- Legal Status:
- Residency Status for Filing Tax Return:
- Residency Status for Certain Taxpayers:
- Military Service Personnel, Including Military Spouses
- Native Americans Living within Indian Country
- Residents Working Overseas
- Resident or Nonresident Alien- Residency Status for Federal Purposes
- Students Temporarily Residing in Massachusetts
- Teachers Temporarily Residing in Massachusetts
- U.S. Tax Treaties
- Where to Report on Original Tax Return, What to Enclose
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts and Federal References
- Prior Law, History of Residency Status
An individual's domicile, or legal residence, depends upon all the facts and circumstances in each case, including the good faith of the individual.
An individual may have multiple residences at one time, but only one domicile. The legal residence or domicile is the one an individual regards as his true home or principal residence. An individual cannot choose to make his home one place for the general purposes of life and in another for tax purposes. One's legal residence is usually the place where an individual maintains the most important family, social, economic, political and religious ties.
Example: Linda and Paul consider their domicile to be in Massachusetts. They own a home in Massachusetts in which they reside for half of April, May, and September through December each year. Linda and Paul have driver's licenses, bank accounts, and credit card accounts in Massachusetts. Their children and grandchildren, as well as most of their friends live in Massachusetts. Linda and Paul also have a summer home on the coast of Maine which they live in during the months of June through August. Linda and Paul spend the rest of the year in their condominium in Florida. Linda and Paul are residents of Massachusetts for tax purposes, even though they do not spend more than 183 days per year in the state, because they are domiciled in Massachusetts.
The basic rules to be applied in determining the domicile or a change of domicile are:
- each individual has a domicile. It may be a domicile of origin (birth), a domicile by operation of law or a domicile of choice (accomplished by a change of residence);
- each individual retains his or her present domicile until he or she establishes a new domicile at another place;
- a new domicile may be acquired only by (a) abandoning the present domicile, (b) establishing a residence at a new place and (c) intending to make the new residence one's home permanently or for an indefinite time, with no certain, present intention to return to the previous home;
- the burden of proving that a taxpayer has changed his or her domicile lies with the party asserting the change.
An Act Making Appropriations for the Fiscal Year 2013 (Fiscal Year 2013 Budget):
Under the Fiscal Year 2013 Budget, effective July 8, 2012, charitable contributions in the form of cash or property that qualify for federal income tax deductions cannot be examined to determine a person’s domicile in Massachusetts or any other jurisdiction.
Under IRC § 170(a), qualifying charitable contributions include gifts of cash or property. Under General Laws c. 62, § 1(f), as amended, contributions of cash or property to any organization which is exempt from taxation under IRC § 501(c)(3) are excluded from a determination of domicile to the extent that such contributions qualify for a federal income tax deduction under IRC § 170(a).
Where and how an individual spends his time is a primary factor considered in a domicile determination. The value of volunteering or donation of uncompensated services to a charitable organization does not qualify as a charitable deduction under IRC § 170(a). Thus, the facts and circumstances of a person’s services to a charitable organization are considered in determining domicile.
A minor's domicile follows that of the parent or guardian who has lawful custody of the child.
The domicile of a mentally incompetent person under guardianship may be changed by the intent of the guardian or the intent of the incompetent if he or she has sufficient mental capacity to select a new home, (by the guardian within the jurisdiction of the appointing court; by the incompetent, if there is sufficient mental capacity to make a choice).
Change in Domicile from Massachusetts - Contesting Domicile Audit
A change in domicile will not be accomplished by a temporary or protracted absence from Massachusetts. A taxpayer must not intend to return. To change domicile, a taxpayer must demonstrate that he has taken affirmative steps consistent with his declaration.
A taxpayer's declaration of his intent will be subject to close scrutiny. One who asserts that domicile has changed has the burden of proving that fact. A number of factors will be considered in determining whether a taxpayer has changed his domicile.
Factors to be considered, the taxpayer has:
- purchased or leased a new home or an apartment in the new location;
- moved his personal property to the new location;
- obtained permanent employment in the new location;
- canceled Massachusetts bank accounts and opened new accounts in the new location;
- sold real property in Massachusetts or canceled leases;
- issued address change notices;
- changed voter registration;
- obtained a driver's license and automobile registration in the new location
- changed membership in churches and clubs;
- in general, the taxpayer is involved in the new community.
