Source: https://www.mass.gov/directive/directive-88-2-non-resident-taxpayers-massachusetts-and-us-total-income-differences-for
Timestamp: 2019-02-23 01:08:48
Document Index: 386517695

Matched Legal Cases: ['§ 402', '§ 2', '§ 103', '§ 103', '§ 117', '§ 1', '§ 408', '§ 85', '§ 1', '§ 2', '§ 2']

Directive 88-2: Non-Resident Taxpayers Massachusetts and U.S. Total Income Differences for Tax Year 1987 | Mass.gov
Directive Directive 88-2: Non-Resident Taxpayers Massachusetts and U.S. Total Income Differences for Tax Year 1987
ISSUE: Why do the instructions of the non-resident income tax form (Form 1-NR) indicate that the amount of a non-resident's U.S. total income in Item 2 of the form (for tax year 1987) may not be the same as the amount the taxpayer enters in Item 14(f).
DISCUSSION: A non-resident taxpayer is required to provide U.S. total income on the Form 1-NR. In addition, the non-resident taxpayer must indicate on the form the sum of Massachusetts total 5% income, 10% income and the additional income that would have been reported as Massachusetts income had the taxpayer been a Massachusetts resident. Due to the differences between Massachusetts and federal tax laws, however, these two amounts may not be the same. For tax year 1987, these differences include:
Mass. Tax Treatment
Social Security and Tier I Railroad Retirement Benefits
Distributions from contributory retirement plans of the U.S., Massachusetts and other states which do not tax such income
Generally taxable, I.R.C. § 402.
Exempt, G.L. c. 62, §§ 2(a)(2)(E), 3B(4).
Taxable, I.R.C. § 103.
Exempt, I.R.C. § 103.
Scholarship and fellowship income
Room and board portion now taxable; remainder exempt for degree candidates only, I.R.C. § 117.
Fully exempt for degree candidates; non-degree candidates up to $300/month exempt with 36 month maximum, G.L. c. 62, § 1(c).
Generally taxable, I.R.C. § 408(d).
Taxable, I.R.C. § 85.
Taxable when income above certain level, G.L. c. 62, § 1(c).
Long term capital gain deduction
Deduction disallowed, G.L. c. 62, § 2(d)(6).
Additional Differences for Taxpayers with Schedule C or Schedule E income
Massachusetts follows U.S. depreciation rules in effect on January 1, 1985. Massachusetts does not adopt the U.S. passive activity loss restrictions.
Additional Difference for Shareholders of Electing S Corporations
There will also be a difference for shareholders of an S corporation which elects under the transition rule in section 72 of chapter 488 of the Acts of 1987 and 830 CMR 62.17A.1 to be taxed under the laws in effect prior to the Massachusetts adoption of federal S corporation treatment. This difference is:
Actual distributions taxable, G.L. c. 62, § 2(a)(1)(E) (1973) (amended 1986).
DIRECTIVE: Such differences often result in a discrepancy between a non-resident taxpayer's U.S. total income and the sum of total 5% income, 10% income and the additional income that would have been reported as Massachusetts income had the taxpayer been a Massachusetts resident. Thus, the amount of U.S. total income in Item 2 of the Form 1-NR may not be the same as the amount in Item 14(f).
DD 88-2