2015 Tax Changes for Massachusetts

Here are four 2015 tax changes. Have your filed your income tax return yet in Massachusetts?

2016_04_13 2015 Tax Changes graphicIf not, you may want to get your tax information together today before your run the risk of being late. If you can’t get your information together, at the very least, consider filing an extension. The Massachusetts tax filing extension allows for an automatic six months. Note this is also the case for the IRS. Before you do that, take a few minutes to read about these income tax changes that took place on or before January 1, 2015 for the State of Massachusetts:

Filing Due Date for 2015 Income Tax Returns

If you are not aware, you should be that the filing of tax returns that include Forms 1, 1NR/PY and extensions are due on or before April 19, 2016. Please make a note of it. That is one week away!

Tax Rates

Personal income tax rates are applied against different classes of Massachusetts taxable income. The tax rate on most classes of income is scheduled to decrease in years where the state achieves revenue growth benchmarks set forth by the formula in M.G.L. Chapter 62, Section 4(b).

As of January 1, 2015, the 5.2% tax rate on most taxable income has been reduced to 5.15%. If you sell or exchange capital assets, let it be known that the short-term gains remains at 12%. Also, long-term gains from the sale or exchange of collectibles (after a 50% deduction) conitnues to be at 12%.

Gambling Loss Deduction

Did you take a gamble this year and lose? For the Massachusetts taxpayer, you should note that the new gambling loss deduction is the only deduction for gambling losses permitted. Massachusetts does not take up with the federal deduction under IRC § 165(d) for gambling losses.

A deduction  from Part B income for gambling losses experienced at certain Massachusetts licensed (under General Laws chapter 23K) gaming establishments, this includes racing meeting licensee or simulcasting licensee establishments. However, this is only limited to winnings from such Massachusetts establishments. This includes gross income for the calendar year and the deduction is claimed on Schedule Y.

Health Insurance, Penalty for Failure to Purchase – Tax Year 2015

Individuals who can afford health insurance in accordance with the law but do not act on it are subject to penalties for each month of non-compliance in the tax year. The exception is the provision for no penalty in the case of a gap in coverage of 63 consecutive days or less. The penalty will not be more than 50% of the minimum monthly insurance premium the individual would have been eligible for had they participated in the Connector, and will be enforced through the individual’s personal income tax return upon filing.

The Massachusetts Health Care Reform Act insists that an adult 18 and over who has access to affordable health insurance to purchase it. In 2015, individuals had to be enrolled in health insurance policies that meet minimum approved coverage standards according to the guidelines approved by the Commonwealth Health Insurance Connector Authority (the Health Connector).

These penalties apply only to adults who are considered able to afford health insurance according to Massachusetts guidelines. Annually, the Health Connector sets up individual criteria that decides if individuals, married couples and families can afford health insurance This is according to their incomes and affordable health insurance premiums. Those who are not deemed able to afford health insurance according to the Massachusetts benchmarks will not be penalized. An appeal process is available to file with the Connector stating any hardship that may inhibit them from buying health insurance. If that is the case, they may have to pay a tax penalty).

Real Estate Tax Credit for Persons Age 65 and Older (Circuit Breaker)

Certain taxpayers age 65 or older may be eligible to claim a refundable credit on their state income taxes for the real estate taxes or rent paid during the tax year on the residential property they own or rent in Massachusetts that is used as their principal residence. If the credit due the taxpayer exceeds the amount of the total income tax payable for the year by the taxpayer, the excess amount of the credit will be refunded to the taxpayer without interest. For tax year 2015, the maximum credit allowed for both renters and homeowners is $1,070.
To be eligible for the credit for the 2015 tax year: the taxpayer or spouse, if married filing jointly, must be 65 years of age or older at the close of the 2015 tax year; the taxpayer must own or rent residential property in Massachusetts and occupy the property as his or her principal residence; the taxpayer’s “total income” cannot exceed $57,000 for a single filer who is not the head of a household, $71,000 for a head of household, or $85,000 for taxpayers filing jointly; and for homeowners, the assessed valuation as of January 1, 2015, before residential exemptions but after abatements, of the homeowner’s personal residence cannot exceed  $693,000.

Conclusion

Take these 2015 tax changes seriously, the State does. If your returns have not yet been completed, please all Alex Franch, BS EA at 781.849.7200 right away so that he can schedule an appointment and/or file an extension if necessary. You can also schedule an appointment at one of Worthtax’s locations in Quincy, Weymouth and Dedham.

Sources and Resources

Funny Money: Four Odd Types of Taxable Income
Itemized Deductions: Should I Itemize My Tax Deductions
Employer Relief: Affordable Care Act
2014 Income Tax Impact of the Affordable Care Act (ACA) in a NutshellHealth Insurance: Ways to Deduct
Health Insurance Plans: Beware of Penalties
Tax Changes for 2015 – Commonwealth of Massachusetts

 

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