- Adoption Exemption
- Age 65 or Over Exemption
- Blindness Exemption
- Dependent Exemption
- Medical/Dental Exemption
- Personal Exemption
- Nonresidents and Part-year Residents
- Where to Report, What to Enclose
- Documentation to Submit with Abatement/Amended Tax Return
- Massachusetts and Federal References
- Prior Law, History of Exemptions
- the exemption is for the full amount of the fees paid during the taxable year; and
- the exemption includes fees paid by the taxpayer in the taxable year to an adoption agency on account of the adoption process of a minor child regardless of whether an adoption actually takes place during the taxable year.
Reimbursement by Employer:
No exemption is allowed for any portion of expenses that are paid or reimbursed by an employer and excluded from gross income under IRC Section 137.
See Adoption Assistance Programs
Age 65 or Over Exemption
A $700 exemption is allowed for each taxpayer who has attained the age of 65 before the close of the tax year.
If filing a joint return, each spouse may be entitled to a $700 exemption if each is age 65 or over on December 31st of the tax year. For example: if the husband turns 65 on December 31st, he would qualify for this exemption.
Massachusetts does not follow the Federal rule that considers taxpayers who reach age 65 on January 1 of any year as having reached that age on the preceding 31st.
A $2,200 exemption is allowed for each taxpayer or spouse who is legally blind at the close of the taxable year.
Legal Definition of Blindness:
For Massachusetts purposes, a taxpayer qualifies for the blindness exemption if his or her visual acuity with correction is 20/200 or less in the better eye, or if his or her peripheral field of vision has been contracted to a 10-degree radius or less, regardless of visual acuity.
This definition of blindness is not the same as the definition of blindness under the Internal Revenue Code. The Code requires a peripheral vision of 20 degrees or less.
Massachusetts does not require that a doctor's statement verifying legal blindness be attached to the return, however, the taxpayer should be prepared to submit such a statement upon request.
A $1,000 exemption is allowed for each dependent claimed that qualifies for a U.S. dependent exemption under the Internal Revenue Code. This exemption does not include taxpayer or spouse.
Dependent means either:
- a qualifying child; or
- a qualifying relative.
Number of Dependents Claimed for Massachusetts and Federal Purposes May Differ:
Federally, dependent exemptions are not allowed for persons who would otherwise be dependents but who file their own income tax returns and claim personal exemptions. For Massachusetts purposes, dependent exemptions may be claimed for such persons if they meet all of the tests listed below for dependency even if they claim exemptions on their own returns.
- Dependent taxpayer test - dependents may not be claimed if taxpayer, or spouse if filing jointly, could be claimed as a dependent by another taxpayer;
- Joint return test - a married person who files a joint return may not be claimed as a dependent unless that joint return is only a claim for a refund and there would be no tax liability for either spouse on separate returns; and
- Citizen or resident test - a dependent may not be claimed unless the person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.
An exemption for a qualifying child may be claimed only if all five tests are met:
- The child must be taxpayer's son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them;
- The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age if permanently and totally disabled;
- The child must have lived with the taxpayer for more than half of the year;
- The child must not have provided more than half of his or her own support for the year; and
- If the child meets the rules to be a qualifying child of more than one person, taxpayer must be the person entitled to claim the child as a qualifying child.
An exemption for a qualifying relative may be claimed only if all four tests are met:
- The person cannot be a taxpayer's qualifying child or the qualifying child of anyone else;
- The person either (a) must be related to taxpayer in one of the ways listed under Relatives who do not have to live with taxpayer, or (b) must live with taxpayer all year as a member of the household ( the taxpayer's relationship must not violate local law);
- The person's gross income for the year must be less than $3,300; and
- Taxpayer must provide more than half of the person's total support for the year.
