Category Archives: Massachusetts

Massachusetts DoR Wants Copies of Your W-2s

It is true, Massachusetts Department of Revenue wants copies of your W-2s, 1099s, etc.

Did you get a letter from Mass Department of Revenue asking for copies of your W-2s, 1099s, etc? Don’t panic. Chances are you have these w2 copies in your files and you just need to pull them out and follow these steps. Continue reading


Tax Filing Due Date 2017 is Fast Approaching

Tax Filing Due Date is Right Around the Corner

The due date to file taxes is April 18th for Federal and Massachusetts tax filing. In fact, most states are posting April 18th as the tax filing due date. Just a reminder if you still have to file your 2016 tax return, April 18, 2017 is the due date. This tax filing deadline is so you can file your return or pay any taxes you owe. For those who are not done with your tax preparation, we suggest you file for the automatic six-month extension. Also, you can pay the tax you estimate to be due. The due date is normally April 15, but the 15th falls on a weekend and the next business day, April 17, is Emancipation Day, a legal holiday in Washington D.C., so the due date in 2017 is April 18. Continue reading


Growing Pains, Growing Business in Massachusetts

Are you the owner of a growing business, chances are you have business growing pains. You know that you need to wear many hats. Imagine your business has grown to the point that you can expand your services beyond the boundaries of your home state, Massachusetts in our case. You may need to file tax returns in the states you are doing business in. Here are a few things to look out for. Continue reading


Broncos Win Super Bowl 50 – California Wins With Jock Tax

bronchos winBroncos win of Super Bowl 50 was a surprise to some. Not to me, they had a tight defense. I just hope their defense was just as good when planning to pay the Jock Tax.

Superbowl 50 was in California this year. California is one of those states that charges a “jock tax.” I know your are moaning, are you kidding me? A Jock Tax? It’s true! Payton Manning will have a hefty amount to share with the state after the Broncos win. But take comfort, the referees will be subject too.

Just like you may earn overtime or a bonus at your job, these Bronco and Panther athletes make a hefty bonuses for the playoffs and Superbowl. The athletes who play for the Broncos, Panthers or our beloved Patriots are subject to taxes on a State and local basis. This makes their taxes are very complicated. They have to have a really good CPA on their team. Hum, they should call Worthtax!

Since these athletes play in many cities throughout the US, each city may have a local tax imposed. And, each city is located in a state that may require a jock tax on a portion of their multi-million dollar contracts. This jock tax, another form of income tax, is not only collected where they are based, but also where they live.

Oh, and when we say the Broncos win got them a big, beautiful ring? They they may be taxed on the that as well. I guess in the end, we can really say, California won.

Each State Has Their Own Tax Rules

States tax all earnings of the residents residing in that state. However what about non-residents? That is not always the case. In Massachusetts, nonresidents are taxed on the income that results from sources within the Commonwealth.

Some states will tax nonresident income. Chances are if a city (and state they are located in) hosts a large NFL, NBA, NHL or other major league sports events, then it is likely that they have the jock tax. It is just one more opportunity for generating revenue, I guess you can say.

Not All Fun and Taxes When Broncos Win or Lose

You may ask yourself, “Why don’t more athletes live in Massachusetts?” Guess what?  Massachusetts has a jock tax. Think about it, we are home to the New England Patriots, the Boston Red Sox, Boston Celtics and New England Revolution. That is a lot of tax revenue to be made for the Commonwealth. States that do not have a jock tax are Florida, Washington, Texas and Tennessee. That is why those states, especially Florida, are able to successfully recruit those big names and keep them as residents. And I bet you thought the awesome weather was the only reason that athletes live in Florida? Well, partially, but professional athletes, who live in Florida do not have to pay taxes against the income they earn playing there.

So when a player happens to mention they would rather play in one city rather than another, it may not be due to loyalty or rivalry. Although, we would like to think that. They very well could be thinking about their tax return. Keep that in the back of your mind the next time you play fantasy football.

Regardless of the Broncos Win – We don’t discriminate if you are subject to a Jock Tax

Professional NFL player or not, we are here to help you sort through your taxes. Call Alex at 781.849.7200 . Worthtax has a sign-on bonus of our own. In addition to our guaranteed pricing, we are giving $50 American Express gift cards to any new clients who have their taxes completed and filed by WorthTax. Worthtax provides ultra-convenient service and triple check accuracy. We have locations in Quincy, Weymouth and Dedham. Although, if you are a Broncos’ fan and you booed our beloved Patriots, well … don’t do it again!

