Technical Information Release  TIR 24-13: Tax Provisions in the Fiscal Year 2024 Supplemental Budget

Date:	11/13/2024
Referenced Sources:	Massachusetts General Laws

I. Introduction

This Technical Information Release (“TIR”) explains certain provisions included in “An Act Making Appropriations for the Fiscal Year 2024 to Provide for Supplementing Certain Existing Appropriations and for Certain other Activities and Projects” (the “Supplemental Budget”)^[1] that pertain to the child and family tax credit, which is available to taxpayers subject to the income tax, G.L. c. 62, and the calculation of the estate tax, G.L. c. 65C.   

The following provisions are discussed in this TIR:

• Clarification on a noncustodial parent’s ability to claim the child and family tax credit
• Change to the estate tax calculation with respect to property located outside of Massachusetts

II. Clarification on a noncustodial parent’s ability to claim the child and family tax credit

Taxpayers who maintain a household that includes certain children, family members, or other dependents may claim the child and family tax credit.^[2]  The household must include at least one individual who is (1) under the age of 13 and who qualifies for the federal exemption for dependents provided by Internal Revenue Code (“Code”) § 151; (2) a qualifying individual pursuant to Code § 21, which includes a dependent, as defined in Code § 152, or the taxpayer’s spouse, where such dependent or spouse is physically or mentally incapable of taking care of himself or herself and principally lives with the taxpayer; or (3) a dependent under Code § 152 who is age 65 or over or disabled.^[3]

Prior to the Supplemental Budget, a noncustodial parent could claim the credit only with respect to a child dependent under the age of 13, provided that (1) the child is a qualifying child of the noncustodial parent for the calendar year pursuant to Code § 152(e)(1); and (2) the noncustodial parent attaches the written declaration required under Code § 152(e)(2) to the relevant return for the taxable year beginning during such calendar year.^[4]  See Technical Information Release 24-4.II.A.  The Supplemental Budget amends G.L. 62, § 6(x) to allow a noncustodial parent to also claim the credit with respect to a child dependent that is age 13 or older and who is physically or mentally incapable of caring for himself or herself, as long as the aforementioned requirements of Code § 152(e)(1) and Code § 152(e)(2) are met.^[5]   

This change to the child and family tax credit is effective as of January 1, 2024.^[6]

III. Change to the estate tax calculation with respect to property located outside of Massachusetts

G.L. c. 65C, § 2A(a) imposes a tax on the estates of decedents who were Massachusetts residents at the time of their death.^[7]  The estate tax is equal to the credit for state death taxes that would have been allowable under Code § 2011, as in effect on December 31, 2000.^[8]  If an estate includes real or tangible personal property located outside of Massachusetts, the estate tax is reduced to account for the portion of the estate that is outside of Massachusetts.^[9]

Specifically, prior to the Supplemental Budget, G.L. c. 65C, § 2A(a) provided that the tax on estates of resident decedents dying on or after January 1, 2023 that include real or tangible personal property located outside of Massachusetts, equals the credit reduced by “an amount equal to the proportion of such allowable credit as the value of such real or tangible personal property located outside of the commonwealth bears to the value of the entire federal gross estate wherever situated, as determined under section 2011 of the Code, as in effect on December 31, 2000.”^[10]  In such cases, the credit was to be determined based on the value of the federal taxable estate, including real or tangible personal property located outside of Massachusetts. The estate tax was then determined by reducing the credit by an amount equal to the credit multiplied by a fraction, the numerator of which was the value of the real or tangible personal property located outside of Massachusetts and the denominator of which was the value of the entire federal gross estate wherever situated.

The Supplemental Budget amends G.L. c. 65C, § 2A(a) to provide a new tax calculation for estates of resident decedents dying on or after January 1, 2023 that include real or tangible personal property located outside of Massachusetts, such that the tax equals the credit, which “shall be determined based on the value of the federal taxable estate after such estate is reduced by the value of such real or tangible personal property located outside of the commonwealth.”^[11]  Accordingly, for estates of resident decedents dying on or after January 1, 2023 that include real or tangible personal property located outside of Massachusetts, such property is excluded from the federal taxable estate prior to calculating the credit. The estate tax is equal to the credit as so determined.

                                                                                    /s/Geoffrey E. Snyder
                                                                                    Geoffrey E. Snyder
                                                                                    Commissioner of Revenue
 

GES:RHF:db

November 13, 2024

TIR 24-13

[1] St. 2024, c. 206, signed into law on September 16, 2024.

[2] G.L. c. 62, § 6(x).

[3] Id.

[4] Id.

[5] The Supplemental Budget, § 12.

[6] The Supplemental Budget, § 62.

[7] G.L. c. 65C, § 2A(a).

[8] Id.

[9] Id.

[10] Id.

[11] The Supplemental Budget, § 13.