Massachusetts’ New Earned Income Tax Credit and Your Tax Return

Qualification considerations and what you can expect

Thanks to the passage of the American Taxpayer Relief Act, some Massachusetts taxpayers will be able to take advantage of increases in the state’s Earned Income Tax Credit (EITC). In previous years, Massachusetts’ EITC was set at 15 percent of the federal government’s EITC. Thanks to the American Taxpayer Relief Act and recent legislation extending its provisions, beginning in the 2016 taxable year, Massachusetts taxpayers who qualify for the state’s EITC will receive a refundable credit equal to 23 percent of the federal government’s EITC.

Taxpayers who receive the state’s EITC may also qualify for the federal government’s Earned Income Tax Credit—combining the two can add up to thousands of dollars.

Who qualifies for Massachusetts’ EITC?

Massachusetts’ EITC is not available to all taxpayers. The following taxpayers are not eligible:

  • Taxpayers who are married but file separately
  • Taxpayers who do not file a tax return, even if they are not required to do so—in other words, you must file a tax return to claim the Massachusetts EITC
  • Taxpayers who received $3,401 or more in investment income during the taxable year

In addition, to qualify for the EITC you must: Have a qualifying child for the taxable year. A qualifying child is any child that meets the age, residency, relationship and joint return qualifications described by the Internal Revenue Service.

Without a qualifying child, you must meet all of the following qualifications:

  • You must have lived in the United States for more than one-half of the taxable year
  • You or your spouse must be least 25 years old but less than 65 years old before the end of the taxable year
  • You were not a dependent of another taxpayer during the taxable year

Taxpayers who meet these qualifications are generally eligible to file a state tax return in Massachusetts and apply for the EITC.

How much money can I receive from the state’s EITC?

Beginning in the 2016 tax year, the amount of the Massachusetts EITC has increased from 15 percent to 23 percent of the federal government’s EITC. This means that most individuals who qualify for Massachusetts’ EITC in the taxable years of 2015 and 2016 will receive a larger EITC in the taxable year of 2016. For example, for the taxable year of 2015 a qualifying taxpayer with one qualifying child would receive a maximum Massachusetts EITC of $503.85. For the taxable year of 2016, this same taxpayer could receive a maximum Massachusetts EITC of $772.57.

Common questions about the federal and Massachusetts EITC can be answered online through the Internal Revenue Service’s or Massachusetts Department of Revenue’s website. If you have specific questions or concerns about your tax liability or whether you qualify for an EITC, you should speak with an experienced tax attorney about your situation and circumstances.

If you want more information on this area of law, see our tax overview.

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