Help! Tax question for student

<p>I feel ill. Despite having done all my taxes over the years, and even having had to slog through the dreaded AMT forms this year, I am finding that it is my daughter's puny income from out of state that is going to make me throw in the towel.
We live in a state with no state income tax. My daughter goes to school in Boston. She filled out a form provided on her school's website so that no MA state tax would be taken out of her (non-school) paycheck, and I assumed that she wasn't liable for MA state taxes. But now i am being told (on a tax site) that if her MA source income exceeds a certain amount (the % MA income to total times the Mass exemption), then we have to file the MA state tax form. I am too old to learn a new set of forms. I tried looking at this and it requires filling out schedules regarding her investment income as well. So, it looks to me like she is going to have to pay taxes on her investment income to MA. This doesn't make sense to me. Am I misunderstanding this? Anyone else deal with their student's income in another state? Any help would be appreciated.</p>

<p>Why don't you just let your daughter take care of this, and ask her to a tax preparer in MA to get advice & help -- even if you pay for the tax advice? I don't have a clue as to why you need to be the one to learn how to file the forms for your daughter's taxes. </p>

<p>Your daughter might find this web site helpful if she wants to try doing it on her own using a free online software program:
Massachusetts</a> Free File Alliance</p>

<p>Rarely do I have true sympathies for other people's plight-Except for, mommeleh. </p>

<p>BTDT. Except we have state (OR) income tax in addition to the state (PA) when he had an internship. Paid double taxes. I do the taxes.. My suggestion is to use a tax program and follow directions. Have a couple of real drinks. </p>

<p>We will have an additional problem for 2008 tax year. DS has foreign income from taxable graduate student work, (Canada-2006,2007) and now is getting paid as intern in India that is paid in rupees and additional intern wage paid in Canadian Dollars. He is having a difficult time in keeping the student bank accounts straight (4). I have the priviledge in keeping additional 4 domestic accounts.</p>

<p>A tax program is very inexpensive.</p>

<p>Not to be a scofflaw, but if the money is really puny, can you just bag the MA return? What is the audit risk? Buying even inexpensive tax programs (it would probably cost $25 for a MA state form, I'm guessing?) sounds like it would be more than any tax owed.</p>

<p>I guess that does make me a scofflaw...</p>

<p>You would be filing a Non Resident MA return, which would tax only the income earned in that state. Each state handles it in a different way, but I don't believe any of them tax unearned income to non residents. I suggest the Free File at the IRS web site. It will let you do a MA return and if you don't want to pay to file it electronically, you can print it out and mail it in.</p>

<p>We freefiled for both the federal income tax and the Mass return last year. We used Turbotax through the IRS website. For DS it was because someone inadvertently took out about $10 worth of MA taxes. Otherwise he would not have had to file.</p>

<p>I've done what 3bm did--filed non-resident form. I worked out of state for 2 years, and state taxes were withdrawn. I got refund checks both years.</p>

<p>My taxes got so complicated, I rely on my accountant to finalize my statements and file the extra forms.</p>

<p>The Non-Resident MA instructions state:

he term “Massachusetts source income” is used
throughout this booklet to describe the types of
income which are taxable to a nonresident.
A nonresident is only subject to tax on items of income
derived from or effectively connected with:
◗ any trade, business, or employment carried on
in Massachusetts (see the following section);
◗ participation in any lottery or wagering transaction
in Massachusetts; or
◗ ownership of any interest in real or tangible personal
property located in Massachusetts.


interest and dividends, only if derived from or
connected with Massachusetts business activity,
or the ownership of Massachusetts real estate or
tangible personal property;


<p><a href=""&gt;;/a&gt;&lt;/p>

<p>So interest/dividend income, unless associated with Massachusetts in some way, will not be taxed by Massachusetts.</p>

<p>Your daughter is not the first student to have to fill out MA state Non-Resident forms. I'd be surprised if her school doesn't have some sort of clinic that can help fill out the forms. If not, H&R Block isn't very expensive, and they're all around the college campuses in Boston; they know where the business is!</p>

<p>Thank You, all. i knew i would find wisdom here. I had looked at the non resident tax form yesterday, and it seemed like it was asking for capital gains info from the US 1040, so I went into panic mode. Thank you, Chedva, for the link and the quote. Now i just have to make sure i know exactly what income they are requesting on all these forms.</p>

<p>It looks as though, if the MA AGI is less than 8K, no MA tax is required. This makes sense, given the form my daughter filled out requesting exemption from Ma taxes (there was a box to check if full-time student and expected income is less than 8K). However, the requirement to FILE the income tax form kicks in at a much lower earned income. So, bookworm, thumper and 3bm103, I will probably take your advice and try the free file sites. It seems quite clear that my daughter will not owe any MA tax, so it would kill me to pay a professional to help her with this. So, ellenmope, your suggestion is attractive, too. Especially since the penalty for non-filing appears to be a percentage of the tax. And, 25% of 0 is, I'm pretty sure, 0. </p>

<p>Thumper, my hat is off to you. At this point, i feel so beaten down taxwise, i don't know if i would have the strength to file a form to recover ten bucks. :)
Thisoldman, you win. I guess i am lucky that i am not dealing in rupees or scheckels or whatever else may be in store for us in a year or so...Beads? shells?</p>

<p>And, Calmom, while i know you are probably right that my dd should handle this herself, I think we will need to start her out on a much simpler form.
And she'll have to return to WA for that :)</p>

<p>They need a simpler Internal Revenue Code. The Constitution is 39 pages long. The Internal Revenue Code is 7,000 pages long, in fine print. It's the king of unnecessarily complicated legislation.</p>