Massachusetts Nonresident Apportionment Methods

Massachusetts Nonresident Apportionment Methods
Article ID: 33913

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Apportionment Methods

Working Days Basis: This basis should be used by employees or self-employed persons who qualify to use the Nonresident Apportionment Worksheet and who are compensated on an hourly, daily, weekly or monthly basis. The income of these taxpayers is to be allocated to MA in the proportion that the amount of time spent working in MA bears to the total working time.
Mileage Basis: An employee or self-employed person whose compensation depends on miles traveled is taxed on that portion of total compensation received in which the miles traveled within Massachusetts bear to total miles traveled.
Sales Basis: For an employee or self-employed person whose compensation depends upon sales or commissions, taxable income includes that portion of total compensation received which the sales made inside Massachusetts bear to total sales. (For the purposes of making this allocation, all sales for which the taxpayer takes orders inside MA are attributable to this state, regardless of whether the formal acceptance of the contract of sale takes place inside or outside MA.)
Special Apportionment Methods: If you earned income both inside and outside Massachusetts from one business or employment, and your actual Massachusetts income is not known and you cannot use the Nonresident Apportionment Worksheet, use the following appropriate apportionment method.
Self-Employed and Professional Persons: If you earned income from both inside and outside MA and your books do not accurately reflect your MA source income, you must use a three-factor formula to apportion your MA income. Instructions for this method of apportionment are in MA Regulation 830 CMR 62.5A.1.
Entertainers and Professional Athletes: If you are a nonresident entertainer who performed in MA and you were not paid specifically for the performance in MA, or if you are a nonresident professional athlete who took part in performances, bouts, meets, matches or games that occurred in Massachusetts and you were not paid for the specific event played in MA, you must use the apportionment formula set forth in MA Regulation 830 CMR 62.5A.1.
Nonresident Partners: If you are a nonresident general or limited partner, you are taxed on your distributive share of the income received by the partnership to the extent that the partnership income is MA source income, determined as if the partnership were a nonresident individual. If you are entitled to apportionment, the partnership will apportion its income and notify you of your share.
Nonresident Shareholders of an S Corporation: If you are a nonresident shareholder in an S corporation, you are taxed on the distributive share of income received by the S corporation to the extent that the S corporation income is Massachusetts source income. If you qualify for apportionment, the S corporation will apportion its income and notify you of your share on an SK-1.

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Created on: Jun 15, 2013