If you are a legal resident of Massachusetts you must file a Massachusetts state income tax return if your gross income from all sources, inside and outside Massachusetts, was $8,000 or more. You should also file a Massachusetts return if state income tax was withheld from your pay, even if you are not required to file. You may be due a refund. Full-year Massachusetts residents use Form 1 to file their return.
If you were not a resident of Massachusetts but you earned income, such as from a job in Massachusetts, you must file a state tax return using Form 1-NR/PY. If you moved into or out of Massachusetts during the year, you also must file a return using Form 1-NR/PY as a partial-year resident. If you were a resident of Massachusetts for part of the year and were also a nonresident with income from Massachusetts during another part of the year, you must file just one Form 1-NR/PY and complete the Resident/Nonresident Worksheet, Schedule R/NR to calculate your income while you were a part-year resident and your income while you were a nonresident.
If you use tax software to prepare your federal and Massachusetts state tax returns you may be able to prepare both returns simultaneously, and the software will prompt you to claim the tax benefits you qualify for. But you should be aware of your potential deductions and credits and check your Massachusetts return before you send it in. If you prepare your tax return on paper, you need to know which deductions and credits you can claim in Massachusetts.
Certain types of income are specifically exempt from state income tax in Massachusetts and do not have to be included on your Massachusetts return. Interest on U.S. government obligations such as savings bonds and Treasury notes are exempt in Massachusetts. You are not subject to Massachusetts state income tax on social security benefits, Veterans Administration disability payments, G.I. Bill education payments, worker’s compensation, or public welfare assistance. And compensation earned by members of the armed forces for service in a combat zone is excluded from your Massachusetts income to the same extent as under federal law.
Pension income from a contributory retirement plan of the U.S. Government or the State of Massachusetts is exempt from state income tax in Massachusetts. Also exempt are noncontributory pensions or survivor benefits received from the U.S. Army, Navy, Marine Corps, Air Force, Coast Guard, commissioned corps of the Public Health Service and the National Oceanic and Atmospheric Administration.
On your Massachusetts state income tax return you can claim personal exemptions and exemptions for your dependents. You can claim an additional exemption if you or your spouse is age 65 or older. And there is another exemption for blindness. If you itemized deductions on your federal return, you can claim an exemption for medical and dental expenses on your Massachusetts return. And if you adopted a child, you can claim an exemption for the adoption fees you paid to a licensed adoption agency.
There are various deductions you could qualify to claim on your Massachusetts state income tax return. Some of the deductions have a separate line on Form 1 or Form 1-NR/PY. Other deductions must be claimed by completing and filing Schedule Y. The following are some common deductions, but you should check the instructions for Form 1 or the Guide to Personal Income Tax on the Massachusetts Department of Revenue website to see if there are other deductions you can claim.
You can deduct up to $2,000 for amounts you paid to Social Security, Medicare, Railroad Retirement, U.S. or Massachusetts retirement systems. This includes the FICA tax withheld from your pay or the self-employment tax you reported on Schedule SE of your federal tax return. If you are married filing jointly you and your spouse can each deduct up to $2,000, but you cannot combine or transfer amounts between you. The Medicare deductions from your social security or retirement payments do not qualify for this deduction.
If you incur expenses for the care of a child under age 13 or a disabled dependent or spouse so you can work, you can claim a deduction of up to $4,800 for one qualifying individual and up to $9,600 for two or more qualifying individuals. There is a worksheet in the instructions for Form 1 to calculate the amount you can deduct.
You can deduct $3,600 for a dependent member of your household, or $7,200 for two or more dependents under age 12 or age 65 or older, or disabled. This does not include you or your spouse.
You can claim a deduction for 50% of the rent on your principal residence in Massachusetts, up to a maximum deduction of $3,000 per tax return. If you are married filing separately you can allocate the deduction differently, provided that the amount claimed by each spouse is not more than 50% of the rent paid, and the combined deduction is not more than $3,000.
Certain deductions reported on Schedule Y of your Massachusetts tax return are based on deductions you claim on your federal tax return. These include deductions for unreimbursed employee expenses, penalty on early savings withdrawal, alimony paid, moving expenses, medical savings account, self-employed health insurance, health savings account and student loan interest.
If you paid tuition to a two-year or four-year undergraduate college for yourself or a dependent you may qualify for the tuition and fees deduction. The deduction is the amount by which the tuition you paid, less any scholarships, grants, or financial aid you received, exceeds 25% of your Massachusetts adjusted gross income. For purposes of this deduction, only tuition or mandatory fees required for enrollment or attendance are taken into account. You cannot claim a deduction for room and board, books, supplies, equipment, insurance, personal living expenses, or travel.
Massachusetts has a commuter deduction that allows you to deduct the amount you paid for tolls through a FastLane account or for weekly or monthly commuter passes for MBTA transit or commuter rail. The deduction does not include any amounts for which you were reimbursed. You can deduct the cost in excess of $150, up to a maximum deduction of $750.
There are various credits you may qualify for on your Massachusetts tax return. Some credits have a separate line on Form 1 or Form 1-NR/PY. Other credits are detailed on Schedule Z and the total is carried over to Form 1 or Form 1-NR/PY. The following are some common credits, but you should review the instructions for Form 1 or the Guide to Personal Income Tax to see if there are other credits you can claim.
If your Massachusetts income is below certain limits according to your filing status, you could qualify for the Low Income Credit. This is an alternative tax calculation for taxpayers who are close to the limit for having to file a return, called “No Tax Status”, and can significantly reduce your taxes. There is a worksheet in the instructions for Form 1 for calculating this credit.
If you are age 65 or older and live in Massachusetts, you could qualify for the Circuit Breaker Tax Credit for property you rent or own that is your principal residence. The credit is the amount by which your real estate taxes or 25% of the rent constituting real estate tax payment exceeds 10% of your total income. The maximum credit is $930. To qualify for this credit, your total income must be less than certain maximum amounts based on your filing status. To claim the circuit breaker tax credit you must file Schedule CB.
If you paid taxes to another state or jurisdiction on income that is included in your Massachusetts tax return you can claim a credit for those taxes on your Massachusetts return.
If you installed a renewable energy system such as solar or wind to heat, cool, or provide hot water for your home in Massachusetts, you could qualify for the Residential Energy Credit. To claim this credit you must file Schedule EC.
Massachusetts Resident Income Tax Form 1 Instructions – Massachusetts Department of Revenue