Most income transfers automatically from your federal return to your Massachusetts return. However, Massachusetts tax law doesn't always follow federal tax law. Because of these differences, you may need to add certain types of income when calculating your Massachusetts taxable income.
Program Entry
Massachusetts Return → Additions to Income
Allocated Tips and Taxable Scholarship Income
Massachusetts taxes allocated tips reported in Box 8 of Form W-2 if they were not otherwise included in taxable wages.
Certain scholarship and fellowship income may also be taxable to Massachusetts and may need to be added to your return if it was not already included in Massachusetts income.
Interest Income from Massachusetts Banks
Interest earned from:
- Savings accounts
- Certificates of deposit (CDs)
- NOW accounts
- Savings shares
- Other deposit accounts held at Massachusetts banks
is taxable to Massachusetts and must be included in Massachusetts income.
Taxable IRA, Keogh, and Roth IRA Conversion Distributions
Massachusetts may calculate the taxable portion of IRA and retirement plan distributions differently than the federal government.
A Massachusetts worksheet is used to determine the taxable amount of:
- Traditional IRA distributions
- Keogh plan distributions
- Qualified charitable IRA distributions
- Roth IRA conversion distributions
In general, Massachusetts does not allow a deduction for certain contributions previously taxed by the state. As a result, some distributions may be taxed differently than they are federally.
Scholarship Income Adjustments
Scholarship income is generally transferred from the federal return.
If the amount taxable to Massachusetts differs from the federal amount transferred, an adjustment may be required so that the correct income is included on the Massachusetts return.
Additional Fees and Other Income
You may need to report additional fees or income not already reported elsewhere on the Massachusetts return.
Examples include:
- Jury duty pay
- Election worker compensation
- Director's fees
- Executor or administrator fees
- Commission income not reported as wages
- Bartering income
- Prize and award income
- Certain forgiveness of debt income
- Certain mortgage forgiveness income
- Other taxable income reported on your federal return but not included elsewhere on the Massachusetts return
If you enter additional income, provide a description explaining the source of the income.
Schedule R/NR Filers
If you're filing Schedule R/NR, do not enter additional fees and other income in this section. Instead, report the information directly on Schedule R/NR.
Department of Family and Medical Leave (DFML) Income
Benefits received from the Massachusetts Department of Family and Medical Leave (DFML) are taxable for Massachusetts purposes.
Enter the amount reported in:
Form 1099-G, Box 1
Separate entries can be made for:
- Taxpayer
- Spouse
If filing a joint return, each spouse should report their own DFML benefits separately.
Other Income Commonly Added to Massachusetts Income
Massachusetts taxable income may also include items that are excluded or treated differently for federal purposes, such as:
- Certain foreign earned income excluded federally
- Taxable gambling winnings
- Certain pension and annuity distributions
- Income from digital assets not reported elsewhere
- Other Massachusetts-specific income adjustments
Important Notes
- Massachusetts tax law differs from federal tax law in several areas.
- Income transferred from the federal return may not always equal the amount taxable to Massachusetts.
- Additional worksheets may be required to calculate the correct taxable amount.
- Review all income entries carefully before filing to ensure Massachusetts income is reported correctly.
- If you're unsure whether income is taxable in Massachusetts, compare the federal treatment to Massachusetts-specific rules before filing.