- Have the taxpayer and spouse had different addresses at any point during the past five years? list any;
- When in Massachusetts, where does taxpayer live and for how many months per year?
- When in the state where legal residence is claimed, where does taxpayer live and for how many months per year?
- List property owned in Massachusetts;
- List property owned in other states;
- List dates physically present in Massachusetts over the past five years;
- List dates physically present in other states over the past five years;
- State portion of the year expected to be in Massachusetts in future years;
- State portion of the year expected to be in other states in future years;
- List years eligible to vote in Massachusetts;
- List years eligible to vote in other states;
- List years assessed real estate tax in Massachusetts;
- List organizations in Massachusetts, and in other states, in following categories:
- fraternal organizations,
- List bank accounts and safe deposit boxes noting location and dates opened/closed;
- List automobiles owned and where registered in the past five years;
- Give address listed on passport if obtained within the past five years;
- State which IRS office the federal tax returns were filed in over the past five years;
- State where any dependents attend school.
- his or her legal residence (domicile) is in Massachusetts for the entire taxable year; or
- his or her legal residence (domicile) is not in Massachusetts for the entire taxable year but who:
- maintains a permanent place of abode in Massachusetts; and
- spends in the aggregate more than 183 days of the taxable year in Massachusetts, including days spent partially in and partially out of Massachusetts.
Note: A day in Massachusetts while on active duty in the United States Armed Forces is not counted.
An individual is a part-year resident if he or she either:
- moves to Massachusetts during the taxable year and becomes a resident; or
- terminates his or her status as a Massachusetts resident during the taxable year and establishes a residence outside the state.
An individual is a nonresident if he or she is not a resident or inhabitant of Massachusetts as defined above.
Permanent Place of Abode:
Whether a person maintains a permanent place of abode in Massachusetts is a factual determination. The Department of Revenue interprets a "permanent place of abode" to mean a dwelling place continually maintained by a person, whether or not owned by such person, and will include a dwelling place owned or leased by a person's spouse.
A permanent place of abode generally will not include the following:
- a camp, military barracks and housing, dormitory room, hospital room or room in any other similar temporary institutional setting;
- a university owned studio apartment available only to a university affiliated student, faculty and staff ;
- a dwelling place completely lacking both kitchen and bathing facilities, or a dwelling place that is not winterized;
- a hotel or motel room, but a determination will be made based on the facts and circumstances of each individual's situation;
- a dwelling place owned by an individual who, during the term of a lease leases it: 1) to others not related to the owner or his or her spouse by blood or marriage, 2) for a period of at least one year, 3) where the individual has no right to occupy any portion of the premises and who does not use such premises as his or her mailing address during the term of the lease;
- a dwelling place that is maintained only during a temporary stay in Massachusetts for the accomplishment of a particular documented purpose. A temporary stay is defined as a predetermined period of time not to exceed one year.
Permanent Place of Abode Examples
Example 1: Charles is domiciled in New Jersey. He is transferred to his employer's Massachusetts office for an assignment from February 1 to October 31, 2012, after which he returns to New Jersey. If Charles takes an apartment in Massachusetts during this period, he will not be considered a resident, even though he spends more than 183 days of the taxable year in Massachusetts, because his place of abode is not permanent. Instead, Charles will be subject to tax as a nonresident on his income from Massachusetts sources, including any salary or other compensation for services performed in Massachusetts.
Example 2: Terri, a consultant, is domiciled in Pennsylvania. She comes to Massachusetts for a consultation project from August 1, 2011 to July 29, 2012. If Terri takes an apartment in Massachusetts during this period, she will not be considered a resident for the 2011 taxable year since she does not spend more than 183 days of the taxable year in Massachusetts, and her place of abode is not permanent. For taxable year 2012, she does spend more than 183 days but still her place of abode is not permanent as the time period in which she lived in Massachusetts does not exceed one year.
However, Terri's project is extended and she stays in Massachusetts until December 31, 2012. Terri's stay in Massachusetts is no longer considered temporary. As a result, for the taxable year ending December 31, 2011,Terri is still considered a nonresident and, as such, will be subject to tax only on her income from Massachusetts sources, including any salary or other compensation for services performed in Massachusetts. For the taxable year ending December 31, 2012, however, Terri is considered a Massachusetts resident because she maintains a permanent place of abode as of August 1, 2012 and is present in Massachusetts for more than 183 days.
