Taxpayer files single and is 66 years old
|Schedule C gross receipts derived from three states:|
|Schedule C gross receipts||$75.000|
Cost of goods sold
|Net income from business|
Massachusetts real estate rental loss
Total self employment tax paid
Line 1. Filing Status - Single
Line 3. Total Income from U.S. 1040, Line 22
Line 4. Exemptions
|4a. Personal exemptions|
4c. Age 65 or older
Line 4f. Total exemptions
|Line 13. NONRESIDENT APPORTIONMENT WORKSHEET (to Determine Trade or Business, Including Employment Carried on in Massachusetts):|
|13a. Sales outside of Massachusetts|
13b. Sales inside Massachusetts
13c. Total sales
13e Mass. ratio line 13b by line 13c $20,000/$75,000
13f. Total income being apportioned
Line 13g. Massachusetts income multiply 13e by line 13f
Since this nonresident's presence for business in Massachusetts is not casual, isolated and inconsequential, the income must be included in Massachusetts gross income.
|Line 8. Business/Profession|
Line 9. Rental Loss
Line 12. Total 5.2% Income
|Line 14 NONRESIDENT DEDUCTION AND EXEMPTION RATIO:|
14a. Total 5.2% income (from Line 12)
14b. Interest Income
14c. Total capital gain income (from Sch B and D)
14d. Total income this return
14e. Non-Massachusetts source income that would be taxable to a MA resident. ($35,000 less $9,331)
14f. Total income
14g. Deduction and Exemption ratio 14d/14f
|Line 15. Self Employment tax paid ($4,200 * .2666) (Deduction directly related to income reported)|
Line 20. TOTAL DEDUCTIONS
Line 21. 5.2% INCOME AFTER DEDUCTIONS
Line 22. Exemption Amount * Line 14g ($5,100*.1851)
Line 23. 5.2% INCOME AFTER EXEMPTIONS
Does the Taxpayer have a Filing Requirement?
The pro-rated personal exemption test ensures that taxpayers having less than $8,000 Massachusetts gross income but total income of $31,500 must still file a return.
|Massachusetts source income|
Total Income from all sources
Ratio of Massachusetts
= $5,831/$31,500 = .1851
= $4,400 x .1851 = $814
Even though Massachusetts gross income is less than the $8,000 threshold, it exceeds the pro-rated personal exemptions. The nonresident taxpayer is required to file a return since the income of $5,831 exceeds the pro-rated personal exemption of $814.
No Tax Status or Limited Income Credit:
Nonresidents must use adjusted gross income as if they were Massachusetts residents to determine if they qualify for either NTS or LIC. As a full year Massachusetts resident, this taxpayer's Massachusetts adjusted gross income would be $31,500 and therefore does not qualify for either No Tax Status or the Limited income Credit.
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