Estimated income and fiduciary tax payment deadlines extended
The first and second installments of estimated tax, due April 15, 2020 and June 15, 2020, will now be due July 15, 2020. Visit TIR 20-4: Tax Filing and Payment Relief for Personal Income and Corporate Excise Taxpayers Affected by COVID-19.
As a taxpayer, you must make quarterly estimated tax payments if the expected tax due on your taxable income not subject to withholding is more than $400. This is to ensure that you are meeting the statutory requirement that taxes due are paid periodically as income is received during the year.
Generally, you need to pay at least 80% of your annual income tax liability before you file your return for the year through withholding or by making quarterly estimated tax payments on any income not subject to withholding.
Farmers and fishermen generally need to pay at least two-thirds (66.67%), rather than 80%, of their annual income tax liability before the year's return is filed. You qualify as a farmer or fisherman for any taxable year if your gross income from farming or fishing is at least two-thirds (66.67%) of your annual gross income.
You must pay estimated tax if you are:
- An individual and you expect to have a tax due of more than $400
- Filing for a fiduciary, trust, or non-profit organization and you expect to have a tax due of more than $400
Types of income you may not have had taxes withheld from:
- 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
- Alimony (prior to 2018)
Paying estimated tax
Individuals and Fiduciaries can make estimated tax payments online through MassTaxConnect.
Paying online through MassTaxConnect allows you to:
- Have 24/7 access to view your payment history
- Make estimated payments and immediately confirm that DOR has received your payment
- Schedule payments in advance and cancel or change scheduled payments if needed
Before making an estimated payment, you can calculate your payments online with DOR's Quarterly Estimated Tax Calculator.
Individuals and Fiduciaries which are not required to pay online may choose to calculate and pay with:
- Form 1-ES: 2020 Estimated Income Tax Payment Vouchers, Instructions and Worksheets
- Form 2-ES: 2020 Estimated Tax Payment Vouchers, Instructions and Worksheets for Filers of Forms 2 or 2G
If paying by check, you must include Form 1-ES or Form 2-ES and mail your payment to:
|Form 1-ES||Form 2-ES|
|Massachusetts Department of Revenue
PO Box 419540
Boston, MA 02241-9540
|Massachusetts Department of Revenue
PO Box 419544
Boston, MA 02241-9544
Each installment is generally 25% of the required annual payment, and is due as follows:
|Installment||Due date of installment|
|#1||On or before April 15th of the taxable year|
|#2||On or before June 15th of the taxable year|
|#3||On or before September 15th of the taxable year|
|#4||On or before January 15th of the next taxable year|
Reporting estimated tax paid on your return
Report the amount of quarterly estimated tax you paid on the Massachusetts Form 1, Line 40 or Form 1-NR/PY, Line 44.
If you elected to have all or part of your prior year refund carried forward as an estimated payment, report that amount on Form 1 line 39 or Form 1-NR/PY line 43.
An overpayment occurs when you pay more tax than you owe. The overpayment can either be refunded to you or carried forward to the next year as an estimated tax payment. If you want the refund to be carried forward, you can choose the entire amount to be carried forward or only part of it.
Enter the amount you want to be carried forward to the next year on Form 1 line 48 or Form 1-NR/PY line 52.
Once you choose to apply an overpayment to the next year, it cannot be refunded later or moved back to the original year, even if you file an amended return. Amended returns cannot change what you originally report as an overpayment to be carried forward, even if a tax increase is being reported on the amended return.
Penalty for underpayment of estimated tax
If you do not meet the quarterly installment payment requirements or are underpaid in any period, you will be subject to a penalty for underpayment of estimated tax.
The underpayment period runs from the installment due date to the tax return due date.
The rate for the underpayment penalty is the current federal short-term interest rate plus 4% points compounded daily.
You can calculate the underpayment penalty with the:
Reporting an underpayment of estimated tax penalty on your tax return
Once you are done calculating your underpayment of estimated tax penalty, complete and enclose Form M-2210 with your tax return.
You do not have to complete Form M-2210 if the balance due with your tax return is $400 or less.
If you owe a penalty, enter the amount in the box entitled “M-2210 amount” under Form 1, Line 50 or Form 1 NR/PY, Line 54. Add the penalty amount to the tax you owe when making your payment.
Underpayment penalty exceptions and waivers
If you meet one of the exceptions to the underpayment penalty, fill in the oval marked "Exception" below the M-2210 amount box under Line 50 on Form 1 or Line 54 on Form 1-NR/PY. Indicate which exception applies to your circumstances on the Form M-2210 and submit the Form M-2210 with your Massachusetts tax return.
You will not be penalized for underpaying if you qualify for one of the following exceptions:
- Your income tax due after credits and withholding is $400 or less
- You are a qualified farmer or fisherman and paying your full amount due on/before March 1
- You were a resident of Massachusetts for 12 months of the prior tax year and not liable for taxes
- Your estimated payments and withholding equal or exceed your prior-year tax (where the prior year was a full 12 months and a Massachusetts tax return was filed)
If you qualify for a waiver of the M-2210 penalty, fill in the oval marked "Exception" below the M-2210 amount box under Line 50 on Form 1 or Line 54 on Form 1-NR/PY and submit a statement with your Massachusetts tax return of your reason for claiming the waiver.
You will not be penalized for underpaying if one of the following waivers applies to you:
- The underpayment was because of casualty, disaster or unusual circumstances
- You retired in the current or previous taxable year after reaching age 62, or you became disabled during the taxable year, and the underpayment was due to reasonable cause and not willful neglect
Please note: There is no safe harbor provision for first-year filers.
Annualized income installment method
If you do not receive taxable income evenly throughout the year, you may wish to annualize your income to adjust your required installment amount(s).
To use the Annualized income installment method you must complete Form M-2210, Part 4. This method may result in a smaller or no penalty.