Even if Terri is an employee and her employer transfers her to Massachusetts and pays for her Massachusetts apartment and all expenses for the period August 1, 2011 through December 31, 2012, the result is the same. She is still not domiciled in Mass, but she has met the 183 and permanent place of abode test. Normally, DOR would require that she file as a resident for taxable year ending December 31, 2012.
Example 3: Donna is an out-of-state student attending a university in Massachusetts. She lives in a room in one of the dormitories on the university campus. She shares her room with another student. Donna lives at the dormitory for the entire school year, which runs from late August 2011 through May 2012. When the school year ends, Donna moves out of the dormitory and resides out-of-state. Donna returns to the university in August 2012 to begin her junior year and again resides in a dormitory room on campus. Although Donna is present in Massachusetts for more than 183 days in 2012, her dormitory room is not considered a permanent place of abode. Therefore, Donna is not considered a resident of Massachusetts for 2012.
Example 4: Frank is a student at a university in Massachusetts. He lives in an off-campus apartment near the university with three other individuals. All four roommates share living expenses. Frank moves into the apartment in September, 2011 and lives there for all of 2012. Since Frank is present in Massachusetts for more than 183 days and is maintaining a permanent place of abode since he has been living at this apartment for one year or more (September, 2011 – December, 2012), Frank is considered a resident of Massachusetts for 2012, even if his domicile is elsewhere and he intends to leave Massachusetts upon his future graduation.
Example 5: Serge is currently renting a university-owned studio apartment, consisting of one room plus bathroom and kitchen. He pays rent for this apartment on a one-year lease through his term bill. This studio apartment is available only to university affiliated student/faculty/staff and is not open for rent to the general public. Even though Serge is present in Massachusetts for more than 183 days in the taxable year, he is not considered a Resident of Massachusetts because the apartment is not a "permanent place of abode" as the accommodations in the building are limited to university students, faculty and staff, and the rent for the studio is paid directly to the university as part of the term bill for classes. The studio apartment is closer in type to a dormitory room or suite than to an off-campus apartment without university affiliation and open to the general public.
Presence in Massachusetts Examples:
Example 1: Alice owns a house in northern New Hampshire and rents an apartment in Boston, where she works 4 days a week. Alice spends 3 nights and 4 days in Massachusetts each week. The remaining time she spends in her home in New Hampshire. Alice considers her domicile to be New Hampshire and most of her social, political, economic, and familial ties are connected to that state. Alice takes three weeks vacation a year, or 12 days, all of which she spends outside of Massachusetts. She receives 10 paid holidays from her employer each year and spends the holidays outside of Massachusetts. For the year from January 1st to December 31st, Alice has spent 186 days in Massachusetts and 179 in New Hampshire and elsewhere. Even though her domicile may be located in New Hampshire, Alice is subject to tax as a Massachusetts resident for the year since she spent more than 183 days in Massachusetts and maintained a permanent place of abode here. As a resident, Alice must file Form 1 by April 15th of the following year.
|Legal Residence (Domicile)||Return to File|
|legal residence (domicile) is in Massachusetts for entire year||Form 1|
|legal residence (domicile) is not in Massachusetts for entire year but individual maintains permanent place of abode in Massachusetts and spends in the aggregate more than 183 days of the taxable year in Massachusetts||Form 1|
|legal residence (domicile) is not in Massachusetts for entire year but nonresident has Mass source income||Form 1-NR/PY|
|during the taxable year, individual either moves to Massachusetts and becomes a resident, or terminates Massachusetts resident status and establishes a residence outside the state. For nonresident period, individual does not have Mass source income||Form 1-NR/PY|
|during the taxable year, individual either moves to Massachusetts and becomes a resident, or terminates Massachusetts resident status and establishes a residence outside the state. For nonresident period, individual does have Mass source income||Form 1-NR/PY and Schedule R/NR|
Military Service Personnel, Including Military Spouses
Military Personnel - Resident:
Taxpayers enlisted in the service as Massachusetts residents, who have not established legal residence (new domicile) elsewhere, are still Massachusetts residents. This applies even though the taxpayer may be stationed outside of Massachusetts. If the taxpayer's gross income is more than $8,000, he or she is required to file as a Massachusetts resident.
Military Personnel - Nonresident Stationed in Massachusetts:
Nonresident military personnel who have not established legal residence (new domicile) in Massachusetts and who are stationed in Massachusetts may meet the 183 days test but will usually not meet the permanent place of abode test since army barracks are not considered a permanent place of abode.