Superbowl 50 Fun Fact

What is Superbowl 50 without the commercials? Did you know that advertising for Superbowl 50 will generate $377 Million in advertising revenue. Imagine paying taxes on that!

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photo credit: Denver Broncos 2008 Schedule Wallpaper via photopin (license)

Wrong Tax Forms Issued – Massachusetts Retirees

Wrong Tax Forms were issued on January 21, 2016 to over 50,000 Commonwealth of Massachusetts Retirees.

What happens if I file with the wrong tax forms?

About 50,000 Commonwealth of Masachusetts retirees received the wrong tax forms. An uncorrected 1099-R form would mean possible over payment of federal income taxes for retirees. Fortunately some State retirees called the office after they noticed the wrong tax forms, as tax bills were much higher than 2014. Normally, retirees who would receive refunds might have had to owe money.

The misprinted forms, because of a programming error, had bad codes assigned. The correct code should have been 7, for normal distribution of benefits. Instead, Code 1 was printed. Code 1 means a premature distribution of benefits. What would this cost the retiree? A 10 % penalty. In addition, State Retirees who should have been assigned Code 2, for early distribution of benefits with exceptions, received forms erroneously marked as Code 7. You can read more about it here on the Massachusetts government website.

Fortunately, this was caught fairly early. The issue can be resolved with the IRS should retirees file the wrong tax forms. However, it can take two years.

When Can I file my paper tax returns?

The State Treasurer’s office recommends that you wait for the revised 1099-R form to come in the mail if you file with a paper tax return. First, make sure the box at the top of the 1099-R marked “Corrected” is checked off.

2015_1099-R, corrected tax form, wrong tax forms

A corrected 1099-R form will be mailed out in early February. The board is sending postcards to make sure the 50,000 Commonwealth retirees are notified of this error. You should receive a revised 1099-R statement by Tuesday, February 16th, 2016. If not, please call the Massachusetts State Retirement Board (the number is at the end of this blog).

How Do I File Electronically?

State retirees who file electronically, can go ahead and file, just use the correct codes. If you are a retired employee of the Commonwealth of Massachusetts, up to the age of 59-1/2 in 2015, you can enter Distribution Code 2 on the electronic form. Use Distribution Code 7 if you turned older than 59-1/2 in 2015. If you have any questions, you can contact the State Treasurer’s office by email at or by telephone at (800) 392-6014 or (617) 367-7770. By the way, be easy on them. Make sure that you notify the Massachusetts State Retirement Board of any change of address. The change of address form can be found here.

You can access information on how to read your 1099-R form here. Make sure the new one you receive has “Corrected” checked off on the top.

Alex Franch, BS EA  at  781.849.7200. He can answer any questions you may have regarding tax preparation and the filing of your returns. We have ultra-convenient service at any three of our locations where you can conveniently drop off your tax documentation to be prepared, Dedham, Quincy and South Weymouth. Worthtax uses a triple check accuracy system.

If you found this information to be helpful, please share it with someone else. You are welcome to leave a comment below, or on our social media outlets below.


Winning the Lottery, What is the Best Payment Option?

2015_05_20 Lottery2Did you win the lottery? If you are reading this, I will assume you did. You are asking yourself whether to take the lump sum or the 20 year payout option. Our Weymouth office is on the opposite end of Columbian Street Lottery office so we get more than our fair share of lottery winners around our office. To be fair, most are lost and looking for directions.

Lottery Payment Options

If you won a large sum, say $1M or more, you have the option of taking a lump sum or a 20 to 30 year payout on your winnings depending on the lottery and state involved. I believe Massachusetts offers a 20 year payout. The 20 years are guaranteed so if you die, someone else gets to spend it.

Lump Sum

The pros to the lump sum include a boatload of money right now! The cons are that you won’t get the full prize. You might get 60% of the prize money. In addition, you will be thrown into a higher tax bracket, This means a bigger chunk of money will go to taxes.

Annual Installment

In this case, if you take annual payments, you do not have a boatload of money burning a hole in your pocket. You will eventually receive the full prize. And, you may save a chunk on money on taxes.

Which one is better?

On smaller prizes, say $1M to $3M, you may be better off with the payment option. It is very easy to spend the lump sum of money and paint yourself into a corner financially with a house and grown up toys that are too expensive to maintain. They payment option can provide an income stream for many years after your prize. Additionally, because the annual payments are smaller, they will be likely be taxed at lower rates.

