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As a nonresident, you need to file income tax returns with Massachusetts if your Massachusetts gross income (from sources within Massachusetts) is greater than either $8,000 or the prorated personal exemption you're entitled to, whichever is less. Nonresidents file Form 1-NR/PY, Massachusetts Nonresident or Part-Year Resident Income Tax Return.
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 certain income from sources within Massachusetts:
Specifically, it excludes:
Massachusetts gross income includes income from sources within Massachusetts. It specifically includes income:
In general, nonresidents and residents have the same deductions and exemptions to determine taxable income. These items are allowed, however, only to the extent that the deductions and exemptions relate to Massachusetts source income. For specific rules about allocating such deductions and exemptions, use the Nonresident Deduction and Exemption Ratio on Massachusetts Form 1-NR/PY, Line 14g.
You have a trade or business in Massachusetts if you, directly or through agents or employees:
You're not engaged in a trade or business in Massachusetts if your presence for business is casual, isolated and inconsequential. Your presence for business in Massachusetts is casual, isolated, and inconsequential if it meets the Ancillary Activity Test (AAT) requirements.
Your presence for business in Massachusetts is "ancillary", or secondary to your main duties, if your occasional presence in Massachusetts for:
Is secondary to your primary out-of-state duties that you perform outside of Massachusetts.
Examples of ancillary activities:
Examples of carrying on business in Massachusetts (and therefore not ancillary):
When you're present in both Massachusetts and elsewhere on the same day, that day will be treated as 1 full day spent present for business in Massachusetts.
If you work both inside and outside of Massachusetts, determine your Massachusetts gross income by using 1 of the methods below. The only part of your income that gets taxed is the amount you get within Massachusetts.
If your W-2 statement shows all the income you earned throughout the year as Massachusetts wages, make any adjustments you need and support it by attaching a corrected Wage and Tax Statement W-2C or a letter from your employer to it.
If you're a self-employed nonresident, your tax return must reflect your trade or business's gross income (wherever it's from), the amount you apportioned to Massachusetts, and the basis you used to determine it.
A professional athletic team includes (but is not limited to) any professional:
Members of a professional athletic team include (but are not limited to):
Determine your Massachusetts source income by multiplying your total compensation for services by the number of duty days in Massachusetts, and then divide by your total number of duty days everywhere.
Total compensation for services includes:
However, the original signing bonus you received is excluded from total compensation if all of the following conditions are met:
Duty days are all days from the initial pre-season training day through the last day of competition (e.g. game days, practice days, days spent at team meetings and promotional "caravans and training" camps).
If you're a nonresident professional athlete but not a member of a professional athletic team, you follow the same tax rules as nonresident entertainers.
If you're a nonresident entertainer, your Massachusetts source income is generally the entire amount you received for a performance or engagement you performed in Massachusetts.
If you're not paid specifically for a performance in Massachusetts, get your apportionment by multiplying your total annual compensation by the number of performances in Massachusetts, and then divide by the total number of performances you performed under the contract.
You're considered a nonresident flight crew member if you're involved in providing services on aircraft during flight (e.g. pilots and flight attendants). You'll be taxed the same way Massachusetts nonresidents are.
You're considered a nonresident air carrier employee (a subset of flight crew members) if you're an operator who needs to have an air carrier certificate because of your commercial flight activities or because of the size of your aircraft. You'll only be taxed if you earn more than 50% of your pay in Massachusetts, meaning that your scheduled flight time in Massachusetts is more than 50% of your total scheduled flight time when employed during the year.
When you can't establish the exact amount of pay you received for services you performed in Massachusetts, calculate how much you owe in taxes by:
When reporting for federal purposes, take out passive activity income and losses that aren't attributed to Massachusetts. For Massachusetts purposes, recalculate the allowed passive activity losses based on income or losses from passive activities that generate income subject to Massachusetts tax. Do this by completing Form 8582, using only the amounts from activities that generate income subject to Massachusetts tax.
When calculating Form 8582, limit the allowance amount ($25,000) for rental real estate activities with active participation to the amount you were allowed for federal purposes. If you have a gross income of $100,000 or more, this lowers or gets rid of the offset allowance.
A pass-through entity can file a composite return on behalf of qualified electing nonresidents who report and pay income tax on their proportional or distributed share of Massachusetts source income of the pass-through entity. A partnership, S corporation, or a trust or estate can file an electronic composite return on Form MA MRCR and make estimated tax payments as an agent on behalf of 2 or more qualified electing nonresident members.
Eligible members of a composite return must:
Any professional athletic team with 2 or more qualified electing nonresident team members can file a composite tax return as an agent for the qualified electing nonresident team members. Each electing non-resident team member must sign, under penalties of perjury, a statement stating their qualifications and election to file a composite return.
File the composite return on Form 1-NR/PY (not Form MA NRCR) along with the applicable schedules and attachments. The total Massachusetts gross income on the composite Form 1 NR/PY must be the sum of all the qualified electing nonresident partners' Massachusetts source income.