Note: A nonresident, however, may be required to report Massachusetts source income earned other than from military sources.
The Military Spouses Residency Relief Act (P.L. 111-97 or "MSRRA"), Effective for taxable years that begin on or after January 1, 2009:
This act amends the Servicemembers Civil Relief Act to provide rules for the determination of the residence or domicile for state tax purposes of a spouse of a servicemember. The Act:
- Prohibits a servicemember's spouse from either losing or acquiring a residence or domicile if such absence or presence in any U.S. tax jurisdiction is solely:
- to be with the servicemember; and
- is in compliance with his or her military orders if the residence or domicile is the same for the servicemember and the spouse.
- Stipulates that income for services performed by the spouse of a servicemember shall not be deemed to be income for services performed or from sources within a tax jurisdiction of the United States if:
- the spouse is not a resident or domiciliary of the jurisdiction in which the income is earned because the spouse is in the jurisdiction solely to be with the servicemember serving in compliance with military orders.
183 Day Test:
For purposes of the 183 day rule in determining whether a servicemember or the spouse of a servicemember is a Massachusetts resident, a day spent in Massachusetts while on active duty in the armed forces of the United States is not counted as a day in the Commonwealth. Thus, a servicemember or his or her qualifying spouse are not taxable as Massachusetts residents under the 183 day rule even though they have spent more than 183 active-duty days in Massachusetts. However, in a given year, for all periods spent in Massachusetts that are not active-duty days, once the number of days spent in Massachusetts exceeds 183 days, the individuals are taxable as Massachusetts residents.
Nonresident Spouse of Nonresident Servicemember:
A spouse of a servicemember may be exempt from Massachusetts personal income tax on "income from services performed in Massachusetts by the spouse" if all the following are applicable:
- the servicemember must have declared "legal residence for purposes of withholding state income taxes from military pay" in a state other than Massachusetts;
- the servicemember is present in or near Massachusetts in compliance with military orders;
- the spouse is in Massachusetts solely to be with the servicemember; and
- the spouse is domiciled in the same state as the servicemember.
Nonresident Spouse Income from Services Performed in Massachusetts That Is Exempt:
- Other income from services performed by the spouse of a servicemember
- Self-employment income if the spouse's business does not employ others, and does not employ significant capital, then the predominant source of the business' income is from the spouse's performance of services and would qualify for the exemption.
However, if the spouse's business employs others who perform services, then the predominant source of the business' income is not from the spouse's performance of services and would not qualify for the exemption.
Nonresident Spouse Income That Is Not Related to Services Performed That is Not Exempt:
- Items of gross derived from or effectively connected with the participation in any lottery or wagering transaction in Massachusetts;
- the ownership of any interest in real or tangible personal property located in Massachusetts remain subject to taxation.
The Federal Servicemembers Civil Relief Act (P.L. 108-189 or "SCRA"), Effective December 19, 2003 - Determination of a Servicemember's Residence or Domicile:
The purpose of this Act is to protect military service personnel from the risk of double taxation occasioned by their temporary duty pursuant to military orders in a state other than that of the state of domicile as follows:
- A servicemember's domicile remains the same as before the service period, despite long absences from the state of domicile and residence in other jurisdictions. No change is effected until the individual establishes a new place of residence, with the intention to make it the new permanent home and not to return to the former place of domicile;
- A servicemember's income is deemed earned in the state of domicile, even though the servicemember is performing duty in another state;
- A servicemember shall neither lose nor acquire a residence or domicile for purposes of taxation by reason of being absent or present in any tax jurisdiction of the United States solely in compliance with military orders; and
- Military service compensation shall not be deemed to be income for services performed or from sources within a tax jurisdiction of the United States if the servicemember is not a resident or domiciliary of the jurisdiction in which the servicemember is serving in compliance with military orders.
A servicemember may not choose a state of domicile. In order to change his or her state of domicile, a servicemember must meet certain rules. He or she must have (or have had) a physical presence in the state as well as intent to one day make it his or her permanent home. That intent is borne out by facts and circumstances such as owning property, registering to vote, titling and registering automobiles, or preparing a will in the state.
The spouse of a servicemember must be able to establish that he or she was domiciled in another state (the same domicile as the servicemember) before moving into Massachusetts and that he or she maintained the domicile in that other state.
