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Residency and state taxes, part 1: Do part-year residents have to file?

On Behalf of | Apr 24, 2015 | Tax Controversies

We focus most of our pieces in this blog on federal income tax. This makes sense because state tax systems tend to mirror the federal system.

But state tax systems also have detailed rules on residency status as it relates to filing requirements for tax returns. In this two-part post, we will address some of these rules. Let’s start with a particular question: When must partial-year residents file a Massachusetts tax return?

 The Massachusetts Department of Revenue offers detailed information on part-year residents and the various factors that affect if and when they must file in Massachusetts.

One factor is income. If you are a part-year resident of Massachusetts and did not have more than $8,000 in Massachusetts gross income during the taxable year, there is no obligation to file a tax return in Massachusetts. But if your income meets that threshold, you will generally need to file – even if it appears that you don’t owe any taxes.

The term “Massachusetts gross income” is tricky, however, because it does not merely refer to income from Massachusetts sources. This is the kind of nuance that a skilled tax lawyer can help you navigate.

Obviously this is pretty technical stuff. But in a complex modern economy where many people have contact with multiple states, issues regarding the taxation of part-year and nonresidents will continue to arise. After all, this isn’t only a matter of a few snowbirds who annually leave northern states for a while and then return. In the Internet age, more and more workers live in one state and earn their money in another.

In part two of this post, will update you on federal efforts to create more uniform standards to address multistate issues such as these.


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