Massachusetts Residents that Work in Rhode Island May Be in for a Windfall!
On February 29th, 2012 the Massachusetts Department of Revenue issued Directive 12-1. In short this brand new directive allows MA residents that work in RI to claim a credit for mandatory RI Temporary Disability Insurance (TDI) paid through your paycheck.
This directive revoked the state’s prior ruling that dates back to 1977.
How does this affect me?
As a result of this directive, many MA residents that work in RI will be entitled to a tax credit which will put money in your pocket. The most beneficial taxpayers are those that have paid TDI and that had a net tax liability to MA.
What do I have to do?
If you haven’t filed your 2011 taxes yet just include the TDI in the taxes paid to another state to calculate your MA tax credit. If you have already filed you may need to file an amended return.
How can this get any better?
You may also be able to file amended returns for all open tax years (currently 2008, 2009 & 2010) to claim the increased credit from Massachusetts.
What’s the downside?
There isn’t much of one. You may have to pay your tax preparer if you need assistance in preparing the amended tax returns. Also, the state software may not be setup to handle this new calculation which could result in delays or questions about your refund. However, the new lower MA tax is accurate and we recommend that you pursue this enhanced credit.
We will be reviewing all of our client’s returns to determine if this affects them for any year between 2008 and 2011. If you are a client we will be contacting you soon to let you know your eligibility for this credit.
