- Example #1 - Qualifies for NTS
- Example #2 - Qualifies for NTS
- Example #3 - Qualifies for LIC
- Example #4 - Nonresident Working in Mass Who Qualifies for both EIC and LIC
- For more information regarding No Tax Status and Limited Income Credit
Example #1 - Qualifies for NTS
A full year resident taxpayer who files single.
Income:
W-2 wages = $10,500
Deductions:
Alimony Paid = $3,000
Filing Requirement:
Taxpayers who accrue Massachusetts gross income in excess of $8,000 during the taxable year are required to file a Massachusetts income tax return. They may calculate a zero tax, however, the requirement to file still exists.
| 2012 Form 1, Line 27 Massachusetts AGI Worksheet. No Tax Status (Only If Single, Head of Household or Married Filing Jointly) If your Massachusetts AGI was $8,000 or less if single, $14,400 or less plus $1,000 per dependent if head of household, or $16,400 or less plus $1,000 per dependent if married filing a joint return, you qualify for No Tax Status and are not required to pay any Massachusetts income taxes. |
| Line 1. Enter your total 5.25% income from Form 1, line 10. Not less than "0" (Add back any Abandoned Building Renovation deduction claimed on Schedule(s) C and/or E before entering an amount in line 1.) | $10,500 |
| Line 2. Add Schedule Y, lines 1 through 10 | ($3,000) |
| Line 3. Subtract line 2 from line 1. Not less than "0" | $7,500 |
| Line 4. Enter total Massachusetts bank interest or the interest exemption amount, whichever is smaller, from Form 1, line 5a or line 5b Note: If Form 1, line 10 is a loss, combine Form 1, line 10 with the smaller amount of total Massachusetts bank interest or the interest exemption amount. Enter the result in line 4, unless the result is a loss. If the result is a loss, enter "0." | $0 |
| Line 5. Enter amount from Schedule B, line 35. If there is no entry in Schedule B, line 35 or if not filing Schedule B, enter the amount from Form 1, line 20 | $0 |
| Line 6. Enter the amount from Schedule D, line 19. Not less than "0." (If filing Schedule D-IS, Installment Sales, see the Schedule D-IS instructions, available at www.mass.gov/dor, for the amount to enter in line 6.) | $0 |
| Line 7. Add lines 3 through 6 | $7,500 |
| If you are single and the total in line 7 is $8,000 or less, you qualify for No Tax Status. Fill in the oval in line 27, enter "0" in line 28 and omit lines 29 and 30. Also enter "0" in line 31 and complete Form 1. However, if there is an amount entered in line 25, Credit Recapture Amount and/or additional tax on installments sales, enter the amount in line 28 and complete line 30. If you are single but do not qualify for No Tax Status, and your total in line 7 is $14,000 or less, complete Form 1, line 28 and see Form 1, line 29 instructions for the Limited Income Credit. If you are filing as head of household or married filing a joint return, compare line 7 with the table below to see if you may qualify for No Tax Status or the Limited Income Credit. | |||||
| Number of dependents (from Form 1, line 2b): | Head of Household. Line 7 of the AGI worksheet is less than or equal to: | Married filing a joint return. Line 7 of the AGI worksheet is less than or equal to: | |||
| 0 | $14,000 $25,200 | $16,400 $28,700 | |||
1 | $15,400 $26,950 | $17,400 $30,450 | |||
2 | $16,400 $28,700 | $18,400 $32,200 | |||
3 | $17,400 $30,450 | $19,400 $33,950 | |||
4 | $18,400 $32,200 | $20,400 $35,700 | |||
5 | $19,400 $33,950 | $21,400 $37,450 | |||
6 | $20,400 $35,700 | $22,400 $39,200 | |||
|
| you may qualify for the Limited Income Credit |
| you may qualify for the Limited Income Credit | |
No Tax Status:
Income threshold for single is $8,000. Taxpayer's Massachusetts adjusted gross income of $7,500 qualifies for no tax status.