On larger prizes, say greater than $20M, you may be better off with the lump sum. Even the reduced amount is difficult to spend down and should be able to provide an income stream on its own. Because the annual payments are larger, the tax becomes more equalized between the lump sum and the payment options.

I crunched a few numbers on a $2M prize and a $50M prize. I also made the following assumptions: 5% rate of return, $20K spent per year on the small prize and $120K per year spent on the larger prize. On the $2M prize, the payment option is better after year 13. On the $50M prize, the payment option does not catch up until year 16. That being said, the greater the rate of return, the better the lump sum is.

Other Lottery Considerations

How old are you? Remember, you cannot take it with you.

Do you still want to work? Are you working for the weekend, do you have a meaningful career, or would you prefer neither?

How responsible are you? Are you going to make it rain like you are insane in the brain, or would Homer chide you as ‘Boring!’?

Do you have questions about Winning the Lottery?

WorthTax can help you work through all the IRS and State rules. If you have any questions, please call Alex at 781-849-7200 and make an appointment today.

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Tax Filing: Jointly or Separately?

By: Alex Franch, BS EA

2015_02_12 Tax Filing Joint or SeparateMost married taxpayers know that they have the option to file jointly or separately for tax filing. The Federal income tax system prods taxpayers toward joint filing. This results in the loss of certain deductions and credits. Also, the inclusion of Social Security benefits is taxable income for those who file separately. Assuming you are better off filing a Federal joint return, when might you consider filing separately? Here are three scenarios for tax filing:

Different Residency Periods

If a taxpayer and spouse are part-year Massachusetts residents and they had different residency periods, they have to file separately on their Massachusetts return. For example, John moves to Massachusetts from Texas in February. He moved due to a new job as a snow plow operator. Marsha remains in their old state to finish out the school year with the kids. She does not move to Massachusetts until July. They are required to file separate Massachusetts tax returns. Note, they are better off in this case, since Marsha’s Texas income will be excluded from taxation in Massachusetts for her tax filing.


If a taxpayer has certain unpaid debts, they may opt to file separately. If a taxpayer is in arrears with student loans, back taxes, or child support, their spouse may benefit from filing separately. Your refund can be garnished by various government authorities, and if there is a nominal difference in tax liability, Married Filing Separately (MFS) may be the way to go. Also, if one spouse expects a tax balance in the current year, Married Filing Separately can be appropriate. For example, John and Marsha are filing a joint return. Marsha had some unemployment income and had no tax withheld. They do not expect any Federal tax liability. However, they do expect to owe Massachusetts. They can file separately on Massachusetts only so John is not liable for the taxes owed on Marsha’s unemployment income.

Squirrely Business

If your husband is Vito Corleone, our official advice is, file separately. Oh, and never ask him about his business. If a spouse has questionable business practices, that taxpayer can file separately. This shields them form the associated tax risks.

By the way, If you are stuck at home for Snowpocalypse 3.0, Vito makes for a good trilogy read.

Questions About Tax Filing?

Are you clear about your tax filing status? If you have thoughts, questions or concerns regarding how your taxes are filed, WorthTax uses a triple check accuracy system. We also go though great lengths to protect your information on secured servers. Please feel free to contact us, leave your comments below or post to on our FacebookGoogle+ or LinkedIn pages.

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Tax Season is Here!

Time flies! Before it slips away, call Alex Franch, EA at 781-849-7200 for your appointment. Learn about our client discounts here. See our locations.


Massachusetts Circuit Breaker Tax Credit

By Thomas Holmes, JD

No, you will not receive a tax credit for having circuit breakers in your home. The Massachusetts Circuit Breaker Tax Credit is an income tax credit for certain people age 65 or older who own or rent a principal residence located in Massachusetts.

What is the Threshold?

Circuit Breaker Tax CreditAs with most tax credits, there are certain income threshold amounts that, if exceeded, will disqualify the taxpayer from taking the credit. On the surface, it would appear that most elders would be eligible for the credit. The income thresholds are as follows:

  • Single taxpayer – $56,000 “total income”
  • Head of household – $70,000 “total income”
  • Married filing joint – $84,000 “total income”

But hold on! Before you start planning on how you will spend your tax credit, think again. “Total income” for the purposes of the Circuit Breaker Tax credit is not “adjusted gross income” or “taxable income.” To calculate “total income,” start with total 5.25% income from Massachusetts Form 1, line 10; subtract deductions (if any) reported on line 1 through 10 of Schedule Y  (do not subtract deductions reported on lines 11 through 16); add back to Income the following: Massachusetts bank interest exempted on line 5b, total Social Security Benefits, Pensions/Annuities/IRA/Keogh distributions not taxed by Massachusetts, and certain miscellaneous income, e.g. cash public assistance; subtract exemptions from lines 2a through 2d of Form 1. The result will be “total income” for the Massachusetts Circuit Breaker Tax credit.

