Living in MA and work in RI

[shawnusa]

What is the name of your state (only U.S. law)? MA

I am living in Mass. The company that I work for has two locations, one in MA and one in RI.

My question is if I go to work in RI office, will I pay more tax?

Should I still work in the MA office or better to work at RI office?

Many thanks!

 

[PayrollHRGuy]

Try using this calculator. https://www.paycheckcity.com/calculator/hourly/

Run it with your information and RI and compare it to your current check.

 

[shawnusa]

Try using this calculator. https://www.paycheckcity.com/calculator/hourly/

Run it with your information and RI and compare it to your current check.

Thanks, but I am not sure if get it.

I am living in MA, still need to fill tax for MA if work at RI. Just want to know if I will pay more tax by living in MA and work in RI.

 

[LdiJ]

What is the name of your state (only U.S. law)? MA

I am living in Mass. The company that I work for has two locations, one in MA and one in RI.

My question is if I go to work in RI office, will I pay more tax?

Should I still work in the MA office or better to work at RI office?

Many thanks!

Its a little bit complicated but here's how it works.

You will file an RI Non-resident tax return and be taxed on the income.
You will file a MA Resident tax return and be taxed on the same income.
MA will give you a credit for the tax that you paid to RI.

Therefore, in the end you will pay the same amount of state tax, but you will have to file two separate state tax returns.

 

[PayrollHRGuy]

I missed that you live you would continue to live in Mass. I live out in the states where they are all too big to live in one and work in another. LdiJ is correct.

 

[ivakridav]

Small correction

Since RI has different tax rates depending on income, you will be paying more income taxes to RI if you fall on the 5.99 bracket or less if you are in the 3.75 or 4.75. MA is 5.15% and it gives you a credit up to the % of taxes that you paid to RI and if you payed at a lower rate you owe the difference.

 

[LdiJ]

Since RI has different tax rates depending on income, you will be paying more income taxes to RI if you fall on the 5.99 bracket or less if you are in the 3.75 or 4.75. MA is 5.15% and it gives you a credit up to the % of taxes that you paid to RI and if you payed at a lower rate you owe the difference.

Bottom line, the total he will pay is the 5.15% MA rate. MA will credit him for what he pays RI no matter which RI tax bracket he ends up owing.

 

[Taxing Matters]

Bottom line, the total he will pay is the 5.15% MA rate. MA will credit him for what he pays RI no matter which RI tax bracket he ends up owing.

No, that's not correct. Massachusetts does not do that, nor does any other state so far as I know. If it did, then it would effectively be subsidizing the treasury of states with a higher tax rate, and of course states are not going to want to subsidize other states. As Massachusetts properly describes it, the credit for the tax paid to other states “is the smaller of:

• Massachusetts income tax on income you reported to the other jurisdiction, or
• The actual tax you paid to the other jurisdiction.”​

You’ll find that stated here: https://www.mass.gov/service-details/learn-about-the-income-tax-paid-to-another-jurisdiction-credit

What this means is that the tax you pay on the income from another state ends up being taxed only once, either at the rate your home state imposes or the rate of the other state, whichever ends up being higher. For example, if the Mass rate were 5.15% and the RI rate was 5.99% then Mass gives you a credit against its tax for the RI tax you paid up to the 5.15% Mass rate; as that does not fully offset the RI tax, you still end up paying the extra 0.84% to RI for which Mass does not credit you. In short, you end up paying the 5.99% on that income that RI imposed. By the way, the federal foreign tax credit works the same way, too.

 

[LdiJ]

No, that's not correct. Massachusetts does not do that, nor does any other state so far as I know. If it did, then it would effectively be subsidizing the treasury of states with a higher tax rate, and of course states are not going to want to subsidize other states. As Massachusetts properly describes it, the credit for the tax paid to other states “is the smaller of:

• Massachusetts income tax on income you reported to the other jurisdiction, or
• The actual tax you paid to the other jurisdiction.”​

You’ll find that stated here: https://www.mass.gov/service-details/learn-about-the-income-tax-paid-to-another-jurisdiction-credit

What this means is that the tax you pay on the income from another state ends up being taxed only once, either at the rate your home state imposes or the rate of the other state, whichever ends up being higher. For example, if the Mass rate were 5.15% and the RI rate was 5.99% then Mass gives you a credit against its tax for the RI tax you paid up to the 5.15% Mass rate; as that does not fully offset the RI tax, you still end up paying the extra 0.84% to RI for which Mass does not credit you. In short, you end up paying the 5.99% on that income that RI imposed. By the way, the federal foreign tax credit works the same way, too.

I did know that about the foreign tax credit.

I did not know that about MA's credit, although I will admit that I skimmed the information before responding.

 

[shawnusa]

Thank you all for the help!!! Much appreciated.

Happy Holidays!