Relatives who do not have to live with taxpayer as a member of the household to meet this test:
- Taxpayer's child, stepchild, eligible foster child, or a descendant of any of them; for example, taxpayer's grandchild; a legally adopted child is considered a taxpayer's child;
- Taxpayer's brother, sister, half brother, half sister, stepbrother, or stepsister;
- Taxpayer's father, mother, grandparent, or other direct ancestor, but not foster parent;
- Taxpayer's stepfather or stepmother;
- A son or daughter of taxpayer's brother or sister;
- A brother or sister of taxpayer's father or mother;
- Taxpayer's son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
An exemption is allowed for medical, dental and other expenses paid during the taxable year that are allowed federally under I.R.C. § 213. Individuals must itemize deductions on their Form 1040 - U.S. Individual Income Tax Returns.
U.S. Schedule A, line 4. If a taxpayer itemizes on U.S. Schedule A and has medical/dental expenses in excess of 7 1/2% of federal AGI, he or she may claim a medical and dental exemption in Massachusetts equal to the amount reported on U.S. Schedule A, line 4.
- Married Filing Joint for Federal must file joint in Massachusetts in order to claim this exemption. Generally, individuals may include medical expenses paid for themselves, spouses, and dependents claimed on the return.
- Married Filing Separate for Federal may file married filing joint for Massachusetts. If taxpayers file separate federal returns but a joint Massachusetts return, a pro-forma joint U.S. Schedule A should be completed to calculate the proper Massachusetts medical expense exemption. For the medical exemption to be allowed, total itemized deductions must exceed the standard deduction.
- Married Filing Separate for both Federal and Massachusetts, each spouse may file his or her own Schedule A.
- Federally, as an alternative to the self-employed health insurance deduction under IRC, § 162(l), a taxpayer may claim a credit under IRC, § 35 equal to 65% of the amount paid for coverage of the taxpayer and qualifying family members under qualified health insurance beginning in the taxable year. Amounts taken into account for this credit may not be taken into account in determining any deduction allowed for either the self-employed insurance deduction or the medical and dental deduction. These deductions may still be available, despite the use of the credit, so long as the taxpayer does not receive a double benefit for any amounts reported.
- Massachusetts does not adopt the federal credit. Generally, Massachusetts does not adopt any federal credits unless specifically provided for. See, e.g., the Earned Income Credit under G.L. c. 62, Section 6(h). However, the availability of the federal credit, as an alternative to the federal self-employed health insurance deduction and/or the medical and dental deduction does not affect the taxpayer's eligibility for either deduction in Massachusetts.
- Taxpayers may include in medical expenses a part of life-care fees or "founder's fees" paid either monthly or as a lump sum under an agreement with a retirement home;
- The part of the payment includible is the amount properly allocable to medical care. The agreement must require that taxpayers pay a specific fee as a condition for the home's promise to provide lifetime care that includes medical care;
- The portion of the founder's fee used to construct the health facilities is not deductible;
- In the event the individuals choose to terminate residence, any refund of the founder's fee is includible in gross income to the extent attributable to deductions previously allowed under § 213 of the Code.
Same-Sex Joint Filers:
For Massachusetts state income tax purposes, beginning on or after May 16, 2004 Massachusetts recognizes the right of same-sex couples to be married. Same-sex spouses will file as married persons, and have the option of filing either Massachusetts joint returns or married filing separate returns. Massachusetts will recognize valid same-sex marriages for tax periods that end on or after May 16, 2004, but will not recognize same-sex marriages for tax periods ending prior to May 16, 2004.
Same-sex joint filers will recalculate their combined allowable expenses as appearing on Federal Form 1040, Schedule A, under the heading 'Medical and Dental Expenses', combining their AGIs to use in performing the 7.5% calculation.
Same-sex couples may choose to file as married filing separately and each would then calculate his or her exemption amount based on Federal AGI.
Taxpayers who file a Massachusetts tax return are entitled to a personal exemption whether or not they may claim a personal exemption on their federal return. (See Dependent Exemption) The amount of personal exemption allowed depends on filing status claimed.
The personal exemption increases are triggered if inflation-adjusted growth in the baseline tax collections (i.e., tax collections adjusted for the impact of tax law and administrative changes and annual growth in the Boston Consumer Price Index) for the prior fiscal year exceeds +2.5% and the inflation-adjusted change in baseline taxes for each consecutive 3 month period between August and December of the previous year is greater than 0%.
