Administrative Procedure  AP 241: Estimated Income Tax Payments

Date:	01/25/2024
Organization:	Massachusetts Department of Revenue
Referenced Sources:	Massachusetts General Laws

241.1. Requirement to Make Estimated Income Tax Payments

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.

Taxpayers who expect to owe more than $400 in Massachusetts tax on income not subject to withholding must pay estimated taxes.  This requirement applies to individual residents and nonresidents, fiduciaries, clubs, or any other entity subject to taxation under G.L. c. 62.

Taxpayers who are members of pass-through entities that have paid the elective excise set forth in G.L. c. 63D are permitted to take into account the PTE credit in determining estimated income tax payments.

Starting with tax year 2023, personal income taxpayers must pay an additional 4% (4% surtax) on taxable income over $1,000,000, increased annually for inflation (surtax threshold). Taxpayers who reasonably expect to receive taxable income not subject to withholding that will cause the taxpayer’s taxable income to exceed the 4% surtax threshold must take this additional tax liability into account when determining the required estimated income tax payments for the taxable year.

Income from which taxpayers may not have had taxes withheld includes but is not limited to the following:

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 plans;
Rental income; and
Illegal income.

241.2. Making Estimated Income Tax Payments

Taxpayers filing the following Massachusetts income tax forms should use Massachusetts Form 1-ES to make estimated tax payments, or may pay electronically online at www.mass.gov/masstaxconnect:

Form 1, Resident Income Tax Return
Form 1-NR/PY, Nonresident or Part-Year Resident Income Tax Return
Form MA NRCR, Nonresident Composite Return (must be filed electronically)

Note: Nonresident composite filers using Form MA NRCR, other than professional athletic teams, are required to file and pay electronically.  See TIR 09-18 for electronic mandate information. Further, composite payments of estimated tax must satisfy the estimated payment obligations as provided in AP 241 for each electing non-resident with regard to the Massachusetts-source income of the pass-through entity. The filing agent shall make payments of estimated tax as an agent on behalf of the nonresident and the filer is generally not subject to the pass-through entity withholding rules in 830 CMR 62B.2.2, with regard to income reported on Form MA NRCR.

Effective for tax periods ending on or after December 31, 2021, taxpayers filing Form 2, Massachusetts Fiduciary Income Tax Return are required to make estimated payments of $2,500 or more electronically. See TIR 21-9. If not making an electronic payment, taxpayers should use Massachusetts Form 2-ES to make estimated tax payments.

Taxpayers filing the Form 3M, Income Tax Return for Clubs and Other Organizations Not Engaged in Business for Profit, or the Form M-990T-62, Exempt Trust and Unincorporated Association Income Tax Return, should use Massachusetts Form UBI-ES to make estimated tax payments or pay online. In fact, certain taxpayers are required to make payments by electronic means. All current electronic filing and payment requirements can be found on the Department’s website at: https://www.mass.gov/info-details/dor-e-filing-and-payment-requirements.To make a payment on-line visit www.mass.gov/masstaxconnect.

Taxpayers are urged to pay estimated taxes by electronic means to ensure fast and accurate processing.

Instead of making estimated payments, individual income taxpayers may request that their employers withhold additional amounts from their salaries to cover taxes on income that is not subject to withholding.  Taxpayers may make such a request on the Massachusetts Employees Withholding Exemption Certificate, Form M-4.

Taxpayers may also apply any refund they are due on an annual return to their estimated account for the following year.

An interactive application is available through DOR’s website at www.mass.gov/masstaxconnect that allows taxpayers to review their quarterly estimated payment histories at their convenience 24 hours a day.

241.3. When Payments Are Due

Calendar year taxpayers (January 1-December 31) must file the first payment voucher, Form 1-ES, Form 2-ES or Form UBI-ES, on or before April 15 of the taxable year.  The estimated tax may be paid in full with the first payment voucher or in four installments on or before April 15, June 15, September 15 of the taxable year and January 15 of the following year.  A completed voucher must accompany each payment unless payment is made electronically on-line.

