Example #1 - Massachusetts Resident

A full year Massachusetts resident, single filer, has the following income:

Income:

  • Wages earned in Rhode Island = $26,000
  • Taxable Massachusetts private pension = $11,000
  • Massachusetts bank interest = $350

Other:

  • Total tax paid on wages to Rhode Island = $748 

2014 Schedule Z, Part 2, Line 11 Worksheet - Income Tax Paid to Another Jurisdiction

If any of the income reported on this return is subject to taxation in another state or jurisdiction and you have filed a return and paid taxes in the other state or jurisdiction, complete the Schedule Z, Part 2, line 11 worksheet and enter the amount of credit on line 11 of Schedule Z. Do not include taxes paid to the U.S. government. (This credit does not apply to city or local taxes.) You are allowed to claim a credit for taxes paid to the following jurisdictions: (a) other states in the U.S. including payments made under the Rhode Island Temporary Disability Insurance Act (see DOR Directive 12-1); (b) any territory or dependency of the U.S. (including Puerto Rico, the Virgin Islands, Guam, the District of Columbia); or (c) the Dominion of Canada or any of its provinces (less any U.S. credit amount allowable from U.S. Form 1116).

The total credit which you calculate on the worksheet is the smaller of the amount of taxes due to other jurisdictions (net of certain adjustments) or the portion of your Massachusetts tax due on your gross income that is taxed in such other jurisdictions.

Credit is not given for a property tax due to another jurisdiction on account of capital stock or property. This does not refer to a tax on gain or income from the sale of capital stock or property, as included on Schedule B or D. Credit is also not given for any interest/penalties paid on a tax due to another jurisdiction.

You must complete separate worksheets if you had 5.2% and interest income (other than interest from Massachusetts banks), dividends or capital gain income taxed by another jurisdiction. If you use this worksheet to calculate a credit for interest income (other than interest from Massachusetts banks), dividends or capital gain income, substitute interest income (other than interest from Massachusetts banks), dividends or capital gain income for 5.2% income in line 1. You must also substitute Schedule B, line 7 (interest and dividend income) and Schedule B, line 13 (taxable 12% capital gains) or Schedule D, line 13, (gross long-term capital gains and losses), but not less than "0," for Form 1, line 10 or Form 1-NR/PY, line 12 in line 2 of the worksheet, and the total of Form 1, line 20 or Form 1-NR/PY, line 24 multiplied by .052 (tax on interest and dividend income) and Form 1, line 23 (12% tax) or line 24 (tax on long-term capital gains) for Form 1, line 19 or for Form 1-NR/PY, line 27 (12% tax) or line 28 (tax on long-term gains) for Form 1-NR/PY, line 23 in line 4 of the worksheet.

When using this worksheet to calculate credit for interest income (other than interest from Massachusetts banks), dividends or capital gain income, enter in line 1 such income taxed in another jurisdiction calculated as if it was earned in Massachusetts.

If you choose to pay the optional 5.85% tax rate, substitute .0585 for .052 in line 4 of the worksheet.

Note: Be sure to enter on line 10 of Schedule Z the two-letter state or jurisdictional postal code for each state or jurisdiction for which you are taking the credit.

1. Enter the total 5.2% income included in Form 1, Line 10 on which you paid taxes to another jurisdiction

$26,000

2. Enter the total of Form 1, Line 10 and the total Mass bank interest
or the interest exemption amount, whichever is smaller, from Form 1, Line 5a or 5b

$37,350

3. Divide Line 1 by Line 2. Not greater than "1"

.696

*4. Multiply Form 1, Line 19 by .052

$1,604

5. Enter any Limited Income Credit from Form 1, Line 29

$0

6. Subtract Line 5 from Line 4

$1,604

7. Multiply Line 6 by line 3

$1,116

8. Enter the total tax liability before credits, W-2 withholding and payments to other jurisdictions on income also reported on this return, including payments made under the Rhode Island Temporary Disability Insurance Act, unless the tax was paid to Canada. If the tax was paid to Canada, the amount reported in this line must be reduced by the amount claimed as a foreign tax credit on U.S. Form 1040, Line 47. Credit is only allowable for amount of tax paid.

