I am in NYS. My son graduated college in June, stayed in Massachusetts, and got a series of temp jobs from July on. He will have investment income throughout the year. Presumably he has to file state tax returns in both NY and MA, with all the earned income going into MA. But how do I split the investment income? Can I claim him as a dependent, as he worked less than 6 months? He is still on my medical insurance. Do I deduct his medical expenses, or does he? The past several years he accumulated some significant capital losses. Will any he can't use in NY in 2010 just be lost at the state level?
This seems like a pretty common, yet complicated issue; is it explained anywhere? Thanks.
Although he intends to reside in Massachusetts permanently, he still has a NYS drivers license, etc. His investment income is just from stocks and bonds; nothing tied to either state.
Way too much information missing to answer your query. It is possible that he was a MA resident for the whole year or for part of the year. It is possible that he was a NY resident for part of the year but probably not the whole year. He could have even been treated as a resident in MA while being a resident in NY. He may have been or may not have been your dependent.
Exactly where did he reside from the start of the school year in Jan.
2010 until he graduated? If he resided on campus or off campus in college owned facilities, those places would not be considered a permanent abode under MA law. If he resided off campus in non-college owned quarters, that would be a permanent abode and it would appear that MA would consider him a state resident. Once school ended and he stayed in non-college quarters, he would be in a permanent abode and as the days in state appear to exceed 183 MA would consider him a part-year resident. It is also quite possible that while in MA he remained a NYS resident (at least for the first part of the year) as NYS appears to have been his domicile. Lastly it is hard to tell from the facts presented when or if he became domiciled in MA.
As to whether or not he was your dependent in 2010 depends upon whether he is your qualifying child or if not your or anyone else's qualifying child, was your qualifying resident. As this subject is more than adequately explained in IRS Pubs, please read either Pub 17 or Pub 501 for definitions of a qualifying child (QC) or qualifying relative (QR).
He lived on campus in MA until 5/17/10, lived with his girlfriend until 6/1/10 in MA when he got his own apartment in MA. He worked about half the time after graduation in temp jobs until he got a long-term temp job in September.
So, I am thinking he was not a dependent as he did not live with me more than half the year as required, even though he did not provide more than half his support.
Based only on the facts presented, it appears as though he passes the MA test for having a permanent abode in MA and spending more than 183 days in the state. It also appears that he probably was a part-year resident of NY during his time spent in campus housing, as I assume he remained domiciled in NY. If his taxable gross income for the year was at least $3650, he could not be your qualifying relative.
Okay, but that's the minor part of my original post. He had investment income throughout the year. Assuming he has to file in NYS as a part time resident, how does he split the investment income; proportionately by days of residency? He is still on my medical insurance. Do I deduct his medical expenses, or does he? The past several years he accumulated some significant capital losses. Will any he can't use in NY in 2010 just be lost at the state level?
Investment income is an intangible. The income belongs to the state in which he was a resident at the time he actually earned the income. E.g., if he received a dividend payment on March 31 and he was a resident of NY, then the dividend is sourced to NY.
The definition of a dependent for purposes of deducting medical expenses is different then the definition used to claim an exemption. This is explained in IRS Pub 502.
Assuming he accumulated the unused capital losses while a resident of NY and he is filing a part-year NY return, he would carry those losses forward to his NY return.
So I have to go though the 1099s and break them up between before and after 5/17/10? Won't be fun, but I can do that.
As I read it, he is qualifying relative for medical deductions, but I do not get a deduction for him because he earned over $3600.
Lets say he has $50,000 in carried forward capital losses on his NYS return, and $5,000 in capital gains before he became a MA resident. He can offset the $5000, but then just loses the $45,000 in capital losses; he cannot carry them forward to MA. Is that correct? Too mad.
MA capital loss carryovers would exclude any carryover that was not reflected on a prior MA Schedule D. In other words, his unused capital losses derived when he was a NYS resident would not be allowed on his MA tax return.
I'm not familiar with MN, but it should be fairly easy to look up. As to NY: I don't know if NY has a time limit on capital loss carryovers. That should also be easy to look up.
BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here.
All logos and trade names are the property of their respective owners.