Living in Mass, Working In Rhode Island (Quincy: sales, how much)

[drPheta]

Just entering my career, and I live in Quincy (since November). So far it's pretty nice being outside of the city but not too far. Well, it looks like I will be working in Rhode Island, and I wanted to know what the income tax will be like?

I understand I will file some sort of form for both states, but what forms will they be? How much tax will I end up paying? From what I gathered, MA has a 5.3% tax on wages, while RI has a scale to follow ( you can go to this link to see the scale http://www.bankrate.com/brm/itax/edi...ate_tax_RI.asp)

Who's tax do I pay?

[Ingleterra]

I think you end up paying taxes in both places. My husband teaches part-time in RI and has to pay taxes both in MA and in RI.

[ss1]

So for purposes of paychecks, can the employee choose which state they would like their state taxes withheld from? Or must it be MA if you live in MA? Or does it have to be RI since you work in RI?

[smarty]

You pay taxes to the state that you work first. Then, you pay your resident state tax.

I think this is how it is done...
If you pay RI 7%, then you pay nothing for MA tax since it is higher of the 2. However, you will still need to file for MA.

If you pay RI 4%, then you pay MA (5.3%-4%).

If you work in NH (0%), then you pay MA (5.3% - 0%) = 5.3%.

I'm not sure how it works if you file with your spouse. I don't know if they tax your spouse also.

You don't have to withhold anything... but you better have the $$ to pay when you file. I do not know about RI. MA will fine you if you consistently under estimate your withholding more than $1000(?).

[professorsenator]

As a resident of MA you will file a MA resident income tax form. Because you work in RI you will have RI income tax withheld from your paycheck. At tax time in April you will file a RI nonresident tax form, in addition to your MA resident tax form. Your income tax due in MA will be offset by the tax you paid in RI. So if you owe MA $2000., but paid $1500. to RI, your net tax due to MA will be $500.

RI income tax is a progressive income tax based off of your federal AGI, while MA has a flat-rate income tax. For upper income earners (>$250K/yr, but I'm not about this), RI's tax is a little higher than MA. For most middle class and lower income earners, RI's tax is a little less than MA.

Bottom line: you will NOT pay double taxation. But you will have to file two state tax forms, which is an inconvenience. And, if it makes you feel any better, this is a pretty common thing in the area, especially among dual income families.

[Valerie C]

We're having a similar discussion of state taxes over at the NH forum, and I'm a little confused about something...

We are residents of New Hampshire, but my spouse started working in MA just a couple of months ago. We knew that his income would be taxed (former MA residents) for the months that he worked in MA.

Then I was told that not only his income, but mine as well would be taxed. Since I"m licensed to practice in both MA and NH, I figured that the portion of my income made from Massachusetts closings would be taxed. However, I"m being told that ALL of my income will be taxed by MA!

Then I was told that both of our incomes would be used as the basis for tax rate. But with MA being a flat-rate state, that doesn't make sense.

Can any one give me a clue? Thanks in advance for any help!!

[smarty]

Originally Posted by smarty

I'm not sure how it works if you file with your spouse. I don't know if they tax your spouse also.

Is that why they call this Taxachusetts?

[professorsenator]

Originally Posted by Valerie C

We're having a similar discussion of state taxes over at the NH forum, and I'm a little confused about something...

We are residents of New Hampshire, but my spouse started working in MA just a couple of months ago. We knew that his income would be taxed (former MA residents) for the months that he worked in MA.

Then I was told that not only his income, but mine as well would be taxed. Since I"m licensed to practice in both MA and NH, I figured that the portion of my income made from Massachusetts closings would be taxed. However, I"m being told that ALL of my income will be taxed by MA!

Then I was told that both of our incomes would be used as the basis for tax rate. But with MA being a flat-rate state, that doesn't make sense.

Can any one give me a clue? Thanks in advance for any help!!

MA taxes non-residents on Massachusetts sourced income. You are correct in that your income made in MA will be taxed by MA but NH sourced income will NOT be taxed by MA since you reside in NH.

Since you both will have MA sourced income you will have to file a MA nonresident form. But only your MA based income is taxed by MA. The form allows a computation of the percentage of in state versus out of state income. Also, you may have to include a signed statement with your tax form explaining the situation.

It would probably be prudent to have an accountant do your taxes for you--it will be a little messy. But the bottom line is that MA will NOT tax your NH source income since you are a resident of NH.

[jorick]

I live in NH but work in MA. I refuse to pay MA tax because even though NH doesn't have an income tax, all of our other taxes are higher to make up for it.

I told my company not to withhold any MA taxes from my paycheck. Then I sit back and don't do anything until the MA government sends me a letter stating that they need a tax form from me (this happens every few years). So I fill out a nonresident tax form and fill in $0 for my income and send it in to them. They accept the form without question.

The issue here is not only having to pay taxes twice but also taxation without representation, which is unconstitutional. I can't vote in MA so I have no representation in that state. Therefore I don't have to pay income tax to the state.

But so as to not upset anybody who thinks I'm getting off scott free, I'm not. I pay road use taxes through the gas tax (I always buy my gas in MA since I live only a couple hundred yards from the MA border). I pay sales taxes when I buy stuff in the state. So I do help support the state, just not through income taxes.

[Valerie C]

Great info Jorick, thank you for posting it!!!