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Category: Massachusetts

Massachusetts Additions to Income

Allocated Tips (From box 8 of your W-2)

Income earned by a Massachusetts resident in another state is subject to taxation in Massachusetts. Generally, your total wages and allocated tips will be the same amount reported on your U.S. 1040, 1040A, or 1040EZ.

Massachusetts Bank Interest

Enter the total amount of interest received or credited to deposit accounts (term and time deposits, including certificates of deposit, savings accounts, savings shares and NOW accounts) in Massachusetts banks. Note: This exemption does not apply to your U.S. tax return.

Ttaxable IRA/Keogh and Roth IRA Conversion Distributions

Enter the taxable portion of any amount you received from an Individual Retirement Account (IRA), Keogh, qualified charitable IRA distribution or Roth IRA conversion distribution. Since Massachusetts does not allow for deduction for amounts originally contributed to an IRA or Keogh, the distributions are not taxable until the full amount of your contributions which were previously subject to Massachusetts taxes are recovered.

Contributions made to Keogh accounts prior to 1975 were deductible when made. Therefore, no deduction may be taken from a Keogh distribution for amounts contributed before 1975.

To refer to the worksheet used to determine the taxable portion reported on Schedule X, please click here.

Description of Fees and Other 5.3% Income

  • All fee income, such as payments for jury duty, election worker payments, director's fees, compensation received as executor or administrator of an estate, and commission income or tips not reported in line 3 of Form 1 are taxable. Also, report all bartering income not reported on Schedule C (the fair market value of goods or services received in payment for your services).
  • All prizes and awards won in a quiz program, drawing, beauty contest, etc. are taxable at fair market value. Awards and bonuses received from your employer for performances of services not part of a qualified award plan are also taxable.
  • Forgiveness of debt and mortgage forgiveness.
  • Other Massachusetts 5.3% income reported on U.S. Form 1040, line 21 and not reported elsewhere in Form 1, lines 3 through 8 or Schedule X, lines 1 through 3 must be reported in line 4 of Schedule X.
  • Pre-1996 installment sales classified as ordinary income for Massachusetts purposes (from Massachusetts Schedule D, line 10) are taxed as 5.3% income and must be reported on line 4 of Schedule X.
  • Embezzled or other income from illegal activities is taxable and should be reported on Schedule X, line 4.

The following items should not be reported on your Massachusetts return:

  • Any "net operating loss" reported as a negative amount on U.S. Form 1040, line 21 cannot be entered on Schedule X. A net operating loss from a business or profession cannot be carried forward or backward to offset individual income in any other year under Massachusetts law.
  • Refunds of U.S. and Massachusetts income taxes are not considered income under Massachusetts law. If you received interest on refunds, report such interest on Massachusetts Schedule B.