A while ago I posted about what to do about investment income and my son moving from NY to MA. I was told that everything before the move went to NY and everything after to MA. Okay, but what documentation do I need to file for this? I can include copies of the 1099s highlited to show what is included, and a letter explaining about the move. Or something else? Thanks.
Interest income can be prorated by the days of residence in each state when the account was held. Dividend income would be taxed by the state where your son was a resident when the dividend was paid or credited. Gains and losses on sale of intangibles (stocks, bonds etc.) would be assigned to the state where he was a resident when the transaction took place.
A schedule attached to each state's return showing how the income was assigned to each state would be helpful but not necessary. It is not necessary to attach the 1099s unless there is backup withholding.
Katie in San Diego
Since I have the worksheets I might as well send them. Do I send a letter also so they know what they are looking at and why? It seems like an obvious thing to do, but sometimes the obvious things are wrong.
It depends upon how self-explanatory your worksheets are. I would expect that a supplementary letter should not be needed, at least not with an original return (perhaps with an amendment or response to IRS letter).
You are basically just breaking down your investment income into two chronological categories: before the move, and after the move. That should be a pretty simple spreadsheet.
Maybe indicate on the spreadsheet which state corresponds to the "Before" moving date, and which to the "After".
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