Example #2 - Qualifies for No Tax Status
Full year resident taxpayers who files married filing a joint return
3 dependents
| Income: | |
| W-2 wages | $19,800 |
| MA bank interest | $1,200 |
| Gross Income | $21,000 |
| Deductions: | |
| FICA Expenses | ($2,000) |
| Employee Business Expenses | ($2,000) |
| Total Deductions | $4,000 |
| Gross Income Less Deductions: | |
| Gross Income | $21,000 |
| Schedule Y Deductions, Lines 1 - 5 | ($2,000) |
| Adjusted gross Income | $19,000 |
Taxpayers who accrue Massachusetts gross income in excess of $8,000 during the taxable year are required to file a Massachusetts income tax return. They may calculate a zero tax, however, the requirement to file still exists.
| 2012 Form 1, Line 27 Massachusetts AGI Worksheet. No Tax Status (Only If Single, Head of Household or Married Filing Jointly) If your Massachusetts AGI was $8,000 or less if single, $14,400 or less plus $1,000 per dependent if head of household, or $16,400 or less plus $1,000 per dependent if married filing a joint return, you qualify for No Tax Status and are not required to pay any Massachusetts income taxes. |
| Line 1. Enter your total 5.25% income from Form 1, line 10. Not less than "0" Add back any Abandoned Building Renovation deduction claimed on Schedule(s) C and/or E before entering an amount in line 1.) | $20,800 |
| Line 2. Add Schedule Y, lines 1 through 10 | ($2,000) |
| Line 3. Subtract line 2 from line 1. Not less than "0" | $18,800 |
Line 4. Enter total Massachusetts bank interest or the Note: If Form 1, line 10 is a loss, combine Form 1, line 10 with the smaller | $200 |
| Line 5. Enter amount from Schedule B, line 35. If there is no entry in Schedule B, line 35 or if not filing Schedule B, enter the amount from Form 1, line 20 | $0 |
| Line 6. Enter the amount from Schedule D, line 19. Not less than "0." (If filing Schedule D-IS, Installment Sales, see the Schedule D-IS instructions, available at www.mass.gov/dor, for the amount to enter in line 6.) | $0 |
| Line 7. Add lines 3 through 6 | $19,000 |
| If you are single and the total in line 7 is $8,000 or less, you qualify for No Tax Status. Fill in the oval in line 27, enter "0" in line 28 and omit lines 29 and 30. Also enter "0" in line 31 and complete Form 1. However, if there is an amount entered in line 25, Credit Recapture Amount and/or additional tax on installments sales, enter the amount in line 28 and complete line 30. If you are single but do not qualify for No Tax Status, and your total in line 7 is $14,000 or less, complete Form 1, line 28 and see Form 1, line 29 instructions for the Limited Income Credit. If you are filing as head of household or married filing a joint return, compare line 7 with the table below to see if you may qualify for No Tax Status or the Limited Income Credit. | |||||
| Number of dependents (from Form 1, line 2b): | Head of Household. Line 7 of the AGI worksheet is less than or equal to: | Married filing a joint return. Line 7 of the AGI worksheet is less than or equal to: | |||
| 0 | $14,000 $25,200 | $16,400 $28,700 | |||
1 | $15,400 $26,950 | $17,400 $30,450 | |||
2 | $16,400 $28,700 | $18,400 $32,200 | |||
3 | $17,400 $30,450 | $19,400 $33,950 | |||
4 | $18,400 $32,200 | $20,400 $35,700 | |||
5 | $19,400 $33,950 | $21,400 $37,450 | |||
6 | $20,400 $35,700 | $22,400 $39,200 | |||
|
| you may qualify for the Limited Income Credit |
| you may qualify for the Limited Income Credit | |
No Tax Status:
Income threshold for married filing joint return with 3 dependents is $19,400. Taxpayer's Massachusetts adjusted gross income of $19,000 qualifies for no tax status.
Example #3 - Qualifies for Limited Income Credit
A full year resident taxpayer who files single
| Income: | |
| Wages | $ 9,500 |
| Short-term capital gains (Sch. B, Line 35) | $ 4,000 |
| Gross Income | $13,500 |
Deductions: | ($0) |
| Exemptions: | |
| Personal exemptions | ($4,400) |
| Medical exemptions | ($ 1,000) |
| Total exemptions | ($5,400) |
| Gross income less deductions: | |
| Income | $13,500 |
| Schedule Y, Lines 1 - 10 | ($0) |
| Adjusted gross income | $13,500 |
Taxpayers who accrue Massachusetts gross income in excess of $8,000 during the taxable year are required to file a Massachusetts income tax return. They may calculate a zero tax, however, the requirement to file still exists.
