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Tax filings for full time students

Posted by Andrew Chan  March 13, 2009 03:00 PM

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My daughter is a full time student in Boston. We claim her as a dependent in California. She made a little over $11,000 (all in Boston) in 2008. What tax form should she be using and what residency status does she claim?

Based on the information in your question, I'm assuming your daughter's domicile or legal residence is California. If so, she will likely need to file a federal tax return, a Massachusetts tax return, and a California tax return. For federal purposes, she will need to file Form 1040 because her earned income (i.e., income from working such as salaries and wages) in 2008 was over $5,450 dollars. [As a side note, I made the assumption that the $11,000 dollars was earned income. If the $11,000 is from unearned income (i.e., interest, dividends, etc.), your daughter would still need to file a return for federal tax purposes because her unearned income exceeded the $900 threshold for federal purposes.]

For state tax purposes, your daughter will need to file a Massachusetts income tax return because her income from Massachusetts sources exceeded the $8,000 threshold. The form that she will need to file will depend on her residency status. If your daughter’s domicile (i.e., legal residence) is not Massachusetts, she may still be considered a full-time resident for MA income tax purposes depending on her “permanent place of abode” and whether or not she spent more then 183 days in Massachusetts during 2008. The MA Department of Revenue defines a “permanent place of abode” as a dwelling place continually maintained by a person, whether or not owned by such person, and will include a dwelling place owned or leased by a person's spouse. Generally, college dormitories or other similar temporary institutional settings are not considered a permanent place of abode in Massachusetts. However, off-campus apartments may be considered a permanent place of abode.

Here are a couple of examples provided by the MA Department of Revenue:

Example 1: Donna is an out-of-state student attending a university in Massachusetts. She lives in a room in one of the dormitories on the university campus. She shares her room with another student. Donna lives at the dormitory for the entire school year, which runs from late August 2004 through May 2005. When the school year ends, Donna moves out of the dormitory and resides out-of-state. Donna returns to the university in August 2005 to begin her junior year and again resides in a dormitory room on campus. Although Donna is present in Massachusetts for more than 183 days in 2005, her dormitory room is not considered a permanent place of abode. Therefore, Donna is not considered a resident of Massachusetts for 2005.

Example 2: Frank is a student at a university in Massachusetts. He lives in an off-campus apartment near the university with three other individuals. All four roommates share living expenses. Frank first moved into the apartment in September, 2004. He lived there for all of 2005. Frank lives in the apartment for more than 183 days in 2005. Since Frank is present in Massachusetts for more than 183 days and is maintaining a permanent place of abode, Frank is considered a resident of Massachusetts for 2005, even if his domicile is elsewhere and he intends to leave Massachusetts upon his future graduation.

Therefore, if your daughter can answer “yes” to both of the following questions, she should be considered a full-time resident (for Massachusetts income tax purposes) and needs to file Massachusetts Income Tax Form 1. If she answers “no” to any of these questions, she is considered a non-resident and should file Massachusetts Income Tax Form 1-NR/PY.

1) Did she maintain a permanent place of abode in Massachusetts in 2008?
2) Did she spend more than 183 days in Massachusetts in 20008?

In addition to the Massachusetts income tax filing, your daughter will likely need to file a California income tax return. California requires dependents who earn more than their standard deduction (in this case $3,692 dollars) to file. Be sure to double check the status of her residency for CA income tax purposes. Based on the limited information in your question, I'm assuming she is considered a resident for CA income tax purposes. California's FTB Publication 1031 outlines how to determine your residency. The form for residents is CA Form 540. Form 540NR is for non-residents.

For more information visit the following web sites for more information:
IRS: www.irs.gov
MA Department of Revenue: http://www.mass.gov/
CA Franchise Tax Board: http://www.ftb.ca.gov/

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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D. Abraham Ringer is a CERTIFIED FINANCIAL PLANNER practitioner and a Financial Adviser with Morgan Stanley Global Wealth Management in Boston. He is registered in MA, NH, NY and several other states to which his articles are directed. For more information please visit www.morganstanleyfa.com/ringer
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