[ddfb]

I'm in Fl and sold inherited house in MA. (no other mass source income) and used tax software taking info from Fed 1040 where it calculated a net capitol loss selling it below the date of death appraisal and then it generated a mass non resident income tax form 1NR/PY, resulting in No taxable income, No tax due. With pages of zeros, and then reporting the net capitol loss on the last page with a schedule D showing the same net capitol loss. I wasn't sure I had to even file it under the circumstances. So then I read entire Mass. gov. site and Mass Dept Revenue for filing requirements for non residents. In essence I believe it said nonresidents who have mass source income exceeding the prorated personal exemption are required to still file even if there's no tax due.
But then it says, WHO MUST FILE: You must file IF your "mass source income" exceeds the prorated exemption. " Mass source income" is types of income which are taxable. And "Income taxable" is a "gain" from sale of real property located in Mass. Not a loss. So, do I have to file it or not?

[AtlantaTaxExpert]

To be safe, you SHOULD file the return by normal mail AND provide a complete copy of your federal income tax return that shows you sold the Massachusetts house at NO capital gain.

If you do NOT file, Massachusetts will get the Form 1099-S from the closing (the title company is REQUIRED to submit Form 1099-S to both the IRS and the state tax agency) that shows you received X amount of dollars from the sale of the house and they will have NO Massachusetts income tax return to account for that money.

They then assume there is no basis for the sale, and WILL come looking for you to collect the taxes they think you owe.

[ddfb]

Just as you wrote that, I put myself in the place of Mass. Getting the 1099S notice and them having no info other than assessing me for the full proceeds if I don't file... so your reply was exactly as my instincts were just telling me. I hope it's safe to send it by normal mail, with no proof of mailing... I think it said also somewhere to include the Federal 1040 Schedule with it. Mass generates a Massachusetts Schedule D also, that duplicates the Federal one.
I'm not sure I have to send the entire 1040? I hope there's no late filing fees. I think I also read there's a 3 month auto extension if you don't owe anything, and Mass deleted the paper filing application for that due to excessive paperwork. Oh well, I'd rather pay a late filing fee, than them assess me a LOT more. Thank you very much

[ddfb]

Correction: it said to include Federal SCHEDULE D from the 1040 with the Mass taxes, I didn't read to send the entire 1040 taxes?

[AtlantaTaxExpert]

In a tax rerurn of this nature, I typically attach the entire federal return.

[ddfb]

OK will do. Thank you

[AtlantaTaxExpert]

Glad to help!