Example 1:
During 2013, a full year resident taxpayer with adjusted gross income (AGI) of $65,000 purchases furniture for his Massachusetts personal residence from an out-of-state firm and pays no sales tax. The cost of the furniture is $2,500. The taxpayer is required to compute actual sales tax of $156 ($2,500 x .0625).

Example 2:
In addition to the $2,500 furniture purchased in example 1, the taxpayer purchases an appliance for his Massachusetts personal residence from an out-of-state firm. The cost of the appliance is $2,100 and the taxpayer pays sales tax of $165 to the out-of-state firm on the appliance.

Taxpayer would fill out the worksheet as follows:

2013 Form 1, Line 33 Worksheet (Line 38 for Form 1-NR/PY) - Use Tax Due on Out-of-State Purchases

A Massachusetts use tax of 6.25% is due on your taxable purchases of tangible personal property purchased for use in Massachusetts on which you did not pay Massachusetts sales or use tax. These include, but are not limited to, purchases made out-of-state, on the Internet or from a catalog, where no Massachusetts sales tax was paid. The use tax does not apply to out-of-state purchases that are exempt from the sales tax (for example, clothing that costs $175 or less).

Complete the Form 1, Line 33 Worksheet below to calculate your use tax if you are not reporting a “safe harbor” amount or if you purchased any individual items with a sales price of $1,000 or more.  If you did purchase items with a sales price over $1,000 and you are reporting a ”safe harbor” amount , add the amount form the worksheet line 4 to the “safe harbor” amount.

1. Total purchases in 2013 subject to Massachusetts use tax. Part-year residents, total purchases made while a Massachusetts resident.

$4,600

2. Use tax. Multiply line 1 by .0625 (6.25%)$288
3. Credit for sales/use tax paid to other states or jurisdictions. Add the amount of any sales/use tax paid to another state or jurisdiction, or 6.25% of the sales price, whichever is less, on each purchase reported on line 1

$131

4. Total amount due. Subtract line 3 from line 2. Not less than "0." Residents, enter the result here and on From 1, Line 33. Part-year residents, enter the amount here and on Form 1-NR/PY, line 38

$157


“Safe-harbor” Amount of Use Tax Based on their Massachusetts Adjusted Gross Income
Taxpayers may use a schedule to identify a "safe harbor" amount of use tax that they can self-assess when filing their income tax returns. The schedule is based on the taxpayer's Massachusetts adjusted gross income. This method can be used in lieu of computing the actual amount due with respect to such purchases on the Form 1, line 33 or Form 1-NR/PY, line 38 worksheet. Taxpayers electing to satisfy a use tax liability by estimating it shall calculate the liability in accordance with the schedule below. This method, however, only applies to purchases of items with a sales price less than $1,000. 

In Example #2, taxpayer would not have this option since both purchases were for $1,000 or more.

 
Massachusetts AGI Per Return*Use Tax liability
$0 - $25,000$0
$25,001 - $40,000$20
$40,001 - $60,000$31
$60,001 - $80,000$44
$80,001 - $100,000$56

If the Massachusetts AGI per return* is above $100,000, multiply by .000625.
* AGI per return: From line 7  Massachusetts AGI Worksheet. 

For more information on Use Tax Due on Out-of-State Purchases


Return to Personal Income Tax Issues