kpozin.net Projects & Musings by Konstantin Pozin

Two useful tidbits I discovered while battling with a bunch of tax forms today:

1. If you are a resident of State A, but made your income in State B as a non-resident, you are not expected to pay double taxes for your earnings (i.e. pay full taxes to both State A and B). Instead, you should file an extra resident credit form in your home state, which will usually let you get a tax credit for the amount you paid to State B.

   This means that for state taxes, you're paying a total of MAX(TaxStateA, TaxStateB), and not (TaxStateA + TaxStateB).

   In New York State, you need to fill out the extra form IT-112-R. However, if you were filing New York's short form IT-150, you'd never even know about this. You'd think that you just have to pay up the double tax. Instead, you have file the long form IT-201, fill out line 41 (Resident credit), and attach IT-112-R to the form.

2. In Massachusetts, if you're filing as a non-resident, you apparently do not pay taxes on taxable scholarships (those that you would pay taxes on to the IRS and to your home state). Here's a excerpt from a Mass. Dept of Revenue document on excluded income:

   Scholarships and Grants

   ...

   Nonresidents: Nonresidents are taxed only on items of gross income that are derived from or effectively connected with any trade or business, including 1) any employment carried on by the taxpayer in Massachusetts; 2) the participation in any lottery or wagering transaction in Massachusetts; or 3) the ownership of any interest in real or tangible personal property located in Massachusetts.

So even if your scholarship is from a Massachusetts college and is taxable, but you are not a Massachusetts resident, you do not pay taxes on it in Massachusetts.