Health Care Mandate Information
Tax Questions - Massachusetts Law
Tax Questions - Massachusetts Law tied to Federal Law
1. When am I required to file a tax return in Massachusetts?
Every individual inhabitant who receives or accrues Massachusetts gross income in excess of $8,000 must make a return of such income.
Full year residents who receive or accrue Massachusetts gross income in excess of $8,000 during the taxable year are required to file a Massachusetts income tax return. Residents file Massachusetts Form 1 – Resident Individual Income Tax Return.
Nonresidents are required to file income tax returns with Massachusetts if their Massachusetts gross income (derived from sources within Massachusetts) exceeds either $8,000 or the prorated personal exemption to which they are entitled, whichever is less. Nonresidents file Massachusetts Form 1 NR/PY- Nonresident/Part-Year Resident Individual Income Tax Return.
Part-year residents who receive or accrue Massachusetts gross income in excess of $8,000 during the taxable year are required to file a Massachusetts income tax return. Part-year residents file Massachusetts Form 1 NR/PY- Nonresident/Part-Year Resident Individual Income Tax Return.
A more in-depth explanation of Filing Requirements is available in the Guide to Taxes.
The fastest and most accurate method of filing your return is through one of the Department of Revenue's electronic filing (e-filing) methods. You can e-file your return either through DOR's free WebFile for Income program, through a professional tax preparer, or by using a DOR-approved commercial software package. You may also opt to file either a 2-D barcoded paper return or traditional paper return.
Returns are processed in the following priority:
- WebFile and Electronic Filing
- 2-D Barcoding
- Traditional paper return (without 2-D barcodes); you will need to submit a paper Form 1 file size 1MB or Form 1-NR/PY file size 1MB.
Additional information is available regarding Filing Options.
The fastest and most accurate method of filing your return and processing your refund is through one of the Department of Revenue's electronic filing (e-filing) methods. You can e-file your return either through DOR's free WebFile program, through a professional tax preparer, or by using a DOR-approved commercial software package.
File as early in the tax season as possible but not before receipt of all relevant tax statements (W-2s, 1099s etc.) and, because errors can delay processing of your refund, be sure to double-check the following before submitting your tax return to DOR:
- name, address and social security number; joint returns must list both social security numbers;
- filing status box at the top of the return;
- number of exemptions;
- mark an "X" in any form or schedule box that shows a loss.
If filing a paper return:
- make sure you have enclosed the state copy of your Form W-2 and all applicable schedules;
- if your filing status is Married Filing Separate and you are claiming more than the maximum rental deduction of $1,500 enclose a statement signed by your spouse, listing his/her name, address, social security number and the amount of rental deduction being taken by each of you;
- make sure you have signed your return; both spouses must sign a joint return. Unsigned returns will be returned for signatures.
For nonresidents and part-year residents:
- make sure your W-2 reflects the correct amount of your Massachusetts wages. Otherwise, submit a corrected W-2 or a letter from your employer verifying the wages you are reporting or the apportionment method you are using;
- if the amount on line 14f exceeds the total income on line 3 by more than 10%, you should enclose a statement explaining the difference;
- you may not report losses from sources out of Massachusetts;
- make sure that any deductions you claim must be related to income reported on your return.
If a refund on a married joint tax return was intercepted by the Department of Revenue to satisfy a liability incurred solely by one spouse, the nondebtor spouse may file Form 8379 "Nondebtor Spouse Claim and Allocation for Refund Due." However, this form is not applicable if your joint refund was applied to satisfy a past due tax owed jointly to the Commonwealth of Massachusetts; You, as an individual filed jointly but made no tax payments for the tax year at issue; or your are liable for any past due tax payments to the Commonwealth of Massachusetts. Please note also that submission of Form M-8379 with the filing of a married joint tax return does not prevent the intercept from taking place. This form should only be submitted after receipt of the intercept notice.
Inquiries related to intercepts by the Child Support Enforcement Agency, other state agencies or the IRS need to be addressed to those agencies as instructed on the intercept notice.
