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.

Residency Status

If you are 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, exemptions and Earned Income Credit.

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.

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. View more detailed information on filing status here.

Single

You can file as single, if at the end of the taxable year, you were:

  • Unmarried, or
  • Legally separated under a final judgment of the probate court

You cannot file as single if:

  • Your divorce or separate maintenance decree is not final
  • You have a temporary support order
  • You and your spouse simply choose to live apart

If you get a judgment from the probate court that you're living apart from your spouse for justifiable cause, you may file a Massachusetts income tax return as single.

Married

If you're legally married as of the last day of the tax year, you can file either jointly or separately. Massachusetts law does not recognize common law marriages. Same-sex couples can file as married, jointly or separately.

You can file as married filing joint if you meet these 2 conditions:

  1. You and your spouse must be legally married as of the last day of the year, and
  2. You and your spouse must have a Massachusetts taxable year that begins and ends on the same day

Taxpayers who are legally married as of the last day of the tax year can file as married filing separately.

If married taxpayers have a Massachusetts residency tax year that begins and ends on different days, they must file married filing separately, assuming each spouse is required to file.

Married filing separate taxpayers may only claim a maximum deduction of $1,500 each, unless a statement from the other spouse is provided, allowing 1 spouse to take more than the $1,500 deduction. The consenting spouse must sign the statement and list:

  • Their name
  • Their address
  • Their social security number, and
  • The amount of rental deduction taken by each spouse

Head of household

You may file as head of household if you meet all of the following criteria:

  1. You're unmarried or considered unmarried on the last day of the year. You're unmarried on the last day of the tax year if you're legally separated from your spouse under a divorce or separate maintenance agreement.
  2. You paid more than half the cost of keeping up a home for the year, and
  3. A qualifying person lived with you in the home for more than half the year

Qualifying widow(er) with dependent child

If your spouse dies during the tax year, and you and your spouse had a Massachusetts taxable year that began on the same day, you may file married filing jointly for the tax year in which your spouse dies.

Since Massachusetts does not have a filing status equivalent to the federal qualifying widow(er) with dependent child, you can file as head of household for 2 years after the year your spouse died. If you don't meet the head of household requirements in the 2 subsequent years, you would file as single.

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 from:

  • 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, deductions are based on 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).

The following deductions are allowed in full if directly related to specific taxable income reported on Form 1-NR/PY or to a personal Massachusetts residence:

  • FICA, Medicare, RR, U.S. or Massachusetts retirement deduction
  • Certain Schedule Y deductions:
    • Employee business expenses
    • Most miscellaneous deductions from U.S. 1040, Line 36
    • Moving expenses
    • Penalty on early savings withdrawal. This is only available if the penalties were related to Massachusetts reportable or previously reported interest income on a Massachusetts tax return.
    • Self-employed health insurance
    • Incapacitated firefighter and police officer income excluded under G.L. c.41, s.111F
    • Income excluded income per U.S. tax treaties
  • Rental deduction. You're allowed a deduction of 50% of the rent paid (up to $3,000) if the residence is in Massachusetts and it's your main residence. You're entitled to this deduction as a nonresident if you have no legal residence in Massachusetts. For example, a migrant worker comes to Massachusetts and pays rent while working here.

Nonresidents may also be allowed the following deductions. If allowable, multiply the deduction by the Nonresident Deduction and Exemption Ratio (Line 14g).

  • Child under age 13/disabled dependent/spouse care expenses
  • Number of dependent household members under age 12, dependents age 65 or over, or disabled dependents
  • Certain Schedule Y deductions:
    • Alimony paid
    • Clean fuel vehicles
    • College tuition
    • Health savings accounts
    • Medical savings account
    • Student loan interest
    • Undergraduate student loan interest

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.

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC), or Earned Income Credit (EIC), benefits working families with low to moderate incomes. You're entitled to the EITC if you have Massachusetts source earned income and file a tax return, even if you don't need to file.

The amount of the Massachusetts EITC is limited to 23% of the federal EITC multiplied by your Massachusetts gross income divided by your gross income for the year.

