Interest Earned from:Where to Report:
Certificates of Deposit (CD) held in a Massachusetts bank:Qualifies as MA bank interest; amount is reported on Form 1, Line 10 or 1-NR/PY, Line 12, and qualifies for either $200 or $100 exemption. Amount less exemption is taxed at 5.2%
Certificates of Deposit (CD) held in a non-Massachusetts bank:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Installment sales:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Insurance policies:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Loans made by an individual or company:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Loans made by pawnbrokers in the course of business:Qualifies as MA bank interest; amount is reported on Form 1, Line 10 or 1-NR/PY, Line 12, and qualifies for either $200 or $100 exemption. Amount less exemption is taxed at 5.2%
Massachusetts banks on deposit accounts including term and time deposits, savings accounts, savings shares and NOW accounts. The interest is from savings banks, credit unions, federal savings and loan associations, etc. located in the Commonwealth:Qualifies as MA bank interest; amount is reported on Form 1, Line 10 or 1-NR/PY, Line 12, and qualifies for either $200 or $100 exemption. Amount less exemption is taxed at 5.2%
Money Market Deposit Accounts in Massachusetts banks:Qualifies as MA bank interest; amount is reported on Form 1, Line 10 or 1-NR/PY, Line 12, and qualifies for either $200 or $100 exemption. Amount less exemption is taxed at 5.2%
Money Market Deposit Accounts in financial institutions other than Massachusetts banks, credit unions etc.,(e.g. Fidelity):Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Non-Massachusetts banks on deposit accounts including term and time deposits, savings accounts, savings shares and NOW accounts. The interest is from savings banks, credit unions, federal savings and loan associations, etc. located outside the Commonwealth:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Real estate tax escrow accounts. Interest earned on real estate taxes collected with mortgage payments and held in escrow by the bank until taxes are due if the bank is in Massachusetts:Qualifies as MA bank interest; amount is reported on Form 1, Line 10 or 1-NR/PY, 5.2% income, and qualifies for either $200 or $100 exemption. Amount less exemption is taxed at 5.2%
Real estate tax escrow accounts. Interest earned on real estate taxes collected with mortgage payments and held in escrow by the bank until taxes are due if the bank is outside Massachusetts:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
Tax Refunds from any tax agency, e.g. Massachusetts tax refund, federal tax refund, property tax refund, etc.:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
U.S. and State/Municipal Obligations:
State/Municipal Obligations from Massachusetts that are excluded under I.R.C. Section 103:Generally, interest from obligations issued by the Commonwealth, or any political subdivision thereof is exempt. See TIR 80-2 and TIR 89-8 for a list of taxable versus exempt bonds.
State/Municipal Obligations other than Massachusetts that are excluded under I.R.C. Section 103:Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
U.S. Obligations that are secondary, indirect obligations such as "Freddie Mac" "Ginnie Mae" and "Fannie Mae":Does not qualify as MA bank interest; amount is reported on Schedule B and taxed at 5.2%
U.S. Obligations that are direct obligation of the United States, including U.S. Treasury bills, notes, certain bonds and savings bonds received by the taxpayer as a beneficial owner:Interest from direct obligations of the United States is exempt. See TIR 80-2 and TIR 89-8 for a list of taxable versus exempt bonds.