Mass., R.I. take income tax bites
Tax season is upon us and the Herald's TaxSmart experts are here to help. Today, Art Ford of Sullivan Bille Group of Tewksbury discusses issues involving multi-state returns.
I work in Rhode Island, but live in Massachusetts. My employer took state taxes in both states. I was informed that I would be able to get the Rhode Island taxes refunded as I am a Massachusetts resident. However, when I did my taxes ... I ended up owing Massachusetts more taxes and receiving a third of my Rhode Island taxes back. Is this correct? Just seems wrong that I pay resident taxes in both states, but live in one.
— Mary Richardson
This is an example of a multi-state return.
As the reader suggests, these can be a pain, as the rules in each state are different and, in this case, both states have an income tax.
Your Rhode Island income must be included on your Massachusetts return, but Massachusetts allows a tax credit for taxes paid to Rhode Island.
The Massachusetts income tax rate is currently 5.25 percent.
Rhode Island has different deductions and exemptions than Massachusetts and it has three graduated tax rates.
Rhode Island has a rate of 3.75 percent on taxable income up to $57,150; 4.75 percent above that up to $129,900; and then 5.99 percent above $129,900.
So, if you are in the 3.75 percent Rhode Island bracket, there will be an additional tax to Massachusetts of 1.5 percent.
Email your TaxSmart questions to bizsmart@bostonherald.com
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