| 2012 Form 1, Line 27 Massachusetts AGI Worksheet. No Tax Status (Only If Single, Head of Household or Married Filing Jointly) If your Massachusetts AGI was $8,000 or less if single, $14,400 or less plus $1,000 per dependent if head of household, or $16,400 or less plus $1,000 per dependent if married filing a joint return, you qualify for No Tax Status and are not required to pay any Massachusetts income taxes. |
| Line 1. Enter your total 5.25% income from Form 1, line 10. Not less than "0" (Add back any Abandoned Building Renovation deduction claimed on Schedule(s) C and/or E before entering an amount in line 1.) | $9,500 |
| Line 2. Add Schedule Y, lines 1 through 10 | $0 |
| Line 3. Subtract line 2 from line 1. Not less than "0" | $9,500 |
Line 4. Enter total Massachusetts bank interest or the interest exemption amount, whichever is smaller, from Form 1, line 5a or line 5b Note: If Form 1, line 10 is a loss, combine Form 1, line 10 with the smaller | $0 |
| Line 5. Enter amount from Schedule B, line 35. If there is no entry in Schedule B, line 35 or if not filing Schedule B, enter the amount from Form 1, line 20 | $4,000 |
| Line 6. Enter the amount from Schedule D, line 19. Not less than "0." (If filing Schedule D-IS, Installment Sales, see the Schedule D-IS instructions, available at www.mass.gov/dor, for the amount to enter in line 6.) | $0 |
| Line 7. Add lines 3 through 6 | $13,500 |
| If you are single and the total in line 7 is $8,000 or less, you qualify for No Tax Status. Fill in the oval in line 27, enter "0" in line 28 and omit lines 29 and 30. Also enter "0" in line 31 and complete Form 1. However, if there is an amount entered in line 25, Credit Recapture Amount and/or additional tax on installments sales, enter the amount in line 28 and complete line 30. If you are single but do not qualify for No Tax Status, and your total in line 7 is $14,000 or less, complete Form 1, line 28 and see Form 1, line 29 instructions for the Limited Income Credit. If you are filing as head of household or married filing a joint return, compare line 7 with the table below to see if you may qualify for No Tax Status or the Limited Income Credit. | |||||
| Number of dependents (from Form 1, line 2b): | Head of Household. Line 7 of the AGI worksheet is less than or equal to: | Married filing a joint return. Line 7 of the AGI worksheet is less than or equal to: | |||
| 0 | $14,000 $25,200 | $16,400 $28,700 | |||
1 | $15,400 $26,950 | $17,400 $30,450 | |||
2 | $16,400 $28,700 | $18,400 $32,200 | |||
3 | $17,400 $30,450 | $19,400 $33,950 | |||
4 | $18,400 $32,200 | $20,400 $35,700 | |||
5 | $19,400 $33,950 | $21,400 $37,450 | |||
6 | $20,400 $35,700 | $22,400 $39,200 | |||
|
| you may qualify for the Limited Income Credit |
| you may qualify for the Limited Income Credit | |
Income threshold for single regardless of dependents is $8,000. Taxpayer's Massachusetts adjusted gross income of $13,500 does not qualify for no tax status.
Limited Income Credit (LIC):
Since Massachusetts adjusted gross income is $14,000 or less, this taxpayer may qualify for LIC.
| 2012 Form 1, Line 29 Worksheet - Limited Income Credit (Only if Single, Head of Household, or Married Filing Jointly) If you do not qualify for No Tax Status, but you are single and your Massachusetts AGI is between $8,000 and $14,000, or if you are filing as head of household and your Massachusetts AGI is between $14,400 and $25,200 plus $1,750 per dependent, or if you are married filing a joint return and your Massachusetts AGI is between $16,400 and $28,700 plus $1,750 per dependent, you may qualify for the Limited Income Credit. This credit is an alternative tax calculation that can result in a significant tax reduction for people whose income is close to the No Tax Status threshold. |
| Line 1. Enter amount from line 7 of Massachusetts AGI Worksheet | $13,500 |
| Line 2. Enter $8,000 if single. If married filing a joint return or head of household, enter the amount from the No Tax Status column of the No Tax Status/Limited Income Credit Chart | $8,000 |