Yes. If you do not have the money to pay the total amount you owe on your return and cannot pay the minimum 80 percent required to qualify for an extension, you are still required to file on time and pay what you can. By filing on time, you will not be billed for any late filing penalties. DOR will bill you for the balance due, plus interest and late payment penalty.
If you are unable to pay in full the tax bill you receive and the amount due is less than $5,000, you may set up a payment agreement. To determine if you qualify, you may access the online Payment Agreement application. Alternatively, you can contact DOR's Customer Service Bureau for a small payment agreement. Affected taxpayers are encouraged to act on this opportunity quickly in order to avoid collection activity, including the levy of bank accounts and wages. Setting up a small payment agreement will allow you to make monthly payments to meet your tax obligation. Please be advised that, during the payment agreement period, interest and penalties will continue to accrue on any unpaid balance.
Keep in mind also that you cannot request a payment plan until the Department of Revenue has billed you. However, you can make online payments via our WebFile for Income prior to receiving a bill. Once you have received the bill, you can apply for the payment agreement online, or by calling DOR at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089 twenty-four hours a day. Please have a copy of your bill handy when you place the call.
Touch-tone callers who qualify for a small payment agreement using our automated system may be eligible to pay their entire liability using Electronic Funds Withdrawal or a Credit Card (VISA, MasterCard, Discover or Novus brand card).
Please note: if the amount of tax that you owe is $5,000 or more, your payment agreement request should be directed to the Collections Bureau at 617-887-6400.
Yes. If you are unable to meet the income tax filing deadline, you may apply for an automatic six-month extension of time to file your Massachusetts personal income tax return and to make payments. The federal automatic extension of time to file is also six months.
You may request an extension via the web or by filling out a paper form:
- DOR's WebFile for Income; or
- Massachusetts Form M-4868 , Application for Automatic Six-Month Extension, granting an automatic six-month extension. This form is available for those filing Form 1 and Form 1 NR/PY return.
Extension must be filed electronically if you either owe no tax; or are making a payment of $5,000 or more with the extension and will be filing a return for the period January 1 - December 31, 2015.
If the amount of tax due is "0" and 100% of the tax due for the taxable year has been paid through: withholding; timely estimated payments of tax; credits from your current year's Rreturn, or a refund from the prior tax year applied to the current year's tax liability, taxpayer is no longer required to file Form M-4868 or Form M-8736 . See TIR 06-21.
For more information, see Automatic Extensions on the Web.
An extension is valid only if a taxpayer pays at least 80% of the total tax liability by the original due date which may include payments through withholding, estimated payments and payments made with the extension.
The Automatic Extension of Time to File is generally limited to the six-month period. An exception to allow an extension beyond the six-month period may apply to military personnel stationed in a combat area and certain taxpayers who reside abroad and qualify for a longer extension under U.S. Guidelines.
Yes. Interest and penalties will be charged if you file and pay after the due date (April 19, 2016), unless you have a valid extension on file with the Massachusetts Department of Revenue.
It is also important to note that individuals whose expected tax due on taxable income not subject to withholding exceeds $400 are required to make estimated tax payments during the year, with Form 1-ES , Estimated Tax Payment Vouchers.
After filing your Massachusetts income tax return, if you receive an additional tax statement such as a W-2 or Form 1099, or discover that an error was made, do not submit a second tax return. If corrections are necessary, you must file an amended tax return. The fastest and easiest way to make this correction is by using WebFile for Income . Otherwise a Form CA-6 , Application for Abatement/Amended Return, should be filed.
If a W-2 is not received, you should first contact your employer to verify whether the W-2 statement was mailed to the correct address. You may also call the IRS at 800-829-1040 after February 15 to request a U.S. Form 4852, Substitute for Missing Form W-2, if necessary to meet the filing deadline. Substitute forms should be requested only after all reasonable attempts have been made to get the document from an employer. The state tax withholding must be verified with a copy of the employee's final pay stub. This amount should be included on the form in an unused box and titled as Massachusetts state tax withheld.
