.  Some how I need to be able to restate my total MO income and I cannot figure out how to do that in TurboTax.

[JillS56]

To restart a state return go back to the beginning of the state section.   On the first screen of the State section click Continue.   To delete the state, click on the Trash Can next to the state that needs to be deleted.    After you delete the State then click on Add a State Return and continue through the questions for that state return.  

[klsmolko]

I guess the ultimate question is do I file as a Missouri part time resident that is resident or non-resident?  That makes a difference in $$$ owed.  I cannot figure out how to get TurboTax to adjust for income made only while living in MO