A Massachusetts resident (who has not established domicile in another state) and who is residing outside of Massachusetts solely to be with his or her servicemember spouse in compliance with military orders, and who earns income in that other state is subject to Massachusetts income tax on the income earned in that other state.
Residents Working Overseas
Federal Treatment for U.S. Citizen Working Overseas:
A qualifying individual who works abroad and receives earned income from foreign sources may elect to exclude foreign earned income attributable to the period of residence in a foreign country.
In order to qualify for the foreign earned income exclusion, a U.S. citizen working abroad must make a tax home in a foreign country and meet either the:
- Bona fide residence test; or
- Physical presence test.
A U.S. resident alien working abroad can qualify for this exclusion provided he or she meets the physical presence test.
Foreign Income Includes:
- Salaries, wages, etc.;
- Allowance for housing;
- Business profits, rent and royalties;
- Value of fringe benefits.
Massachusetts Treatment For Massachusetts Residents Working Overseas:
Pursuant to the provisions of M.G.L. Chapter 62, Section 2(a)(1)(C),Massachusetts does not allow the foreign earned income exclusion. However, Massachusetts residents who are taxed on income earned in Canada or in any of its provinces are entitled to claim credit for such taxes after accounting for any federal credit. See Income Tax Paid to Other Jurisdiction.
Residents and Nonresident Aliens
For Federal Income Tax Purposes:
For federal tax purposes, an alien is an individual who is not a U.S. citizen. Aliens are classified as either nonresident or resident:
- Resident aliens do not benefit from income tax treaties and are generally taxed on their worldwide income in the same manner as U.S. citizens. Resident aliens file Form 1040, U.S. Individual Income Tax Return;
- Nonresident aliens are taxed only on their income from sources within the United States and on certain income connected with the conduct of a trade or business in the United States. Nonresident aliens file Form 1040 NR, U. S. Nonresident Alien Income Tax Return.
Generally, individuals are considered resident aliens if they meet one of the following criteria:
- Green Card Test:
Aliens are residents for tax purposes if they are lawful permanent residents of the United States at any time during the calendar year. Aliens are lawful permanent residents of the U.S. at any time if they have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. Aliens have this status if the Immigration and Naturalization Service (INS) has issued them an alien registration card, also known as a "green card;" or
- Substantial Presence Test:
Aliens are considered U.S. residents for income tax purposes if they are physically present in the United States at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
- all the days present in the current year,
- and 1/3 of the days present in the first year before the current year,
- and 1/6 of the days present in the second year before the current year.
Taxpayer is physically present in the United States on 33 days in 2004 and 300 days each of the years 2002 and 2003. Taxpayer meets the physical presence test for 2004 since the total days present in the U.S. for the 3-year period is 183 days calculated as follows:
2004 = 33 days;
2003 = 100 days (1/3 or 300 days)
2002 = 50 days (1/6 of 300 days)
Taxpayer is physically present in the United States on 120 days in each of the years 2002, 2003, and 2004. Taxpayer does not meet the physical presence test for 2004 since the total days present in the U.S. for the 3-year period is 180 days calculated as follows:
2004 = 120 days;
2003 = 40 days (1/3 or 120 days)
2002 = 20 days (1/6 of 120 days)
If the taxpayer had been physically present in 2004 for 183 days, he/she would have met the substantial presence test.
Note: there are certain exceptions to the substantial presence test for those individuals referred to as exempt individuals and for individuals with a "closer connection to a foreign country." For further details, see I.R.S. Publication 519.
A nonresident alien is an individual who does not qualify as a resident alien.
For Massachusetts Income Tax Purposes:
Regardless of taxpayer's residency status for federal purposes, Massachusetts relies on it own law in determining whether or not a taxpayer is a resident, nonresident or part-year resident
Visa status of a resident or nonresident alien does not determine his/her tax status. One's tax status is determined by the existence of tax treaties between the U.S. and another country.
The most common types of visas are:
- F-1 student visas are generally given to those who come to the U.S. as students to pursue a course of study at an established institution of learning; and
- H-1 work visas are generally given to those who come to the U.S. to work.
- J-1 teaching visas are generally given to those who come to the U.S. as exchange visitors to participate in authorized programs as teachers, scholars, research assistants, trainers, etc.;
- M-1 visas are generally given to those who come to the U.S. as vocational or other nonacademic students;
- Q-1 visas are generally given to those who come to the U.S. as international cultural exchange visitors.
For a complete listing of visas, see IRS Immigration classifications and Visa Categories.
