Massachusetts Error with Turbotax 2002

Skip to first unread message

Fred Benson

Feb 2, 2003, 7:41:12 PM2/2/03
Turbotax 2002.
When reporting Interest Income, there is a checkbox:

"My state requires special handling for this interest."

Several states require this checkbox for several purposes.
In Massachusetts this box needs to be checked for interest
earned in out-of-state banks.* This is because $100 of
interest is tax exempt, but only from Massachusetts banks.

However, the Help Explanation offers the following advice:

"Check the special handling box for Massachusetts 12%
interest. If the special handling box is NOT checked, the
Massachusetts program assumes that the interest is taxable
at the 5.3% tax rate.

Generally, amounts of interest received or credited to
deposit accounts in savings banks, cooperative banks,
national banks, trust companies, savings & loan associations
or credit unions located outside Massachusetts are taxed at
the 12% tax rate. Refer to your Massachusetts government
instructions for further information. "

This is completely wrong since Massachusetts has not charged
12% on out-of-state interest since Tax Year 1998. Turbotax
really needs to fix this mis-information. Unfortunately I
can't see a place to report such a bug without paying tech
support fees. .

And, while the calculations can be right, if you check the
box and then select Massachusetts as where the interest as
earned, the final calculations still do not consider the
interest to be from Mass. The only way to do it is uncheck
that box for all Mass banks--don't check the box and then
select Mass as the location where the interest was earned
from. .


* Sidenote: It's questionable from a constitutional
standpoint whether they charge tax at different rates
depending on the source. Florida was a shot down a number
of years ago for taxing stock intangible property at
different rates for Florida companies by the US Supreme
Court. Today it's not a big deal ($100 exemption at 5.3% is
only $5.30 a year), but I don't know how Mass. got away with
charging double taxes for out of state bank interest for so
many years until 1999.

<< -------------------------------------------------- >>
<< The Charter and the Guidelines for Posting to this >>
<< newsgroup are at >>
<< -------------------------------------------------- >>

Reply all
Reply to author
0 new messages