Our daughter quit her job in Massachusetts to go to UCLA (MBA). Her taxes jump $200 as a part time resident as opposed to being a full time resident. Is this typical? Are there circumstances where she could claim full time residency? I am using TaxAct. She sold some stock as well as having salary while here.
Little surprises me about Massachusetts taxation but this still seems odd. I would expect a part time resident to pay proportionally less. We will be leaving the state in a year or two so it is relevant to us as well.
It depends what you mean by "as oppose to being a full-time resident." There are two implications of being a part-time resident, I think all states use the first and most use the second:
a) Your personal exemptions are pro-rated. So if your personal exemption was $2400 a year and your income was $10000, if you were a full-year resident you would be taxed on $7600, but if you lived there only one month you would be taxed on $9800. b) In states with a graduated income tax, your tax bracket is usually based on your proportional full-year earnings. So if your taxable income was $10000 and you were a resident for half the year, you would pay half the tax on $20000 of income, rather than the full tax on $10000, and the former would usually be higher.
I take it that all of your daughter's income was earned during the part of the year when she was in Massachusetts. I'd have to work through the numbers to figure out why her tax is higher on a part-year resident return than it would have been on a full-year resident return.
In any case, unless she has moved to California with the intention of making a permanent home there, she remains a resident of Massachusetts under Mass. Gen. L. Chapter 62 §1(f) because her domicile remains in Massachusetts. There is no provision in Massachusetts law for a domiciliary to be a nonresident for tax purposes. Arguably under Massachusetts law she will remain a Mass resident for tax purposes until she establishes a new domicile somewhere else -- i.e., moves to another place with the intention of making a permanent home. Enrollment in an educational program with a fixed duration would generally not constitute a change of domicile.
As a full-year Mass resident she is subject to Mass. tax on all of her income, including any income earned in California. That income would also be subject to California tax, but MA would give her credit for the CA tax on that income, limited to the proportion of her MA tax liability that relates to that income.
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