U.S. Tax Treaties
Federal Treatment of Income Sources within the United States:
The United States has income tax treaties with a number of foreign countries most of which are reciprocal; if an item of income is exempt to U.S. residents who are working in a country overseas, that same item of income will be exempt to residents of foreign countries "nonresident aliens" who are working in the U.S. Under these treaties, nonresident aliens are taxed either at a reduced rate, or are exempt from U.S. income taxes on certain items of income they receive from sources within the United States. Each treaty is different and may specify that either all income is exempt, or only certain types of income are exempt.
Income That Is Required to Be Reported:
- In cases where a treaty does not cover a particular type of income, the taxpayer must report such income and pay tax on Form 1040 NR, U. S. Nonresident Alien Income Tax Return; or
- If there is no treaty between taxpayer's country and the United States, the taxpayer must report and pay tax on income from all sources within the United States on Form 1040 NR, U. S. Nonresident Alien Income Tax Return.
Note: Resident aliens do not benefit from income tax treaties.
Massachusetts Treatment of Massachusetts Source Income:
Massachusetts source income received by a nonresident, as defined by Massachusetts law, is excluded for Massachusetts purposes if:
- the nonresident is a citizen of a foreign country; and
- the income is excluded from federal gross income under an income tax treaty or convention to which the United States is a party.
Income That is Required to Be Reported:
- In cases where a treaty does not cover a particular type of income, which is Massachusetts sourced, the taxpayer must report such income and pay tax on Form 1-NR/PY, Nonresident or Part -Year Resident Income Tax Return; or
- If there is no treaty between taxpayer's country and the United States, then the taxpayer must report and pay tax on income from Massachusetts sources on Form 1-NR/PY, Nonresident or Part -Year Resident Income Tax Return.
U.S. Tax Treaties, Income Exclusion - Schedule Y Deduction:
To the extent that income is excluded federally per a tax treaty, is excluded for Massachusetts purposes. However, such income must still be reported if such income exceeds the threshold requirement for filing a tax return. The income is included in the employee's Massachusetts gross income and reported as "wages." The amount is then claimed as a Schedule Y deduction.
No Tax Status and Limited Income Credit Calculation:
This deduction impacts the calculation of No Tax Status and the Limited Income Credit as it is treated as an adjustment to arrive at Massachusetts adjusted gross income on the Massachusetts AGI Worksheet and Schedule NTS-L-NR/PY.
Massachusetts State Tax Withholding:
Massachusetts state tax must be withheld unless an exemption under a tax treaty applies. This will be shown on U.S. Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. Where income is exempt by a tax treaty but taxes have been withheld by an employer, a nonresident may claim a refund of the amounts withheld by filing Form 1-NR, Massachusetts Nonresident Income Tax Return. The state copy of the W-2 Form indicating that taxes have been withheld as well as documentation of the treaty exemption should be attached to the return.
U.S. Tax Treaties, Resident/Nonresident Aliens - Tax Return to File
For tax reporting purposes, federal resident aliens who meet the Massachusetts residency test should file Massachusetts Form 1; federal nonresident or resident aliens who meet the Massachusetts nonresidency test, with Massachusetts source income should file Massachusetts Form 1-NR/PY.
- Taxpayers who are resident aliens for federal purposes can be nonresidents for Massachusetts purposes if they do not meet the permanent place of abode (PPA) test and the 183 days test, i.e. they live in another state; and
- Taxpayers who are nonresident aliens for federal purposes are generally nonresidents for Massachusetts purposes since the Substantial Presence Test for federal resident alien status has the same threshold as the 183 days of physical presence in Massachusetts for Massachusetts resident status.
Income Excluded per Treaty w/Foreign Country?
Income Excluded or Included on 1040?
PPA and 183 Day Residency Test is Met
Is Fed Gross Income Included in MASS?
included - 1040
included - Form 1
included - 1040
does not meet test
MA source included - Form 1-NR/PY
does not meet test
included - 1040NR
does not meet test
MA source included - Form 1-NR/PY
Students Temporarily Residing in Massachusetts
Students attending school or college in Massachusetts have not established legal residence (new domicile) in Massachusetts. They may, however, be required to file as residents if they meet the permanent place of abode and 183 days test.
Nonresident Alien Students - Federal Treatment:
Nonresident aliens admitted to the United States as students are generally not permitted to work for a wage or salary or to engage in business while they are in the United States. In some cases, students admitted to the United States in "F-1," "J-1," or "M-1" statuses are granted permission to work.
