Page 29 - BusinessWest January 20, 2025

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Giving
Continued from page 27
the individual owners, who can then deduct their share of the donation
on their personal tax returns based on their ownership percentage. This makes DAFs an especially attractive option for business owners who want to incorporate charitable giving into their overall tax strategy.
The Act of Giving
The most important aspect of a donor-advised fund is that it allows taxpayers to invest in charities, sup- port growth and culture for future generations, and give back to those
in need. A donor-advised fund allows for the donor to plan and track their charitable donations over time. A DAF opens doors for increased giving and provides taxpayers the opportunity to reflect on their priorities while making a difference in the lives of others.
As always, when engaging in tax planning or investing in a new fund, working with an experienced financial advisor or tax professional can help you navigate donor-advised funds. BW
Lauren Foley is a senior associate at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.
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Residency
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work in the state or income from Massachusetts-based properties. Non-residents are required to file state income- tax returns if they earn income in Massachusetts.
• Some individuals, such as students or temporary work- ers, may not qualify as full-year residents, but still earn Massachusetts-sourced income. They may need to file a tax return for the period they lived or worked in Massachusetts.
Changing Residency: Plan Ahead
Changing your state residency can have significant
tax consequences. States, including Massachusetts, often require a clear ‘leave and land’ process. Simply leaving Massachusetts without fully establishing residency in anoth- er state could result in continued residency classification by Massachusetts.
To demonstrate a permanent change in residency, actions such as selling property, updating voter registration, or opening bank accounts in the new state are crucial. Fail- ure to establish clear ties to a new state might lead to Mas- sachusetts considering you a resident, even if you’ve moved.
Residency Audits and Determination
If there’s uncertainty about your residency status, the Massachusetts Department of Revenue may conduct a resi- dency audit. It will investigate various factors, including where you live, work, and maintain personal connections. If it determines that you are still a Massachusetts resident when you believe you’ve changed residency, you could be subject to back taxes, penalties, and interest.
Residency audits can be extensive and often result in appeals or settlements. To prepare, you should maintain
proper documentation that supports your claim of residency in another state.
Conclusion
Massachusetts’ residency rules play a significant role in your tax obligations and legal standing. Residency classifi- cations, such as full-year resident, part-year resident, and non-resident, affect how your income is taxed. The statutory residence test and the domicile test are key tools for deter- mining your residency status. Factors like physical pres- ence, intent, and personal connections are crucial in these determinations. It is worth noting that it’s possible to be treated as both a resident and non-resident, or even be con- sidered a dual resident (resident of multiple states).
If you’re considering changing your state residency, careful planning is essential. Work with a tax professional to ensure that your move is well-documented and legally defensible in case of an audit. Massachusetts, like many states, is increasingly vigilant about residency audits, so it’s important to establish clear ties to your new state to avoid tax liabilities.
In summary, before deciding to move to a warmer cli- mate, be sure you understand the full tax implications of such a change. While the process of becoming a non-resi- dent may seem straightforward, it requires proper planning and documentation to avoid complications with Massachu- setts’ tax authorities. BW
Jeff Laboe is a tax manager with MP CPAs, with a primary focus on tax planning and solutions for high- net-worth individuals and private-equity firms.
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