For tax years beginning on or after January 1, 2001, senior citizens in Massachusetts may be eligible to claim a refundable credit on their state income taxes for the real estate taxes they paid on the Massachusetts residential property they own or rent and which they occupy as their principal residence. The maximum credit allowed is $1,030 for the tax years beginning after January 1, 2009. See TIR 09-16 for more information.
Eligible taxpayers who own their property may claim a credit equal to the amount by which their property tax payments (excluding any exemptions and/or abatements), including water and sewer debt charges, exceed 10% of their ôtotal incomeö for the same current tax year. Taxpayers residing in communities that do not include water and sewer debt service in their property tax assessments may claim, in addition to their property tax payments, 50% of the water and sewer use charges actually paid during the tax year when figuring their credit.
Renters may claim a credit in the amount by which 25% of their annual rental payment is more than 10% of their total income. For purposes of the tax credit, a taxpayer's "total income" includes taxable income as well as exempt income such as Social Security, Treasury bills and public pensions. For a complete list of what constitutes ôtotal income,ö see TIR 01-19.
Who Is Eligible for the Credit?
To be eligible for the credit, a taxpayer must be 65 years of age or older by the end pf the tax year (for joint filers, it is sufficient if one taxpayer is 65 years of age or older), must own or rent residential property in Massachusetts and occupy the property as his or her principal residence, and must not be the dependent of another taxpayer. The taxpayer's total income cannot exceed $55,000 for a single filer who is not the head of a household, $69,000 for a head of household, or $82,000 for taxpayers filing jointly. No credit is allowed for a married taxpayer unless a joint return is filed. Moreover, the assessed valuation of the real estate cannot exceed $700,000. No credit is allowed if the taxpayer claims the 'married filing separate' status, receives a federal or state rent subsidy, rents from a tax-exempt entity, or is the dependent of another taxpayer.
Is the Tax Credit Considered Income?
Tax credits received by eligible taxpayers are not considered income for the purpose of obtaining eligibility or benefits under other means-tested assistance programs including food, medical, housing, energy and educational assistance programs.
How Does a Taxpayer Claim the Credit?
Taxpayers who are eligible for the tax credit can claim the credit by submitting a completed Schedule CB, Circuit Breaker Credit with their state income tax return. Eligible taxpayers who do not normally file a state income tax return may obtain a refund by filing a return with Schedule CB. As with all claimed tax credits and deductions, the taxpayer must keep all pertinent records, receipts and other documentation supporting his or her claim for the credit.