General Rules

Taxpayers must make estimated payments if the expected tax due on taxable income not subject to withholding exceeds certain thresholds as determined by the Commissioner of Revenue. This is to ensure that taxpayers are able to meet the statutory requirement that taxes due are paid periodically as income is received during the year. Taxpayers are required to file declarations of estimated tax and pay such tax in four installments.

Taxpayers are generally required to pay at least 80% of their annual income tax liability before the year's return is filed. This requirement is met through withholding and by making estimated tax payments on any income that is not subject to withholding.

Qualified Farmers or Fisherman - Special Provisions:
An individual qualifies as a farmer or fisherman for any taxable year if his/her gross income from farming or fishing is at least two-thirds of his/her annual gross income.

Farmers and fishermen are generally required to pay at least 66 2/3% rather than the 80% of their annual income tax liability before the year's return is filed. Each installment is 25% of the required annual payment and should be paid along with a filled out Estimated Tax Payment Voucher as follows:

Who Must Pay Estimated Tax:

  • for an individual - if the expected tax due on taxable income not subject to withholding exceeds $400;
  • for a fiduciary, corporate trust or non-profit organization not engaged in business for profit - if the expected tax due on taxable income exceeds $400.

Types of Income from which taxpayers may not have had taxes withheld:

  • Salaries and wages from employment not subject to Massachusetts withholding;
  • Unemployment compensation (if you did not elect voluntary Massachusetts withholding)
  • Dividends and interest income;
  • Gains from the sale or exchange of capital assets;
  • Income from a trade, business, profession, partnership or S corporation;
  • Income from an estate or trust;
  • Certain Lottery or gambling winnings;
  • Income from certain pensions or retirement savings plan;
  • Rental income.


Example where Taxpayer Must File Estimated Taxes:

Estimated Tax Worksheet
Wages= $45,000
Interest and Dividends= $15,000
Total Income= $60,000
Less: Deductions/Exemptions= ($16,000)
Taxable Income= $43,400
Estimate of Income Tax ($43,400 x .0525)= $2,279
Amount of this Tax Expected to be Withheld= $1,679
Estimated Tax= $600
80% of Estimated Tax Due ($600 x .80)= $480

Calculating the Estimated Tax

Taxpayers should fill out either the:

Taxpayers should then pay the amount calculated in four installments with either:

To determine the correct estimated tax on the worksheet, credits are applied in the following order:

  1. credits allowed under G.L. c. 62 other than s. 6. which are the limited income credit and full employment credit; and
  2. credits allowed under G.L. c. 62, s. 6. which are: taxes paid to other jurisdiction credit; energy credit; lead paint removal credit; economic opportunity area credit; earned income credit; and repair or replacement of failed cesspool or septic system credit.


Installment Payment Requirements for Each Taxable Year:
Each installment is 25% of the required annual payment and should be paid along with a filled out Estimated Tax Payment Voucher as follows:

InstallmentDue Date of Installment
#1April 15 of the taxable year
#2June 15 of the taxable year
#3September 15 of the taxable year
#4January 15 of the succeeding table year

                                                                     
Due date for filing tax returns

Submitting Installment Payments:
Estimated tax payments can be made online by visiting DOR's WebFile for Income or they can be mailed to :
MDOR
PO Box 7007
Boston, MA 02204

Verification of Installment Payments - IVR and Website:
Taxpayers may access the total amount of their estimated tax payments as captured on MASSTAX by either calling the IVR (Interactive Voice Response) at 617-887-6367 or 1-800-392-6089 or by visiting DOR's WebFile for Income . Taxpayers must provide their Social Security Numbers and either their refund or balance due amounts from last year. If practitioners call for their clients, they will authenticate the call using their PTINs or SSNs.

Annualized Income:  
Estimated tax for annualized income allows taxpayers who earn their income unevenly throughout the year to adjust their estimated installment payments by annualizing their income.


Overpayment Applied to Estimated Tax for Succeeding Taxable Year:
If an overpayment of tax is claimed as a credit against estimated tax for the succeeding taxable year, it will be considered as a payment of tax for the succeeding taxable year.

This means that a taxpayer may request that a portion of his overpayment of taxes, (refund), be carried forward as a credit to estimated payments for the succeeding taxable year.

Overpayment May Not Be Refunded:
Once an election is made to apply an overpayment to the succeeding year, it cannot be refunded later or applied to any additional tax owed in the taxable year in which the overpayment was incurred.

Also, if an amended return is filed, the estimated carry forward amount originally requested and properly allowed cannot be increased or decreased.

Prior Year and Current Year Payments:

All forms provide a line for the overpayment carried forward from the prior year and a separate line for current year payments.


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

For Individuals

  • The amount of estimated taxes paid on 1-ES vouchers is reported on either Mass Form 1, Line 38 or 1-NR/PY, Line 43.
  • The amount of estimated tax to be applied to the succeeding taxable year is reported on Mass Form 1, Line 45 or 1-NR/PY, Line 50.

Massachusetts References:


Return to Personal Income Tax Issues