An Example of the Massachusetts Circuit Breaker Tax Credit

John & Mary are both retired and are both 65 years old. John has income of $45,000 from a Massachusetts teacher’s pension. Mary has Social Security income of $30,000. Together they have investment income of $25,000 and net rental income of $5,000. They do not report any deductions on Schedule Y. Because the teacher’s pension and Social Security income are not taxable in Massachusetts, only $19,800 of their income will be subject to Massachusetts income taxes ($30,000 less exemptions). At first glance it might appear that they qualify for the Circuit Breaker Tax credit. However, employing the calculations of the preceding paragraph, their “total income” is $94,800 ($105,000 less exemptions). Therefore, John & Mary are not eligible for the Circuit Breaker Tax credit.

Even if their “total income” had been below $84,000, if they own their home, the assessed value of the home may not exceed $691,000 (down $9,000 from 2013) to remain eligible for the credit.

The Calculation

If eligible, having satisfied both threshold requirements, the credit available in 2014 is calculated as follows:

For homeowners, the credit is equal to the amount by which the taxpayer’s property tax payments for the current year, plus 50% of water and sewer charges, but excluding any abatement or exemption granted, exceeds 10% of “total income”. The maximum credit for 2014 is $1,050.

For renters, the credit is equal to the amount by which 25% of the rent actually paid during the taxable year exceeds 10% of “total income”. Again, the maximum credit is $1,050.

Want to know more?

To read more about the Massachusetts Circuit Breaker Tax Credit click over to the Guide for Personal Income Tax on We also invite you to leave your questions below or post to our Facebook or Google+ page. You are also welcome to contact us.


Taxpayer Identity Theft: IRS v Massachusetts

by Alex Franch, Enrolled Agent

Recently, the Massachusetts Department Of Revenue (Mass DOR) announced some new tax fraud prevention tools. Let’s compare how Massachusetts Department of Revenue measures up to the big dogs at the IRS when it comes to Taxpayer identity theft. While e-filing continues to be the most convenient, most popular, quickest, and most secure method to file, it is also targeted most often by cyber criminals.

Preventive Measures

stopping cyber crimeYou can request a PIN from the IRS which they will send you letter with your PIN by mail. Without this PIN, you cannot e-file your tax return. Mass e-files typically require that a copy of the Federal return be attached depending on the system used, therefore, the IRS PIN does not necessarily protect you on Mass. A thief might be able to bypass both safeguards by paper filing but most of these crimes are cyber crimes. In my opinion, the IRS system seems to provide better safeguards from a preventive standpoint.

What if you become a victim?

If someone has filed a fraudulent IRS return with your name or Social Security Number (SSN), you will need to paper file with the IRS, along with an identity theft affidavit. This can delay your tax return for several months. This is a slow and frustrating process for most taxpayers. IRS online resources are very limited in this regard; on the other hand, they are already a very big target for cyber-crime. Pick your poison I suppose.

As I understand it, The Mass DOR’s new system in place would generate a letter (snail mail) and they would hold your refund. The letter would instruct you to go to the Mass DOR website and answer some questions. First, you are asked for the reference number from the letter, your name, and the last four of your Social Security Number. You would then be prompted with four questions to verify your identity. Answer three out of four of the questions, and you get your refund; you get two tries, three minutes each. If you fail twice you will have to take additional steps to verify your ID. It is unclear what additional steps are needed to verify your Identification.

In addition to actual cases of cyber crime, the IRS and Mass DOR both use algorithms to flag tax returns in this manner. Regardless if it is a cyber crime or dragnet, I suppose you are a victim either way.


The Mass DOR system processes faster than the IRS, if you need a speedy resolution; however, the IRS has a more proactive system. Mass DOR does not mention what the four questions are, supposedly making it more difficult for the cyber thieves. However, this can make these questions difficult for an honest person to answer and put you on the spot. (Here is my question, how does the Mass DOR know my pet’s name anyway?) Finally, heaven help me if my parents get swept up in this dragnet and I have to help them navigate through the Mass DOR website. We all know how challenging this can be for you and I, but what about the elderly themselves who may not be so quick in their memory or someone helping the elderly who may need answers quickly?

If you have experienced the Mass DOR system or IRS process, please feel free to share your experience below or go to our Facebook or Google+ page.

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