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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.


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



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 Mass.gov. We also invite you to leave your questions below or post to our Facebook or Google+ page. You are also welcome to contact us.


Confused about the Circuit Breaker Tax Credit?

Confused about the Circuit Breaker Tax Credit? You’re not alone. Perhaps this can help you to understand it.

This is a state income tax credit available to those over 65, who pay rent or real estate taxes, and who meet certain eligibility criteria:

  • For homeowners, this means that they must have paid at least 10% of their income to real estate taxes. Renters can count 25% of their rent as real estate payments.
  • Total income from all sources can be no more than $55,000 for a single, who is not head of household, $69,000 for a single, who is head of household, and $82,000 if filing jointly.
  • The assessed value of the home cannot exceed $700,000.
  • If married, the couple must file jointly.
  • The home or place of rent must be the primary residence.

The credit is not available to the taxpayer who:

  • Is filing married filing separately status
  • Receives a federal or state rent subsidy
  • Is renting from a landlord who is not required to pay real estate taxes
  • Is the dependent of another taxpayer

If the credit is greater than the amount of income taxes owed, the state gives a refund for the difference.

To receive this credit, a Massachusetts income tax return must be filed, whether or not the taxpayer otherwise needs to.

Your tax preparer can determine if you qualify, can calculate the credit, can ensure that all necessary forms are completed, and can help you file for up to 3 previous years if you were eligible, but didn’t apply for the Circuit Breaker credit.

Should you have any questions, feel free to contact us.