To Pay MA Income Tax Or Not To Pay MA Income Tax...That Is The Question On Everyone’s Mind

Here at AccountAbility we strive to provide you with the most up to date and relevant information on what you need to know each month when it comes to all things taxes and bookkeeping. Many of our clients that are New Hampshire residents have reached out to ask about paying Massachusetts income tax while working remotely during the COVID19 pandemic. So this month we’re taking a deep dive into the rules and breaking it down for you so that you don’t have to go searching through all that technical tax jargon.

We know you’re here for the down and dirty so here it is:

If you work in MA, you must continue to pay MA income tax. 

According to a release from the MA Department of Revenue dated in April of 2020, “Pursuant to the regulation, for the duration of the Massachusetts COVID-19 state of emergency, all compensation received for personal services performed by a non-resident who, immediately prior to the Massachusetts COVID-19 state of emergency, was an employee engaged in performing such services in Massachusetts, and who, during such emergency, is performing such services from a location outside Massachusetts due solely to the Massachusetts COVID-19 state of emergency, will continue to be treated as Massachusetts source income subject to  personal income tax.” 

Essentially a (very) long winded way of saying you’re still on the hook for those pesky income taxes. But wait, you ask, what if my company allowed me to work remotely, even occasionally, before this whole mess started? Do I now have to pay taxes on that income? Well, there are a few different scenarios here so read on to find which best fits your situation.

If You Are Employed in MA, but Regularly Work Remotely:

 If you work in MA AND work from home in NH on a regular basis, you can reduce your MA tax when you file your income tax return at the end of the year.  MA hates this and audits these claims regularly, so we strongly recommend keeping a calendar of days worked in and out of MA as well as getting a letter from your boss that explains that your position allows remote work. We do not recommend getting all cowboy and beating MA up on your 2020 return.  Audits can take 1-3 years to pop up- like bumping into an old ex – no one wants that.

If Your Company Is Staying On the Remote Bandwagon for the Long Haul:

 If your company will continue remote work beyond the pandemic, you can certainly apportion your wages. Again, it’s best to get this in writing from your employer. But unlike the previous scenario where keeping an accurate calendar of days worked remotely is important, when requesting this letter, vague is best.  If the letter says 2 days per week and there were several times you worked 3 or 4 days from home, the letter would actually hurt you in an audit.

Even though we just wrapped up the 2019 tax season, it’s important to get a jump on MA income tax now if it applies to you. 2020 will prove to be a wild ride – pandemic, stay at home orders, many companies finding that remote works just fine and are not reopening their brick and mortar offices. It’s worth repeating that information is always changing these days and we’ll be sure to pass along anything noteworthy through our social media channels. As always, reach out to us with any questions.