If you're unable to e-file your Massachusetts return, one common reason is that your Massachusetts state wages are higher than your federal wages. Massachusetts requires additional verification whenever the amount reported in Box 16 (state wages) of Form W-2 exceeds the amount reported in Box 1 (federal wages).
Program Entry
Massachusetts Return → Basic Information → If your total amount of state wages exceed the total amount of federal wages, answer Yes to be able to electronically file.
Do Your Total State Wages Exceed Your Total Federal Wages?
If your total Massachusetts wages are greater than your total federal wages, answer Yes to this question.
Before selecting Yes, carefully review all Forms W-2 to confirm the information was entered correctly.
State wages can legitimately exceed federal wages in certain situations, including:
- Contributions to retirement plans that are excluded from federal wages but taxable to Massachusetts
- Employee contributions to certain retirement systems that receive different state and federal tax treatment
- Other payroll items that are excluded from federal taxable wages but included in Massachusetts wages
Massachusetts specifically notes that state wages reported in Box 16 may be higher than federal wages reported in Box 1 for some taxpayers. Taxpayers who contribute to Massachusetts state, city, town, or county retirement systems may often see this difference.
When Should I Answer No?
Answer No if:
- Your Massachusetts wages do not exceed your federal wages, or
- The difference is the result of an incorrect W-2 entry
If the state wage amount appears unexpectedly high, review each W-2 carefully before continuing.
Common data entry errors include:
- Entering the wrong Box 16 amount
- Using state wages from the wrong state
- Transposing numbers
- Entering wages in the wrong W-2 fields
Correct any W-2 errors before proceeding.
How Does This Affect E-Filing?
The Massachusetts return may be blocked from electronic filing until this question is answered.
Answering Yes confirms that:
- You have reviewed your W-2 information
- The difference between federal and state wages is correct
- Massachusetts wages legitimately exceed federal wages
Once confirmed, the return can continue through the e-file process.
Why Would State Wages Be Higher Than Federal Wages?
Massachusetts and federal tax laws do not always treat payroll deductions the same way.
For example, Massachusetts requires certain retirement contributions to be included in taxable wages even though they may be excluded from federal taxable wages. This commonly affects:
- Massachusetts state employees
- City and town employees
- County employees
- Employees participating in qualifying state retirement systems
Because of these differences, higher Massachusetts wages are not automatically an error.
Important Notes
- State wages that exceed federal wages are not always incorrect.
- Review all W-2 entries before answering Yes.
- The amount reported in Box 16 may legitimately be greater than the amount reported in Box 1.
- If the W-2 was entered incorrectly, correct the W-2 information instead of answering Yes.
- The return generally cannot be electronically filed until this verification question is completed.