You're eligible for the credit if you:

  • Have a qualifying child for the taxable year, or
  • Do not have a qualifying child for the taxable year but still meet all of the following criteria:
  • Lived in the United States for more than half of the taxable year
  • You or your spouse is at least 25 years old but younger than 65 years old before the end of the taxable year
  • You're not a dependent of another taxpayer during the taxable year

You're not eligible for the EITC if you have investment income greater than $3,400 for the year. Investment income includes:

  • Capital gain net income
  • Net passive income
  • Interest
  • Dividends
  • Tax-exempt interest
  • Non-business rents and royalties

To fill out your return: 

  1. Enter the number of qualifying children you have, if any, in the box on Form 1-NR/PY, Line 45a
  2. Enter the amount reported on either U.S. Form 1040 (Line 66a), U.S. Form 1040A (Line 42a), or U.S. Form 1040 EZ (Line 8a), in the box next to 45a
  3. Multiply the amount reported on U.S. return by 0.23
  4. Multiply that amount by Form 1-NR/PY, Line 14g, Nonresident Deduction and Exemption Ratio (Massachusetts gross income divided by your gross income for the year)
  5. Enter the new result in Form 1-NR/PY, Line 45

View maximum EITC credit allowed and more information on the EITC here.

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 if you qualify for NTS and LIC by completing Schedule NTS-L-NR/PY, No Tax Status and Limited Income Credit, Lines 1 to 11. Compute your Massachusetts adjusted gross income (AGI) as if you were a Massachusetts resident for the entire taxable year.

While determining whether or not you qualify for NTS, include all non-Massachusetts source income as well as all non-Massachusetts Schedule Y, Lines 1 to 10 deductions. Non-Massachusetts source income is all the income you'd have to report if you were a Massachusetts resident. Report all losses as 0.

If you don't qualify for NTS, you may still be entitled to LIC. Fill out Lines 1 to 15. If you receive military compensation and file Massachusetts Form 1-NR/PY, do not include such military compensation when determining whether you qualify for NTS or LIC.

View more information on No Tax Status and Limited Income credit here.

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:

If you fully complied with the Massachusetts Lead Law, the credit you're allowed per deleaded residential unit is the smaller of:

  • The cost of removing or covering any paint, plaster, or other structural accessible materials that have dangerous levels of lead, or
  • $1,500

To qualify as fully complying for the credit:

  1. A licensed inspector establishes that there is a dangerous level of lead in the residence's accessible structural materials.
  2. After an authorized person deleads the premises, get a letter of compliance from a licensed inspector.
  3. Complete Schedule LP and enclose it with the tax return. 

If you brought your residence into interim control according to Section 197b, the credit you're allowed per deleaded residential unit is the smaller of:

  • Half the cost of removing or covering any paint, plaster, or other structural accessible materials that have dangerous levels of lead, or
  • $500

To qualify as interim control in order to claim the deleading credit:

  1. A licensed risk assessor establishes that there is a dangerous level of lead in the residence's accessible structural materials.
  2. After an authorized person deleads the premises, get a letter of interim control from a licensed risk assessor which certifies that the costs of establishing interim control measures are necessary for achieving full compliance.
  3. Complete Schedule LP and enclose it with the return. You should also keep the letter of interim control.

If the credit is greater than the tax due, you can carry the excess credit forward for up to 7 tax years afterwards.

If you own a condominium, you can claim the credit for the amount you paid to delead common areas as well as what you paid to delead the individual unit. Owning a condominium means that your interest extends both to your individual unit and to common areas. Condominium common areas and facilities include:

  • Party walls
  • Common walls
  • Halls
  • Lobbies
  • Public stairs
  • The land on which the building is located
  • The basement
  • Yard
  • Recreational facilities
  • Other areas normally in common use

If you claim the deleading expense as a deduction on U.S. Schedule E, adjust Massachusetts Schedule E by the amount of the Massachusetts allowable credit.

Additional Resources for Credits

Image credits:  Interstate 190 (Laurie Turner)

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