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Personal income taxes
How is taxable personal income determined in your state?
Massachusetts has three categories of taxable income:
- Part A taxable income;
- Part B taxable income; and
- Part C taxable income.
Under what circumstances is an individual deemed resident in your state for personal income tax purposes?
A ‘resident’ is any natural person domiciled in Massachusetts or any natural person who is not domiciled in Massachusetts but who maintains a permanent place of abode in Massachusetts and spends, in the aggregate, more than 183 days of the taxable year in Massachusetts—including days spent partially in and out of Massachusetts.
What are the applicable personal income tax rates?
The personal income tax rate is 5.1%.
Exemptions, deductions and credits
What exemptions, deductions, and credits are available?
Massachusetts ‘gross income’ is ‘federal gross income’ with several modifications that either add or subtract from this figure.
The following deductions are generally allowed:
- alimony paid;
- attorney fees and court costs involving certain unlawful discrimination claims;
- certain business expenses of National Guard and Reserve members, certain business expenses of qualified performing artist, certain business expenses of state and local government officials, contributions by certain chaplains to I.R.C. § 403(b) Plans, deductible expenses related to income from renting personal property for profit, employee business expenses;
- health savings account (HSA) deduction;
- jury duty pay remittance;
- medical savings account deduction;
- moving expenses;
- penalty on withdrawing savings early;
- reforestation amortization and expenses; and
- repayment of supplemental unemployment benefits, self-employed health insurance deduction, S Corporation Shareholder SEP, SIMPLE, and Qualified Plans allowed under I.R.C. § 404; and
- federal student loan interest deduction.
An important credit for many residents is the credit for taxpayer paid to other jurisdictions.
What filing requirements and procedures apply?
Personal income tax returns are typically due on April 15, unless an extension is granted. For fiscal year taxpayers, returns are due on the 15th day of the fourth month following the end of the taxable year.
Taxpayers required to make estimated payments must make payments by April 15, June 15, and September 15 of the taxable year and January 15 of the next taxable year. The amount of any required installment shall be 25% of the required annual payment. The term ‘required annual payment’ means the lesser of:
- 80%, or 66.66% in the case of a farmer or fisherman as defined in subsection (h), of the tax shown on the return for the taxable year or, if no return is filed, 80% or 66.66%, as the case may be, of the tax for such year; or
- 100% of the tax shown on the return of the taxpayer for the preceding taxable year, provided that the taxpayer filed a return for the preceding taxable year and such preceding year was a taxable year of 12 months.
What obligations are imposed on the employer in relation to the collection and remittance of state personal income taxes (eg, withholding)?
Employers must withhold and pay taxes for residents and non-residents that earn Massachusetts source income. Withholding for non-residents may include withholding on amounts paid to a non-resident, even if that non-resident did not work in Massachusetts during the year of payment, if the wages paid relate to work previously performed in the state.
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