The Massachusetts-sourced income of nonresidents who work in the state but are telecommuting from their home state because of the COVID-19 pandemic will continue to be subject to Massachusetts personal income tax.
According to an April 21 Massachusetts Department of Revenue emergency regulation, the income will continue to be subject to personal income tax under M.G.L. c. 62, section 5A and personal income tax withholding under M.G.L. c. 62B, section 2.
However, the regulation says that a tax credit will be available under M.G.L. c. 62, section 6(a) for resident employees who worked in another state but are now required to work in Massachusetts because of the pandemic if they continue to incur an income tax liability under the sourcing rules of the state where they previously worked.
"In addition, the employer of such employee is not obligated to withhold Massachusetts income tax to the extent the employer remains required to withhold income tax with respect to the employee in such other state," the reg says.
The regulation will apply retroactively from March 10 until the state of emergency is no longer in effect.