A more in-depth explanation is available in the Wages, Salaries, Tips and Other Employee Compensation section of the Guide to Taxes.
If you move after filing your Massachusetts income tax return, be sure to leave a forwarding address with your local Post Office. To change your address, we recommend that you use WebFile for Income or call the Department of Revenue at 617- 887-MDOR or toll-free in Massachusetts at 800-392-6089 (our automated phone change of address system is available after regular business hours for your convenience).
The U.S. Postal Service generally forwards checks. However, if you want to determine the status of your refund or whether your check has been returned by the Post Office as undeliverable, you can do so by calling our automated refund line at 617-887-MDOR or toll-free in Massachusetts at 800-392-6089, 24 hours a day or by accessing the WebFile for Income application.
A final income tax return must be filed by the due date in 2016 for a taxpayer who died in 2015. As the surviving spouse, you may file a joint return. Be sure to fill in oval 1 if the taxpayer who was listed first on last year's income tax return is deceased or oval 2 if the taxpayer who was listed second on last year's income tax return is deceased. Any income received for your deceased spouse for 2015 and for any succeeding taxable years until the estate is completed, must be reported each year on Massachusetts Form 2 file size 1MB, Fiduciary Income Tax Return.
Generally, a taxpayer is required to make estimated payments if the expected tax due after credits and withholding exceeds $400. Additional detailed information can be found in TIR 04-25. To avoid penalty charges, taxes on this income must be paid in quarterly installments using Form 1-ES, Estimated Income Tax Vouchers for Individuals or Form 2-ES, Estimated Income Tax Vouchers for Fiduciaries, Corporate Trusts and Other Unincorporated Organizations. You may make estimated payments using one of the following:
- WebFile for Income
- Form 1-ES , Estimated Income Tax Vouchers for Individuals; or
- Form 2-ES , Estimated Income Tax Vouchers for Fiduciaries, Corporate Trusts and Other Unincorporated Organizations.
You may also view or verify any estimated tax payments you may have made to the DOR via WebFile for Income .
A Form 1099G notifies you of your 2014 Massachusetts income tax overpayment received in 2015. This overpayment amount may be considered income required to be reported on your 2015 Federal 1040, line 10, Taxable Refunds, if you itemized your deductions on Schedule A in 2014 and the amount you claimed for state income taxes was the withholding amount and/or total estimated payment amounts made in 2014.
Massachusetts allows same-sex couples to be married, and they may either file as married filing separately or married filing jointly in Massachusetts. As a result of the U.S. Supreme Court decision, United States v. Windsor, 133 S. Ct. 2675 (2013), same-sex married couples from now on will file their federal tax returns as married persons, jointly or separately. See Rev. Rul. 2013-17 and any subsequent federal guidance. Same-sex married couples will no longer be required to combine amounts from two separate federal returns in order to file a Massachusetts joint return, but instead will simply carry information from the federal return to the state return according the rules for married filers.
DOR follows the federal rules for granting an extension of time to file income tax returns and to pay taxes due for those serving in a combat zone, or hospitalized as a result of such service, during the period designated as the period of combatant activities. This extension applies to members of the armed forces, as well as individuals serving in support of the armed forces, serving in a combat zone. The extension period is for the time of service in the combat zone area or hospitalization attributable to such service plus 180 days. Additional detailed information can be found in TIR 04-05.
No interest or penalties will be charged during the extension period on taxes due for the tax year. The extension of time to file returns also applies to spouses of personnel serving in combat areas if a joint return is filed. Taxpayers claiming an extension of time to file a return or pay tax under this provision of law should write "COMBAT ZONE" on the income tax envelope and on the top of the income tax return that they submit to the Department of Revenue. If filing electronically, taxpayers should write "COMBAT ZONE" next to their name, or if necessary, on one of the address lines on the form, along with the date of deployment.