Note: Form MA NRCR must be filed and paid based on the tax year of the eligible nonresident members. Since all the eligible members must have the same tax year, in most cases Form MA NRCR will be filed on a calendar year basis.

Fiscal year taxpayers must file their first payment voucher, Form 1-ES, Form 2-ES or Form UBI-ES, or pay using electronic means at www.mass.gov/masstaxconnect, on or before the fifteenth day of the fourth month of the fiscal year.  The estimated tax may be paid in full with the first payment voucher or in four equal installments on or before the fifteenth day of the fourth, sixth and ninth months of the fiscal year and the fifteenth day of the following fiscal year.  A completed voucher must accompany each payment that is not made electronically.

Taxpayers who must make estimated payments because of a change in their income or deductions after the due date of the first payment must make payments according to the following schedule:

Date of Change in Income or Deductions	Due Date of First Payment Voucher	Remaining Payment Date(s)
Between April 1 and May 31	June 15	September 15, January 15 of the following year
Between June 1 and August 31	September 15	January 15 of the following year
September 1 and thereafter	January 15 of the following year

241.4. Underpayment of Estimated Income Taxes

Taxpayers who have not paid at least 80% of their annual Massachusetts tax liability through Massachusetts estimated payments and/or withholding are, with certain exceptions, liable for an addition to tax.  The addition to tax or underpayment penalty is generally calculated at a rate based on the federal short-term rate plus four percentage points per year on the amount of the underpayment for the period of that underpayment.  Taxpayers who fail to meet the 80% requirement must complete and attach Massachusetts Form M-2210, Underpayment of Estimated Income Tax Return, to calculate the addition to tax.  The 80% requirement is reduced to 66.67% for individuals who receive two‑thirds of their income from fishing or farming.

No underpayment penalty is imposed if the taxpayer qualifies for one of the following exceptions:

Exception 1 - The tax due after withholding and credits is $400 or less.

Exception 2 - The taxpayer is a qualified farmer or fisherman and is paying the full amount of tax due on or before the first day of the third month of the following year.  To qualify, the taxpayer's gross income from farming or fishing must be two‑thirds of the annual gross income.

Exception 3 - The taxpayer was a Massachusetts resident and was not liable for taxes during the previous taxable year and the taxable year was 12 months.

Exception 4 - The taxpayer's estimated payments and withholding equal or exceed the total tax due for the previous taxable year and the taxable year was 12 months.

A waiver of the underpayment penalty is also available for one or more installments if:

1. The underpayment was by reason of casualty, disaster, or unusual circumstance; or

2. The taxpayer retired after reaching age 62 or became disabled during the taxable year for which the payments were due or during the taxable year preceding the year for which the payments were due and the underpayment was due to reasonable cause and not willful neglect.

For more information on estimated income tax payments, contact the Massachusetts Department of Revenue, Customer Service Bureau, P.O. Box 7010, Boston, MA 02204, (617) 887-MDOR, toll-free within Massachusetts at 1-800-392-6089 or visit our website at www.mass.gov/dor. 

 

REFERENCES:
G.L. c. 62,
G.L. c. 62B
830 CMR 62B.2.2, Pass-Through Entity Withholding
TIR 16-9
TIR 09-18
TIR 21-9
TIR 22-6
TIR 23-12
Form 1, Resident Income Tax Return
Form 1-ES, Estimated Income Tax Vouchers for Individuals
Form 1-NR/PY, Nonresident or Part-Year Resident Income Tax Return
Form 2, Massachusetts Fiduciary Income Tax Return
Form 2-ES, Estimated Income Tax Vouchers for Fiduciaries, Corporate Trusts,  Clubs, and Other Unincorporated Organizations
Form 3M, Income Tax Return for Clubs and Other Organizations Not Engaged in Business for Profit
Form M-4, Massachusetts Employees Withholding Exemption Certificate
Form M-990T-62, Exempt Trust and Unincorporated Association Income Tax Return
Form M-2210, Underpayment of Estimated Income Tax Return
Form MA NRCR, Nonresident Composite Return (must be filed electronically)
Form UBI-ES, Estimated Tax Payment Voucher for filers of Forms 3M, M-990T and M-990T-62