I was let go June 2007. Now, March 2008 I will get a bonus from the prior employer, for work in 2007. Should I get the 401K, and company match for the work done in 2007 but paid in 2008? Do I owe state taxes on the bonus? I worked then in MA and live in NH, if the money is 2008 Income, then why should I have to pay MA income tax?

My guess no for 401k since I'm not an employee in 2008, for money earned in 2007. So one part of government says I'm covered due to yr change, but I guess Ma will say I'm earning the income, hence taxed. How can both parts of the government have different answers, that penalize the individual...

The amount was earned in MA so is taxable in MA.
The 401K is not applicable since you are no longer an employee. Many companies do not have the bonus payment written in their plan as eligible for 401k anyway.

I agree that you can no longer contribute to the 401(k), nor get a company match, as you are not an active employee. As for taxing the bonus - this is money earned as a non-resident worker in MA, so you will be taxed on it by MA (just as you were for your salary when you worked there). The bonus will also be included in your 2008 federal wages, to be reported to the IRS. I don't understand your point about being taxed in 2 different ways by the state versus the feds - please restate.