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Guide Personal Income Tax for Nonresidents

This guide has general information about Personal Income tax for nonresidents. It is not designed to address all questions which may arise nor to address complex issues in detail. Nothing contained herein supersedes, alters or otherwise changes any provision of the Massachusetts General Laws, Massachusetts Department of Revenue Regulations, Department rulings or any other sources of the law.

Table of Contents

Residency Status

If you're a nonresident of Massachusetts, you must file a Massachusetts Income Tax Return if you received Massachusetts source income in excess of your personal exemption multiplied by the ratio of your Massachusetts source income to your total income, or your gross income was more than $8,000 – whether received from sources inside or outside Massachusetts.

You're a nonresident if you are neither a full-year nor a part-year resident. Your Massachusetts tax treatment is based on your residency status and not the type of visa you hold.

Nonresidents use Form 1-NR/PY - Massachusetts Nonresident or Part-Year Resident Income Tax Return.

Use Schedule R/NR – Resident/Nonresident Worksheet to adjust your income, deductions, and exemptions.

If your employer mistakenly withheld Massachusetts income tax, file a Massachusetts Nonresident/Part-Year Resident Return, Form 1-NR/PY, to request a refund. Submit a letter from your employer along with the return, which verifies that you didn't work in Massachusetts.

Additional Resources for Residency Status

Filing Status

For federal purposes, your filing status determines your income tax rate. For Massachusetts purposes, your filing status determines how many personal exemptions you're allowed. For federal purposes, there are 5 filing statuses:

  • Single
  • Married filing a joint return
  • Married filing a separate return
  • Head of household
  • Qualifying widow(er) with dependent child

Massachusetts offers all but the qualifying widow(er) with dependent child. Generally, if you claim this status federally, you qualify for head of household for Massachusetts.

Reporting on your original tax return

Enter your filing status on either Form 1 or 1-NR/PY, Line 1, and fill in the appropriate oval. Enter your spouse's Social Security Number in the appropriate space at the top of the return under taxpayer's Social Security Number. If you're married filing joint, both spouses must sign the return.

Exemptions

As a nonresident, your exemptions are based on the income you reported.

Multiply your exemption amounts by the Nonresident Deduction and Exemption Ratio (Form 1-NR/PY, Line 22a by Line 14g). This ratio is your Massachusetts gross income (from sources in Massachusetts), divided by Massachusetts gross income from all sources (as if you were a full-year Massachusetts resident).

Determining Income

Massachusetts gross income, also known as Massachusetts source income, is income you gained from sources within Massachusetts, including and excluding specific income items.

Massachusetts gross income excludes income from:

  • U.S. military compensation paid to active members of the Army, Navy, Air Force, Coast Guard and Marines assigned to a military air base, naval station, or any public or private facility in Massachusetts
  • Income from certain intangibles (e.g. annuities, interest, dividends, and gains from selling or exchanging intangibles) unrelated to:
    • Massachusetts employment 
    • Massachusetts business
    • Selling or exchanging real or tangible Massachusetts personal property
  • Massachusetts source income received by a nonresident who is a citizen of a foreign country
  • Pension income from any U.S. government or Massachusetts contributory annuity, pension, endowment or retirement fund you contributed to
  • Qualified pension income

Massachusetts gross income includes income:

  • Gained from or connected with any trade or business, whether or not you were actively engaged in a trade or business or employment, in Massachusetts in the year you received income
  • From any lottery or wagering transactions in Massachusetts
  • From owning real or tangible personal property in Massachusetts. This includes (but isn't limited to) rent, gains, and interest from selling or exchanging:
    • Real property located in Massachusetts
    • Tangible personal property legally located in Massachusetts
    • Any interest in a Massachusetts cooperative housing corporation
    • Any interest in a Massachusetts timeshare (or similar arrangement)
  • From patents, copyrights and other similar intangibles
  • Other income

Deductions

For nonresidents, you can only take deductions that are attributable to the income you reported.

Multiply your deduction by the Nonresident Deduction and Exemption ratio (Form 1-NR/PY, Line 14). This ratio is your Massachusetts gross income (from sources in Massachusetts), divided by your Massachusetts gross income from all sources (as if you were a full-year resident).

In addition to deductions that you will find on the Form 1-NR/PY itself, such as those allowed nonresidents for FICA, Medicare, RR, U.S. or Massachusetts retirement, certain dependent care expenses and the rental deduction, there is also a list of deductions the nonresidents are allowed to take on Form 1-NR/PY, Schedule Y, more fully explained in the instructions. All these deductions are allowed if directly related to specific taxable income reported on Form 1-NR/PY or to a personal Massachusetts residence.

Credits

As a nonresident, you may also qualify for certain personal income tax credits, which can reduce the amount of tax you owe.

Business-related credits

See business-related credits you may be able to claim on your personal income tax return.

No Tax Status and Limited Income credit

If your Massachusetts Adjusted Gross Income (AGI) doesn't exceed certain amounts for the taxable year, you qualify for No Tax Status (NTS) and are not required to pay any Massachusetts income tax, but still need to file a tax return.

Adjusted gross income is gross income reduced by certain business expenses and other deductions claimed on Massachusetts Schedule Y, Lines 1 to 10, such as allowable employee business expenses, alimony paid or student loan interest, etc. 
Except for Line 4, these are generally federal allowable deductions.

If you do not qualify for No Tax Status (NTS), but your Massachusetts AGI still doesn't exceed certain amounts, you may qualify for the Limited Income Credit (LIC), which may reduce your tax significantly.

Married filing separate taxpayers do not qualify for either NTS or LIC. 

See detailed information on No Tax Status and Limited Income Credit.

Lead paint removal credit

You only qualify for this credit if the property is residential and located in Massachusetts. It does not need to be a principal residence located in Massachusetts. You can get a tax credit if you own residential property in Massachusetts and paid for deleading (removing or covering lead paint) it in order to:

See detailed information on Lead paint removal credit.

Additional Resources for Credits

Image credits:  Interstate 190 (Laurie Turner)

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