| Line 3. Subtract line 2 from line 1 | $5,500 |
| Line 4. Enter in line 4 the amount of tax from Form 1, line 28 less any Credit Recapture Amount entered in line 25 and/or Additional Tax on Installment Sales on line 26 | $695 |
| Line 5. Multiply line 3 by 10% (.10) | $550 |
| Line 6. If line 4 is smaller than line 5, you are not eligible for this credit. Enter "0." If line 4 is larger than line 5, subtract line 5 from line 4 and enter the result here and in line 29 on Form 1 | $145 |
| Line 4 Tax Computation: | |
| 5.25% income | $9,500 |
| less exemptions | ($5,400) |
| taxable income | $4,100 |
| tax rate | .0525 |
| tax $4,100 x.0525 | $215 |
| 12% income | $4,000 |
| tax rate | .12 |
| tax $4,000 x.12 | $480 |
Total tax ($215+$480) | $695 |
Example #4 - Nonresident Working in Massachusetts Who Qualifies for both EIC and LIC
Husband and wife, full year residents of Rhode Island
Married filing joint for Massachusetts
Dependents = 3 (ages 11, 16, 18)
W-2 information:
| Husband's W-2: | Wife's W-2: | |||
| RI wages | $9,286 | MA wages | $10,214 | |
| State W/H | $130 | State W/H | $510 | |
| SS W/H | $645 | SS W/H | $230 | |
| Medicare tax W/H | $150 | Medicare tax W/H | $75 |
Other Income:
- US Treasury bond interest = $200
Deductions and Credits:
- Rent paid = $750 per month in Rhode Island
- Federal Earned Income Credit = $2,173
| 2012 Form 1-NR/PY | |
Line 1. Filing Status - Married Filing Joint Return |
|
Line 3. Total Income from U.S. 1040, Line 22 (combined wages & interest) | $19,700 |
Line 4. Exemptions |
|
| 4a Personal exemptions 4b Number of dependents 3 x 1,000 | $8,800 $3,000 |
| Line 4f. Total exemptions | $11,800 |
| Line 5. Wages | $10,214 |
| Line 12. TOTAL 5.25% INCOME | $10,214 |
| Line 14 NONRESIDENT DEDUCTION AND EXEMPTION RATIO: | |
| 14a. Total 5.25% income (from line 12) | $10,214 |
14b. Interest Income (smaller of Line 7a or 7b) | $0 |
14c. Total capital gain income (from Sch B and D) | $0 |
14d. Total income this return | $10,214 |
14e. Non-Massachusetts source income that would be taxable to a MA resident. (R.I. wages included; interest from U.S. Treasury bonds excluded) | $9,286 |
14f. Total income. Add 14d and 14e (gross income that would | $19,500 |
14g. Deduction and Exemption ratio 14d/14f | .5238 |
| Line 15. Amount paid to Soc. Sec.(deduction must be directly related to income reported $230 + $75) | $305 |
| Line 17. Number of dependent members of household. Not more than two: a. 1 x $3,600 = $3,600 * .5238 (Nonresidents multiply by 14g) | $1,886 |
| Line 20. TOTAL DEDUCTIONS | $2,191 |
| Line 21. 5.25% INCOME AFTER DEDUCTIONS | $8,023 |
| Line 22. Exemption amount a. $11,800 * .5238 (Nonresidents multiply by 14g) | $6,180 |
| Line 23. 5.25% INCOME AFTER EXEMPTIONS | $1,843 |
| Line 25. TOTAL TAXABLE 5.25% INCOME | $1,843 |
| Line 26. TAX ON 5.25% INCOME | $97 |
| Line 32. TOTAL INCOME TAX | $97 |
| Line 33. Limited Income Credit | $87 |
| Line 35. Total Credits | $87 |
| Line 36. TAX AFTER CREDITS | $10 |
| Line 40. TAX AFTER CREDITS, CONTRIBUTIONS, USE TAX and HC PENALTY | $10 |
| Line 41. Massachusetts income tax withheld | $510 |
| Line 45. Earned income Credit a. $2,173 x .15 = 326 * .5238 Qualifying children 2 (Nonresidents multiply by 14g ) | $171 |
| Line 48. TOTAL. Add lines 40 through 45 | $681 |
| Line 49. OVERPAYMENT. If line 40 is smaller than line 48, subtract line 40 from line 48 | $671 |
Does the Taxpayer have a Filing Requirement?
| Massachusetts source income Total Income from all sources Ratio of Massachusetts Personal Exemption | = $10,214 = $19,500 = $10,214/19,500= .5238 = $8,800 x .5238 = $4,609 |
No Tax Status or Limited Income Credit:
Nonresidents must use adjusted gross income as if they were Massachusetts residents to determine if they qualify for either NTS or LIC. As full year Massachusetts residents filing jointly with three dependents, taxpayers' Massachusetts adjusted gross income is $19,500 which exceeds the maximum amount allowable to qualify for NTS; amount may, however, qualify taxpayers for LIC.
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