Tax Questions - Massachusetts Law
Please refer to:
- The tax rate on Part (B) income, which includes income such as wages, pensions, business income, rents, etc. as well as Part (A) interest and dividend income is 5.15%;
- The tax rate on Part (A) income, which includes short term capital gains, long term gains resulting from the sale of collectibles and pre-1996 installment sale is 12 percent;
Note: A 50 percent deduction is allowed on gains from the sale of collectibles and pre-1996 installment sales.
- The tax rate on Part (C) income, which includes long-term capital gains, except for collectibles and pre-1996 installment sales is 5.15% tax.
Recent legislation has also given taxpayers the opportunity to elect to voluntarily pay tax at a rate of 5.85 percent on taxable income which would otherwise be taxed at 5.2 percent. This option is not applicable to short term gains and gains on collectibles which remain subject to the 12% tax rate.
Income received from a contributory annuity, pension, endowment or retirement fund of the Commonwealth of Massachusetts and its political subdivisions or the U.S. government is exempt from taxation in Massachusetts.
Income from a contributory public employee retirement plan of another state received by a Massachusetts resident may be deducted from Massachusetts adjusted gross income if the other state grants reciprocal treatment to retirees from Massachusetts living there. Certain other states may allow a partial exclusion for such pension income. The entire contributory public retirement pension received from another state as a resident is reported on the pension line and the exempt portion is deducted on Schedule Y. For further information, refer to TIR 95-9: Income Taxation of Contributory Public Employee Pensions of Other States.
Noncontributory military pension income and survivorship benefits received on or after January 1, 1997 from the U.S. uniformed services are exempt from taxation in Massachusetts. U.S. uniformed services are defined as the Army, Navy, Marine Corps, Air Force, Coast Guard, commissioned corps of the Public Health Service and National Oceanic and Atmospheric Administration. Generally, pensions associated with service in the Massachusetts National Guard do not qualify for this exclusion.
For nonresidents, Public Law 104-95 prevents any state from taxing income from certain pensions and deferred compensation plans paid to nonresidents of that state. For an in-depth listing of those pensions not taxable to nonresidents, see Nonresident Pension Distributions .
Please note that private pensions are generally taxable following federal guidelines.
Non-Roth IRA distributions received by a full-year and/or part-year resident are not taxed in Massachusetts until the original contributions that were previously taxed by Massachusetts are fully recovered. Only those contributions that have been made by taxpayers while Massachusetts residents are considered.
Nonresidents are not subject to tax on these distributions, nor are they taxed on rollover amounts into Roth IRAs in Massachusetts. Massachusetts follows the federal rules concerning rollovers from existing IRAs to Roth IRAs. However, similar to the Massachusetts treatment of IRA distributions, the amount includible on the Massachusetts return by a Massachusetts full-year and/or part-year resident will only include the amounts in excess of the original contributions that were previously taxed by Massachusetts.
An IRA/Keogh Plan and Roth IRA Conversion Distributions Worksheet Example is available in the Guide to Taxes.
Interest or dividends from mutual funds which invest in U.S. or Massachusetts's obligations (e.g. treasury bills, bonds, notes, savings bonds or other obligations of the United States or Massachusetts) are exempt from taxation in Massachusetts. The statement issued by the mutual fund should include what percentage, if any, may be from tax exempt obligations, interest or dividends from state or local governments other than Massachusetts are fully taxable. Certain obligations which may be insured by the U.S. government but are not a debt obligation of the U.S. government are not exempt. Such obligations include Government National Mortgage Associate (GNMA), Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corp. Unlike the federal government, interest or dividends from non-Massachusetts obligations are subject to tax in Massachusetts.
It is important to note that capital gains from the sale of government obligations are generally taxable in Massachusetts. The capital gain is reported on Schedule B if the obligation is for one year or less. If held for more than one year, it should be reported on Schedule D. For more information, please refer to TIR 80-2: Income Tax Treatment of Interest and Gains on Certain Bonds, and TIR 89-8: Income Tax Treatment of Interest and Gains on Federal Obligations: IRA Distributions Consisting of Interest Derived from Federal Obligations.