The personal exemption amounts, effective for the 2012 taxable year, are as follows:
|Filing Status||2012 Exemption Amount|
|Single; Married filing Separate||$4,400|
|Head of Household||$6,800|
|Married filing Joint||$8,800|
- Adoption- enter the full amount of fees paid on either Mass Form 1, Line 2f or Form 1-NR/PY, Line 4f. This figure must be added to the Medical/Dental exemption, if any. Enter the totals of adoption and medical on either Mass Form 1, Line 2g, or Form 1-NR/PY, Line 4g.
- Blindness- fill in the appropriate oval(s) on either Mass Form 1, Line 2d or Form 1-NR/PY, Line 4d and enter the total number of blindness exemptions in the small box. Multiply the number of exemptions by $2,200 and enter the result on either Mass Form 1, Line 2d or Form 1-NR/PY, Line 4d.
- Dependents - enter the number of dependents reported on either U.S. Form 1040, Line 6c or U.S. Form 1040A, Line 6c in the box on either Mass Form 1, Line 2b or Form 1-NR/PY, Line 4b. Then, multiply that figure by $1,000 and enter the total amount on either Mass Form 1, Line 2b or Form 1-NR/PY, Line 4b.
- Medical/Dental - enter the amount reported on U.S. Schedule A, Line 4 on either Mass Form 1, Line 2e, or Form 1-NR/PY, Line 4e. This figure must be added to the Adoption Fee exemption, if any. Enter the totals of adoption and medical on either Mass Form 1, Line 2g, or Form 1-NR/PY, Line 4g. Taxpayer is required to itemize deductions on U.S. Form 1040, Schedule A.
- Age 65 or Over - enter the amount of exemption on either Mass Form 1, Line 2c or Form 1-NR/PY, Line 4c. Fill in the appropriate oval(s) and enter the total number of persons age 65 or over in the box. Then, multiply the total by $700 and enter the result on either Mass Form 1, Line 2c or Form 1-NR/PY, Line 4c.
- Personal Exemption - enter the amount allowed on either Mass Form 1, Line 2a or Form 1-NR/PY, Line 4a.
Part-year residents must multiply the amount of exemptions by the ratio in Massachusetts Form 1-NR/PY, Line 2, Total Days As Massachusetts Resident, since this exemption must be prorated based upon the number of days a taxpayer is a Massachusetts resident.
Nonresidents must multiply the amount of exemptions by Massachusetts Form 1-NR/PY, Line 14g, Nonresident Deduction And Exemption Ratio, since this exemption must be prorated based upon the amount of taxpayer's Massachusetts source income to his/her total income.
- Statement listing the name and address of the licensed adoption agency;
- Verification of adoption fees paid by taxpayer.
- Letter from doctor to verify legal blindness.
- Copy of U.S. Schedule A.
Age 65 or Over
- Verification of age, such as copy of license or birth certificate.
For all exemptions
- M.G.L. Chapter 62, Section 3(B)(b)(1)-(5)
- M.G.L. Chapter 62, Section 3(B)(b)(1)-(2) as amended by St. 2002, c. 186, ss. 10 - 12; as amended by St. 1998, c. 175, ss. 10, 12 and 14 for 1998 and ss. 11, 13 and 15 for 1999
- M.G.L. Chapter 62, Section 3(b)(5) as amended by St. 1999, c. 127, ss. 72 and 379
- TIR 99-19: Tax Changes in the Fiscal Year 2000 Budget, Other Than Capital Gains and "Pay to Play" Provisions which modifies prior year public written statements
- LR 88-12: Adoption Expense Qualifying for Exemption Under M.G.L. c. 62 s. 3B(b)(5)
- M.G.L. Chapter 6, Section 13
- I.R.C. §§ 151; 152
- U.S. Publication 501
- I.R.C. §§ 35(a); 63(f)213
- U.S. Publication 502: Medical and Dental Expenses (allowed for years 2000 - 2002)
- Treas. Reg. Section 1.213-1: Medical, Dental, etc. Expenses
Age 65 or Over
- Rev. Rul. 69-422