$748

9. Enter the smaller of Lines 7 or 8 here and on Schedule Z, Line 10

$748

*4. Form 1, Line 19 Computation of Tax:
Form 1, Line 10

= $37,250 

Less: FICA Deduction

= ($2,000) 

Less: Personal Exemptions

=   ($4,400)

Form 1, Line 19

= $30,850 x .052 = $1,604 


Example #2 - Part-Year Resident

A part-year Massachusetts resident who moved into Massachusetts on March 7th has the following income:

Income:

  • Connecticut wages earned while a Massachusetts resident = $16,000
  • Connecticut wages earned while a Connecticut resident = $7,600
  • Massachusetts state lottery winnings = $9,000
  • Massachusetts bank interest while a Massachusetts resident = $550

Other:

  • Total tax paid to New York for wages = $733

2014 Schedule Z, Part 2, Line 11 Worksheet - Income Tax Paid to Another Jurisdiction

If any of the income reported on this return is subject to taxation in another state or jurisdiction and you have filed a return and paid taxes in the other state or jurisdiction, complete the Schedule Z, Part 2, line 11 worksheet and enter the amount of credit on line 11 of Schedule Z. Do not include taxes paid to the U.S. government. (This credit does not apply to city or local taxes.) You are allowed to claim a credit for taxes paid to the following jurisdictions: (a) other states in the U.S. including payments made under the Rhode Island Temporary Disability Insurance Act (see DOR Directive 12-1); (b) any territory or dependency of the U.S. (including Puerto Rico, the Virgin Islands, Guam, the District of Columbia); or (c) the Dominion of Canada or any of its provinces (less any U.S. credit amount allowable from U.S. Form 1116). 

The total credit which you calculate on the worksheet is the smaller of the amount of taxes due to other jurisdictions (net of certain adjustments) or the portion of your Massachusetts tax due on your gross income that is taxed in such other jurisdictions.

Credit is not given for a property tax due to another jurisdiction on account of capital stock or property. This does not refer to a tax on gain or income from the sale of capital stock or property, as included on Schedule B or D. Credit is also not given for any interest/penalties paid on a tax due to another jurisdiction.

You must complete separate worksheets if you had 5.2% and interest income (other than interest from Massachusetts banks), dividends or capital gain income taxed by another jurisdiction. If you use this worksheet to calculate a credit for interest income (other than interest from Massachusetts banks), dividends or capital gain income, substitute interest income (other than interest from Massachusetts banks), dividends or capital gain income for 5.2% income in line 1. You must also substitute Schedule B, line 7 (interest and dividend income) and Schedule B, line 13 (taxable 12% capital gains) or Schedule D, line  13, (gross long-term capital gains and losses), but not less than “0,” for Form 1, line 10 or Form 1-NR/PY, line 12 in line 2 of the worksheet, and the total of Form 1, line 20 or Form 1-NR/PY, line 24 multiplied by .052 (tax on interest and dividend income) and Form 1, line 23 (12% tax) or line 24 (tax on long-term capital gains) for Form 1, line 19 or for Form 1-NR/PY, line 27 (12% tax) or line 28 (tax on long-term gains) for Form 1-NR/PY, line 23 in line 4 of the worksheet.

When using this worksheet to calculate credit for interest income (other than interest from Massachusetts banks), dividends or capital gain income, enter in line 1 such income taxed in another jurisdiction calculated as if it was earned in Massachusetts.

If you choose to pay the optional 5.85% tax rate, substitute .0585 for .052 in line 4 of the worksheet.

Note: Be sure to enter on line 10 of Schedule Z the two-letter state or jurisdictional postal code for each state or jurisdiction for which you are taking the credit.

1. Enter the total 5.2% income included in Form 1-NR/PY, Line 12 on which you paid taxes to another jurisdiction$16,000
2. Enter the total of Form 1-NR/PY, Line 12 and the total Mass bank interest or the interest exemption amount, whichever is smaller, from Form 1-NR/PY, Line 7a or 7b$25,550
3. Divide Line 1 by Line 2 Not greater than "1".626
*4. Multiply Form 1-NR/PY, Line 23 by .052$1,043
5. Enter any Limited Income Credit from Form 1-NR/PY, Line 33$0
6. Subtract Line 5 from Line 4$1,043
7. Multiply Line 6 by Line 3$653
8. Enter the total tax liability before credits, W-2, withholding and payments to other jurisdictions on income also reported on this return, including payments made under the Rhode Island Temporary Disability Insurance Act, unless the tax was paid to Canada. If the tax was paid to Canada, the amount reported in this line must be reduced by the amount claimed as a foreign tax credit on U.S. Form 1040, Line 47. Credit is only allowable for amount of tax paid.$733
Line 9. Enter the smaller of Lines 7 or 8 here and on Schedule Z, Line 11$653
*Line 4. Form 1-NR/PY, Line 23 Computation:   
Form 1-NR/PY, Line 12

= $25,450

Less: FICA Deduction

= ($2,000)

*Less: Exemptions ($4,400 x .7726)

= ($3,399)

Form 1-NR/PY, Line 23

= $20,051 x .052 = $1,043

PART-YEAR RESIDENTS ONLY

Dates as Massachusetts resident: From: March 7 to: December 31

Total days as Massachusetts resident………282 ÷ 365 = .7726


Return to Personal Income Tax Issues

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