The Massachusetts Department of Revenue (DOR) recently released a working draft of TIR 09-23, Effect of the Military Spouses Residency Relief Act or Public-Law 111-97 (the MSRRA). Under the MSSRA, spouses of military personnel who are present in or absent from a domicile due to compliance with military orders will not have their tax residence impacted by such presence or absence. According to the TIR 09-23:
For taxable year 2009, a servicemember’s spouse who had Massachusetts personal income tax withheld and who qualifies for exemption from Massachusetts tax under the MSRRA must file a Massachusetts non-resident income tax return, Form 1NR/PY, to claim a refund. For this purpose, the Form 1 NR/PY return must be paper filed; no efile returns are allowed. The qualifying spouse must write “MSRRA,” across the top of the Form 1NR/PY and attach copies of the following:
- Military Spouse ID card.
- Department of Defense Form 2058, State of Legal Residence Certificate – “legal residence for purposes of withholding state income taxes from military pay;”
- LES, Leave and Earnings Statement of servicemember; and
- Servicemember’s current military orders assigning such servicemember to a post of duty in Massachusetts (or an adjoining state).
The qualifying servicemember’s spouse must pay tax to the state of domicile for 2009, to the extent required by the state of domicile.
For taxable years beginning with 2010, a non-resident servicemember’s qualifying spouse whose wages are exempt from Massachusetts personal income tax under the MSRRA may claim an exemption from Massachusetts withholding tax. A military spouse who qualifies for Massachusetts wage exemption under the MSRRA must complete a Form M-4-MS, Annual Withholding Tax Exemption Certificate for Military Spouse, and provide required documentation.
The Form M-4-MS must be validated on an annual basis. The military spouse must show continued eligibility for the exemption. Scenarios that will cause the spouse to no longer be eligible include:
- Servicemember leaves the service;
- Voluntary physical separation due to duty changes – the servicemember’s orders move him or her to a location outside Massachusetts where the spouse is allowed to join him or her but chooses not to; or
- Spouse commits an action that clearly establishes Massachusetts as his or her state of domicile.
Contact Vision Payroll if you have any questions on the Military Spouses Residency Relief Act.
The Massachusetts Department of Revenue has released an emergency regulation 830 CMR 62B.2.3: Motion Picture Production Company Withholding. This regulation “establishes and explains the requirements of motion picture production companies to withhold Massachusetts personal income tax on payments to independent contractors and loan-outs for services rendered in Massachusetts.” The regulation provides information in the following areas:
- Statement of Purpose; Outline of Topics
- Registration and Reporting Obligations of a Production Company; Qualification for the Credit
- Withholding and Reporting Requirements as Prerequisites for Credit Qualification; Loan-Out Filing Requirements
- Personal Income Credit against Taxes; Reporting Requirements
- Coordination with Other Withholding Requirements
- Effective Date
Since the regulation was issued as an emergency regulation, it is effective immediately and requires withholding on covered payments made after February 17, 2010. A transition rule allows certain waivers issued before February 18, 2010 to remain in effect for the duration of the production for which the waiver was issued. Contact Vision Payroll if you have any questions on 830 CMR 62B.2.3.
The Florida Department of Revenue has announced an increase in the taxable wage base for 2010. The wage base will increase from $7,000 for 2009 to $8,500 for 2010. Contact Vision Payroll if you have any questions on Florida unemployment taxable wage base or visit our Unemployment Taxable Wage Base page.
Masschusetts DD 09-2, Personal Income Tax Treatment of Employer-Provided Health Insurance Coverage for an Employee’s Former Spouse
The Commonwealth of Massachusetts Department of Revenue has released a working draft of TIR 09-1, Individual Mandate Penalties for Tax Year 2009, which would provide the penalties in 2009 for adults without health insurance. Under the working draft, adults with annual family household incomes of 150% of the Federal Poverty Level or less are not subject to any penalty. Adults with annual family household incomes of more than 150% but not more than 200% of the Federal Poverty Level are subject to a penalty of $17 per month for each month of non-compliance. Adults with annual family household incomes of more than 200% but not more than 250% of the Federal Poverty Level are subject to a penalty of $35 per month for each month of non-compliance. Adults with annual family household incomes of more than 250% but not more than 300% of the Federal Poverty Level are subject to a penalty of $52 per month for each month of non-compliance. Adults aged 18-26 with annual family household incomes of more than 300% of the Federal Poverty Level are subject to a penalty of $52 per month for each month of non-compliance. Adults aged 27 and older with annual family household incomes of more than 300% of the Federal Poverty Level are subject to a penalty of $89 per month for each month of non-compliance. The TIR provides the annual income standards for the Federal Poverty Level by family size. Qualifying coverage is defined as enrollment “in health insurance policies that meet minimum creditable coverage standards adopted by the Commonwealth Health Insurance Connector Authority.” Written comments for the working draft are due by January 23, 2009. Contact Vision Payroll if you have any questions on TIR 09-1 or need a referral to a licensed benefits broker.