State taxes

[BF66389]

Both my wife and I work in MA and live in NH. Here's how it works in one sentence:

You pay taxes in MA for that income earned in MA

Some Issues to be aware of:
Working From Home
So if you work from home 2 days a week...you only owe taxes on the other 3 days to MA.
BUT- you better have it well documented; as in a W-2 from your employer- one showing the income earned working in MA and one showing the income earned working in NH. In other words your "working from home" needs to be a very formal thing that is recognized by the payroll system of your employer. They do this so that everyone doesn't go "I work from home".

Spouse/Joint Income
If you work in MA and your spouse works in NH- you SHOULD NOT pay income taxes to MA for the income earned by your spouse. Their W-2 clearly shows NH; and therefore MA should not come looking for that income; they should only look for yours. Automated tax programs (TurboTax, etc) tend to mess this up a lot.

There are a lot of misconceptions about this...but there it is in a nutshell.

[buck naked]

"Spouse/Joint Income
If you work in MA and your spouse works in NH- you SHOULD NOT pay income taxes to MA for the income earned by your spouse. Their W-2 clearly shows NH; and therefore MA should not come looking for that income; they should only look for yours. Automated tax programs (TurboTax, etc) tend to mess this up a lot."


I never used to report the spouse's income because it was earned solely in NH - but then MA caught up with me and the fines were enormous and retroactive. The income is taken directly from the number on your federal tax form if filing jointly and it better match what is reported to MA.

there is a percentage calculation to figure the rate of taxation. the spouse's income is taxed in that you will pay more than if it was calculated on your income alone.

I don't use turbo tax or other programs. After being fined by MA, I hire an accountant now to do the taxes.

[seamusnh]

Buck,
I believe that you are not actually taxed on the income of your spouse, but your combined household income starts taking away your exemptions and deductions on the non-resident tax form. It is kind of like the Federal govt where a child counts as an exemption but the exemption amount erodes as you make more above a certain amount...

[buck naked]

You are correct seamusnh - however, I pay more than I would if I was paying solely on MA income.