Wednesday, August 5, 2020

Massachusetts Paid Family and Medical Leave Taxation Issues

Now that a few months have passed and this new tax has been deducted and/or employer only paid, have we handled it correctly?  What’s to handle, you might ask?

William Delaney, EA
Westwood, MA
I haven’t seen anyone draw down on this fund (with good reason---it’s too soon for benefits to kick-in).  Yes, but is it taxable when it does suddenly appear in a subsequent year – or currently for a RI resident (more on this later).

What about the employee payroll deductions?  If you are like me, at least half of the   W-2 forms which should have shown something in box #14 did not have an entry.  If there is an entry, did you do anything with it?  It qualifies as a SALT (state and local [income] tax) so it should be posted to Schedule A---subject to the $10,000 annual limitation.   For authority, see CCA 200630017 (7/28/2006).

Is it taxable income when received.  YES, according to the Chief Counsel’s Advice cited above.  If you received an itemized deduction for the employee payment, the entire benefit is taxable when received.  If you were unable to itemize, the amount of the payroll deduction becomes your tax basis and it is excluded from taxable benefit income.

While this is the federal rule for the Massachusetts and Rhode Island State plans, other state plans may be treated differently. 

And, if you have not forgotten, the RI “tax” qualifies as a state tax when computing the maximum amount of credit on the MA resident return for taxes paid to another state.  See MA Revised Directive 12-1 (3/15/12).  Does RI reciprocate?  Not at this time.  The regulation in effect since 1/1/1998 is PIT 98-12 and it specifies (see part IV) that the allowable state income tax must be similar to what is allowed on the RI personal income tax return.  The RI personal return only allows (Schedule W) a credit for withholding tax shown on form W-2, box #17).  RI does not follow the MA “rule.”

Wednesday, June 10, 2020

COVID-19 Relief Town Hall Discussion

COVID – 19 Relief Town Hall Discussion
with the IRS and Massachusetts Departments of Revenue and Unemployment Assistance
Date   Thursday, June 11, 2020
Time   10:00 a.m. Eastern Time

Call in Telephone Number: (888) 331-8226      Access Code:  5206386

This free 45-minute teleconference is open to all.

Learn about:
  • Postponed Federal and state of Massachusetts Filing and Payment Deadlines
  • Economic Impact Payments - From $1,200 To $2,400 (Even more with qualifying dependents)
  • Free File – File for free using Free File tax software or Free File Fillable Forms
  • Resources & Guidance - Find out where to get the information you need to learn more about the Coronavirus economic tax relief
  • Department Unemployment Assistance – 3 new temporary federal programs
  • Department of Revenue – Taxability of Unemployment Benefits
    • EITC rule
    • MassTax Connect
    • VITA Assistance

Wednesday, June 3, 2020

Teleconference tomorrow: “COVID-19 Relief Town Hall Discussion”

The Internal Revenue Service, the Rhode Island Division of Taxation, and others will take part in the IRS’s “COVID-19 Relief Town Hall Discussion” tomorrow, Thursday, June 4, 2020.

The free 60-minute teleconference call, which is open to the public, will cover a variety of relief provisions related to the coronavirus pandemic.

Topics will include the federal economic impact payments (sometimes called “stimulus payments”, “COVID-19 payments”, or “recovery rebates”); tax-filing and tax-payment updates; awareness about scams; the Volunteer Income Tax Assistance (VITA) program; and other individual assistance and relief programs and initiatives.

Registration is not required. However, the number of teleconference phone lines available is limited, so those interested in listening to the conference are urged to call in early. The teleconference will begin at 10:00 a.m. Eastern Time and will run for approximately one hour.
To listen to the teleconference, call toll-free at 1-888-331-8226 and, when prompted, enter the following access code: 3911745.

A flyer is available with more details. To view, click here.

RI Division of Taxation Office Remains Closed Through Friday, But Many Services Still Available

PROVIDENCE, R.I. – Due to some damage incurred to the William E. Powers building from Monday’s riots in downtown Providence, the Rhode Island Division of Taxation’s office will remain closed to the public through Friday, June 5, 2020, but the Division continues to offer a number of services to taxpayers, tax professionals, and other stakeholders.

The Division’s first-floor office remains closed to the public, with no walk-in service and limited telephone service. Nevertheless, taxpayers, tax professionals, and others may still contact the Division via email, make payments electronically, and file electronically.

The Division continues to issue tax refunds. The Division continues to accept paper filings and payments by check via the United States Postal Service and via private delivery service (although there may be a brief delay in processing). Furthermore, forms, instructions, notices, rulings, and other publications are available 24 hours a day, seven days a week, from the Division’s website:

“Although our office remains closed through Friday, June 5, we continue to operate, with certain limitations, and we continue to provide needed services for the State of Rhode Island, its taxpayers, and other stakeholders,” said Rhode Island Tax Administrator Neena Savage.

“Virtually all services the Division provides are available via the agency’s website, email system, and portal,” she said. A brief list of the services that continue to be available, and the few that are temporarily unavailable through June 5, is in the table below. A list of frequently used email addresses and Division website links can be found here