Long story short: I moved to MA from CA in spring of last year and bought and sold stocks in both states (majority is in MA). Inadvertently, I took a small negative short term capital loss in CA and a much bigger short and long term capital gain in MA thus resulting in a federal net short term capital gain that is lower than my MA. I used taxfreeusa and other softwares. Unfortunately the system is hard coded so that it wouldn’t accept a higher state amount than the federal amount. Taxfreeusa only allow me to make adjustments for MA long term capital gain which is not the issue.

    Example calculations:

    MA short-term capital gain: $2000

    MA long-term capital gain: $10000

    CA short-term capital loss: -$150

    CA long-term capital gain: $100

    Total CA capital loss (short/long term are taxed equally in this state): $-150+$100 = $-50

    Total federal short-term: $-150+2000= $1850

    This is the number that is displayed in the MA part-year residence income for federal net short term gain . Since my MA short-term gain is $2000 which is higher than $1850, multiple softwares wouldn't accept this and I can’t proceed to next step.

    I definitely thought about manipulating the system (adding ca short term loss as positive adjustment in MA adjustments/differences) but this may be risky. As this may be a unique scenario, does anyone else have a similar experience and know a workaround or any other softwares that can handle this?

    2-state tax return: My MA short term capital gain is less than Federal total short term gain (Loss in CA)
    byu/hairyappa intax



    Posted by hairyappa

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