When you pay more taxes (i.e., withholding taxes or estimated taxes) than the amount of taxes determined to be due an overpayment may be generated on your account. An overpayment may also be generated if you are entitled to a refundable credit that exceeds the amount of tax due. Additionally, when you file an amended massachusetts income tax return or an abatement application to reduce the amount of tax due, and you previously paid more than what is now shown as due, an overpayment may be generated. As a taxpayer, you must make estimated payments if the expected tax due on your taxable income not subject to withholding is more than a certain amount.
For e-filed returns the turnaround time is about 6 weeks; but for paper returns it could take up to 10 weeks. You must claim your refund or credit within a certain time period, as further detailed below. Also, the Department of Revenue must issue refunds within a certain time period or pay interest on the amount of the refund. This page contains important information on the time limitations for claiming a refund and on the calculation of interest. An overpayment claimed on a return may be applied as a credit for your next year’s estimated tax or you may request that it be refunded to you.
Rates
Once the extension is granted, the 6-month extension starts at the filing due date of the original return. An extension to file a return doesn’t extend the due date for paying any tax due. If an employee has more than one job, they may claim exemptions only with their principal employer.
- Tips are considered part of an employee’s pay and must be taken into account when determining withholding.
- The Personal Exemption, which is supported by the Massachusetts income tax, is an additional deduction you can take if you (and not someone else) are primarily responsible for your own living expenses.
- If you’re a full-year resident with an annual Massachusetts gross income of more than $8,000, you must file a Massachusetts tax return.
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Refer to the appropriate table in Circular M, and find where wages earned in their payroll period (left side of the table) and the number of exemptions they claimed on their M-4 (on the top of the table) line up together. Tips are considered part of an employee’s pay and must be taken into account when determining withholding. Employees must report tips from any one job totaling $20 or more in any given month to their employers by the 10th day of the following month.
Massachusetts State Tax Guide
Massachusetts individual income tax rate is flat, meaning, every resident is taxed the same percentage. This is different from other states, where your income tax percentage is based on upon filing status and income. Some taxpayers have to file amended returns and applications for abatement electronically.
While the tax rate is set explicitly by the Massachusetts legislature, the Massachusetts personal exemption is indexed to inflation and changes every year. The FY24 Budget codifies into the Massachusetts General Laws the 4% surtax and clarifies the computation of taxable income subject to the surtax. Technically, you don’t have just one “tax bracket” – you pay all of the Massachusetts marginal tax rates from the lowest tax bracket to the tax bracket in which you earned your last dollar. For comparison purposes, however, your Massachusetts tax bracket is the tax bracket in which your last earned dollar in any given tax period falls. If the employee can substantiate their travel or other reimbursable expenses, and they return to the employer any amount that exceeds the substantiated expenses, then these payments aren’t subject to withholding.
Massachusetts Sales Tax
Returns are due annually, and payments follow the same schedule as wage withholding. Anyone who is registered to withhold must file an annual report, whether they withheld Massachusetts taxes during the calendar year or not. You don’t have to withhold if your only connection to Massachusetts is the employment of a Massachusetts resident outside of Massachusetts. However, you may withhold for the employee’s convenience if both you and the employee agree. The employee will owe Massachusetts income tax if you don’t withhold state income taxes. If there’s no state withholding in your business’s home state, you must withhold and send to us the full amount determined for Massachusetts purposes.
