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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.

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