General Rules and Qualifications

If a taxpayer's Massachusetts Adjusted Gross Income (Massachusetts AGI) does not exceed certain thresholds for the taxable year, he or she qualifies for No Tax Status (NTS) and is not required to pay any Massachusetts income tax. A taxpayer qualifying for NTS must still file a tax return.

Taxpayers Who Do Not Qualify for No Tax Status May Qualify for Limited Income Credit (LIC):
If taxpayers do not qualify for No Tax Status (NTS), but their Massachusetts Adjusted Gross Income does not exceed certain thresholds, they may qualify for the Limited Income Credit (LIC). This credit involves an alternative tax calculation that can result in a significant tax reduction for taxpayers whose income is close to the NTS threshold.
 

Calculation of Massachusetts adjusted gross income:
Adjusted gross income calculation is gross income reduced by certain business expenses and other deductions claimed on Massachusetts Schedule Y, Lines 1 - 10, such as allowable employee business expenses, alimony paid or student loan interest, etc..
With the exception of Line 4, these are generally federal allowable deductions.

Married filing separate taxpayers do not qualify for either NTS or LIC.
 

Qualification for NTS and LIC is determined by completing the following worksheets:

  • for residents, the AGI Worksheet for NTS; if they do not qualify for NTS but may be entitled to LIC they must fill out both the AGI Worksheet and the Line 29 Worksheet;
  • for nonresidents and part-year residents, Schedule NTS-L-NR/PY, No Tax Status and Limited Income Credit. They must compute their Massachusetts adjusted gross income (AGI) as if they were Massachusetts residents for the entire taxable year. In determining whether or not they qualify for NTS, they must include all non-Massachusetts source income as well as all non-Massachusetts Schedule Y, Lines 1 - 10 deductions. They fill out Schedule NTS-L-NR/PY, Lines 1 through 11; if they do not qualify for NTS but may be entitled to LIC they must fill out lines 1 through 15

Note: all losses must be reported on the worksheets/Schedules and the Schedule as zero.

Non-Massachusetts source income means all of the income that a Massachusetts resident would be required to report.


Special Rules for Nonresident Military Taxpayers

The Federal Servicemembers Civil Relief Act (P.L. 108-189 or "SCRA"), Effective December 19, 2003 - Residence or Domicile:
This act provides that a tax jurisdiction may not use the military service compensation of a nonresident servicemember to increase the tax liability imposed on other income earned by the nonresident servicemember or spouse subject to tax by the jurisdiction.

Nonresident taxpayers, who have a filing requirement in Massachusetts because they have MA source income other than military source income, should not include any military service compensation as non-Massachusetts source income when determining whether they qualify for NTS or LIC. Specifically, nonresident taxpayers filing Form 1-NR/PY should not include any military service compensation received during the taxable year on line 7 of Schedule NTS-L-NR/PY as non-Massachusetts source income.

Military service compensation means not only compensation earned by members of the armed forces for service in a combat zone (which is always excluded from gross income to the extent excluded federally) but also as any other military service compensation.


Table for 2013 No Tax Status (NTS) and Limited Income Credit (LIC) Thresholds

Because the income level for No Tax Status for joint filers and heads of household is based in part on the personal exemption amounts, in 2008 the threshold for No Tax Status for these taxpayers has been changed to reflect changes to the personal exemptions. The Limited Income Credit calculation is similarly affected.

For tax years beginning in 2008, if Line 7 of the Massachusetts AGI Worksheet is less than the amounts below, then taxpayer qualifies for either the NTS or LIC.

No Tax Status Thresholds for 2013:

Filing StatusMaximum NTS AGIAdditional NTS Amount per Dependent
Single$8,000N/A
Head of Household$14,400 +$1,000
Married Filing Jointly$16,400 +$1,000

Limited Income Credit Thresholds for 2013:
Filing StatusMaximum LIC AGIAdditional LIC Amount per Dependent
Single$14,000N/A
Head of Household$25,200 +$1,750
Married Filing Jointly$28,700 +$1,750

Note: Married filing separate taxpayers do not qualify for No Tax Status or the Limited Income Credit.

Note: per M.G.L Chapter 62, Section 5(a), to be eligible for LIC, Massachusetts adjusted gross income cannot exceed 175% of the NTS thresholds, e.g. HH NTS AGI = $14,200 * 175% = $24,850.


Where to Report on Original Tax Return; What to Enclose:

Documentation to Submit with Abatement/Amended Tax Return:

  • for NTS, Massachusetts AGI worksheet from the Massachusetts Form 1 instruction booklet;
  • for LIC, both Massachusetts AGI worksheet and Limited Income Credit Worksheet from the Massachusetts Form 1 instruction booklet;
  • nonresident or part-year residents, Massachusetts Form 1 - NR/PY, Schedule NTS-L-NR/PY and copy of U.S. Form 1040, 1040A, 1040EZ, or 1040NR.

Massachusetts References:

Federal References:

  • Federal Servicemembers Civil Relief Act (P.L. 108-189)

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