Massachusetts does not tax benefits received from U.S. Social Security, Railroad Retirement (Tier I and II), Public Welfare assistance, Veterans' Administration payments or workers' compensation. Any portion of such income, which may be taxed under federal law, is not subject to Massachusetts's income tax. Since Massachusetts does not tax Social Security benefits, the deductions related to that income such as Medicare tax withheld are not allowed. In addition, it is to be noted that total Social Security benefits will be included in the income calculation on Schedule CB for purposes of claiming the Circuit Breaker Credit.
Massachusetts generally follows the federal rules governing scholarships. If you receive a scholarship or fellowship grant, you may be able to exclude from income all or part of the amounts you receive. Only a candidate for a degree can exclude amounts received as a qualified scholarship. A qualified scholarship is any amount you receive that is for either tuition and fees to attend an educational organization or fees, books supplies and equipment required for courses at the educational institution.
Scholarships and fellowship amounts used for room and board do not qualify. However, scholarship and fellowship amounts received by a nonresident, which are specifically designated for use as living expenses would not be subject to Massachusetts personal income tax.
Please note: since the federal line item references for Form 1040NR and 1040NR-EZ on line 3 of Massachusetts Form 1-NR/PY include qualified scholarships, taxpayers need to exclude the applicable amounts on Massachusetts Form 1-NR/PY when computing the deduction and exemption ratio.
The Massachusetts Undergraduate Student Loan interest deduction allows taxpayers to deduct the full amount of interest payments on education debt for undergraduate studies only. The loan must have been obtained and spent to pay tuition and other expenses related solely to the school enrollment. Taxpayers may take the deduction on Schedule Y, line 12.
The federal based student loan interest deduction applies to interest payments for both undergraduate and graduate studies. The Maximum deduction allowed is $2,500, but the amount is phased out for taxpayers whose federal modified adjusted gross income exceeds certain amounts. Taxpayers can claim this deduction on Schedule Y, line 10.
Generally, taxpayers can claim either the federal student loan interest deduction or the Undergraduate Student Loan interest deduction, but not both. However in certain instances, the same taxpayer may take both deductions as long as the deductions pertain to separate loan payments. (i.e. on line 10 for a graduate loan, on line 12 of Schedule Y for an undergraduate loan.)
A Massachusetts full-year and/or part-year resident is entitled to claim a credit for incomes taxes paid to other states on income reported and taxed in Massachusetts. No credit is allowed for city, local, property, excise taxes as well as for taxes paid to the federal government. The credit is, however, allowed for income taxes paid to the following jurisdictions:
- Any territory or dependency of the U.S including Puerto Rico, the Virgin Islands, Guam, the District of Columbia; and
- The Dominion of Canada.
The credit is the smaller of the apportioned Massachusetts tax and the tax paid on such income to the other jurisdictions.
Note: A part-year resident is only allowed credit for taxes paid on income earned and/or received during the Massachusetts residency period; nonresidents are not eligible for this credit. Nonresidents do not qualify for this credit.
A more in-depth explanation of the Taxes Paid to Other Jurisdiction Credit and examples for filling out the worksheets is available in the Guide for Taxes.
If you are 65 or older before January 1, 2015, you may be entitled to the Circuit Breaker Credit if all of the following conditions are met for tax year 2015:
- you own or rent residential property in Massachusetts and occupy the property as your principal residence;
- your real estate's assessed valuation does not exceed $693,000;
- you are not the dependent of another taxpayer;
- your filing status cannot be "married filing separate;"
- you do not receive a federal or state rent subsidy;
- your total income (including such items as social security, pensions, tax-exempt interest & dividends, IRAs, certain capital gains/losses and certain other types of income identified as income cannot exceed $57,000 if you are a single filer; $71,000 if you file as head of household; or $85,000 if filing jointly.
