MA return for non-resident

[Kea]

I am seeking help from anyone familiar with MA tax prep.

My client lives in Texas but is a partner in an LLC in Massachusetts. From general rules and from my reading of the instructions for the MA Form 1 NR/PY, this should be MA source income. He did not live in MA during any of 2007 (or ever). The K-1 income ($14K) and $3 interest on a TX bank account are all he had for 2007. This sounded like it should be pretty straightforward.

However the software (TRX) is indicating that he is "Filing as both nonresident and part-year resident" When I answered the check boxes, I indicated that he did not live there but that he did have MA source income. It noted that in this case I had to file a Schedule R/NR.

The software is also subtracting the K-1 income on line 7 of the Schedule NTS-L-NR/PY. I'm not sure why, but I presume because he was a non-resident.

Since I have never done a MA state return, I don't want to just automatically assume I know more than the software. Before I override the entries:

Is he a "Nonresident" or "both nonresident and part-year resident"?

Should the K-1 income be subtracted on the Schedule NTS-L-NR/PY?

I am using Schedules B & E to report the interest (and then subtracting it back out) and the K-1 income.

Do I need to show the proration on Schedule R/NR that all K-1 income is from MA (software brought up form but made no entries)?

Do I adjust for the 1/2 SE tax reduction - or is that Federal only?

Any help is greatly appreciated.

Thanks.

[Catherine]

One the Form 1-NR/PY you should check "Nonresident". The only income taxed in MA will be MA-source income (as opposed to some states that look at whole income, then apply a percentage correction to the tax due).

On the Schedule R/NR, put the K-1 income on lined 9C and 9D. Interest will go on Line 24C only. Column A will get regular totals from the Federal; it's the overall. The _only_ amount you should end up with at the bottom of column E should be the MA partnership income.

You should end up with about $740 tax due to MA.

Feel free to email me off-group with more questions; [email protected] is the address.

Catherine