Students may work on-campus in "F-1" status if they do not displace U.S. residents. On-campus work means work performed on the school's premises including work performed at an off-campus location that is educationally affiliated with the school. On-campus work under the terms of a scholarship, fellowship, or assistantship is considered part of the academic program of a student taking a full course of study and is permitted by the INS.
Employment due to severe economic necessity and for optional practical training is sometimes permitted for students in "F-1" status.
Students in "M-1" status who have completed a course of study can accept employment or practical training for up to six months.
In all other cases, any services performed by a nonresident alien student are not considered as performed to carry out the purpose for which the student was admitted to the United States.
Students are exempt under most treaties on amounts received for study, research, etc. Certain treaties exempt grants and awards; if the treaty does not specify exempt status for these grants and awards, such amounts are taxable under the same rules that exist for any other taxpayer.
Students, Apprentices and Trainees - Treaty Provisions
- Scholarship and Grant Remittances:
Under many income tax treaties, nonresident alien students, apprentices and trainees are exempt from tax on remittances (including scholarships and fellowship grants) received from a foreign country for study and maintenance. Also, under some treaties, a limited amount of compensation received may be exempt from tax.
- Personal Services Performed:
Under many income tax treaties, pay (as contrasted with remittances, allowances, or other forms of scholarships or fellowship grants) received for personal services performed while nonresident aliens are temporarily in the United States as students, apprentices or trainees, or while acquiring technical, professional, or business experience is exempt from tax.
Teachers and Professors Temporarily in the United States - Treaty Provisions
Under many income tax treaties, nonresident alien teachers and professors who temporarily visit the United States for the primary purpose of teaching at a university or other accredited educational institution are not subject to U.S. income tax on compensation received for teaching for the first 2 or 3 years after their arrival in the United States. Many treaties also provide exemption for engaging in research. Pay for teaching includes payments to a nonresident alien professor, teacher, or researcher by a U.S. university or other accredited educational institution for teaching or research work at the institution.
U.S. Tax Treaties Income
- To the extent that income is excluded federally per a tax treaty, the income must still be reported for Massachusetts purposes. The income is included in the employee's Massachusetts gross income and will be reported "wages.” The amount is then claimed as a deduction on Schedule Y, Line 4.
- Statement to support a change in domicile. The statement must include detailed information regarding the domicile change.
- Copy of the income tax return filed with any other state if required to be filed;
- Copy of Form 1040 - U.S. Individual Income Tax Return, or Form 1040 NR - U.S. Nonresident Alien Income Tax Return or 1040NR - EZ - U.S. Income Tax Return for Certain Nonresident Aliens with No Dependents.
For income excluded by a Tax Treaty
- The amount of income subject to Mass tax must be reported on Mass. Form 1, Line 3 or Form 1-NR/PY, Line 5 as wages and is then excluded on Schedule Y, Line 4. Fill in the appropriate oval..
- Copy of U.S. Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, relative to any tax treaty provision (if applicable).
- Country of origin, income code number, and/or treaty article citation from U.S. Publication 901.
- M.G.L. Chapter 62 Sections 1 as amended by St. 1995, c.38, s.65; 1(f) as amended by St. 2012, c 139
- M.G.L. Chapter 62B, Section 2
- Horvitz v. Commissioner, 51 Mass. App. Ct. 386, 2001
- 830 CMR 62.5A.1(5): Non-Resident Income Tax
- TIR 12-10: Effect of recent Legislation on the Personal Income Tax, the Corporate Excise, and Tax Administration
- TIR 09-23: Effect of the Military Spouses Residency Relief Act
- TIR 04-6: Effect of the Federal Servicemembers Civil Relief Act (P.L. 108-189) on Massachusetts Nonresidents with Military Compensation
- TIR 95-7: Change in the Definition of "Resident" for Massachusetts Income Tax Purposes
- Letter Ruling 09-5: Residency
- LR 08-11: Taxpayer Domiciled in New York, Resident in Massachusetts
- DD 87-4: Nonresidents from Other Countries; Effect of Tax Treaty
- I.R.C. § § 894(a); § 911; 1441(c)
- U.S. Publication 54: Tax Guide for U.S. Citizens and Resident Aliens Abroad
- U.S. Publication 519: U.S. Tax Guide for Aliens
- U.S. Publication 901: U.S. Tax Treaties