For tax year 2015, the maximum credit is $1,070.
If you are an eligible homeowner, you may claim a credit equal to the amount by which your property tax payments in the current year, including 50 percent of water and sewer use charges, exceed 10 percent of your total income.
If you are an eligible renter, you may claim a credit in the amount by which 25 percent of your annual rental payment exceeds 10 percent of your total income.
Eligible taxpayers are required to enclose Schedule CB , Circuit Breaker Credit, with their tax return. Taxpayers not otherwise required to file a personal income tax return are entitled to obtain the credit by filing a return and claiming a refund.
A more in-depth explanation of the Circuit Breaker Credit is available in the Guide to Taxes.
This is a refundable credit paid to certain low income taxpayers who qualify for and claim the federal Earned Income Credit allowed under the Internal Revenue Code. You may claim the credit even though you do not owe any taxes nor have any income taxes withheld from your pay. To receive the credit, you must file a tax return and claim the credit. This refundable Massachusetts credit is 15 percent of the federal credit. The IRS provides an Earned Income Credit table based on the credit available for modified adjusted gross income. The maximum credit allowed is 1) $75.45 with no qualifying children; 2) $503.85 with one qualifying child; and 3) $832.20 with two qualifying children; and 4) $936.30 with 3 or more qualifying children.
Nonresidents are entitled to the Earned Income Tax Credit (EITC) if they have Massachusetts source earned income even if they do not have a filing requirement. The credit is limited to 15 percent of the federal credit multiplied by a fraction; the numerator of which is the earned income of the nonresident derived from sources from within Massachusetts and the denominator of which is the earned income of the nonresident from all sources, as if the taxpayer were a full year Massachusetts resident.
Individuals who purchase taxable tangible personal property for use in Massachusetts from out-of-state businesses that do not collect Massachusetts sales and use tax must self-assess their use tax liability and remit the amount directly to the Department of Revenue. Examples of taxable items include computers, furniture, jewelry, cameras, appliances and any other item that is not exempt. The Massachusetts use tax is 5 percent of the sales price or rental charge of tangible personal property on which no Massachusetts sales tax was paid, where the property was purchased to be used, stored or consumed in the Commonwealth.
To compute the amount of use tax due, taxpayers may either:
- Compute the actual amount due with respect to such purchases by using the Form 1, line 33 or Form 1-NR/PY, line 38 worksheets; or
- Use a schedule to identify a "safe harbor" amount of use tax that they can self-assess when filing their income tax returns, based on the taxpayer's Massachusetts adjusted gross income. If this method is used, however, the estimated liability is only applicable to purchases of any individual item having a total sales price of less than $1,000. These purchases are not part of the safe harbor estimate and must be calculated separately.
Use tax does not apply to nonresidents.
For more information on technical tax questions, please see the various guides published by DOR.
Tax Questions - Massachusetts Law tied to Federal Law
29. Does Massachusetts follow the Internal Revenue Code for Qualified Tuition Programs?
Massachusetts follows the federal treatment of qualified prepaid tuition programs governed by Section 529 of the Internal Revenue Code. Distributions from qualified prepaid tuition plans will not be subject to tax if used for higher education.
A more in-depth explanation of Qualified Tuition Programs is available in the Guide to Taxes
30. Does Massachusetts follow the Internal Revenue Code for the treatment of qualified pension plans?
Massachusetts follows the federal treatment of qualified plans and other tax favored retirement plans covered under IRC Section 72, Sections 401 through 420 inclusive and Section 457.
This applies to income tax contributions limits for elective deferrals, catch-up contributions for those ages 50 or older and qualified rollover of plan proceeds. In addition, retirement plan contributions and distributions excluded from Federal Gross Income will also be excluded from Massachusetts Gross Income. Under prior law, Massachusetts followed the IRC as amended and in effect on January 1, 1998. For further detailed information, you may refer to TIR 02-18: Tax Changes Contained in "An Act Enhancing State Revenues" and Related Acts.