Massachusetts Tax Calculator 2022-2023: Estimate Your Taxes

For example, taxpayers who recalculate their capital gains tax on their 1996 tax return and claim any resulting tax benefit as a credit on their 1999 tax year may do so even if they file for extension. The capital gains tax credit is treated as a 1999 tax credit, regardless of the fact that it is generated from a 1996, 1997 or 1998 recalculation of capital gains. The credit is claimed on line 36 of the 1999 Massachusetts Form 1 (or line 41 of the Form 1-NR/PY). Taxpayers who choose to recalculate their capital gains tax for previous tax years and obtain their capital gains tax benefit through the abatement option, must do so within the statute of limitations for abatements.

If your total itemized massachusetts state income tax are less than the standard deduction, the calculator will use the standard deduction. You can deduct any expenses that exceed $150 (married filing jointly taxpayers can deduct expenses above $150 per person). PKF O’Connor Davies is the lead North American representative of the international association of PKF member firms. PKF International is a network of legally independent member firms providing accounting, tax and business advisory services in more than 400 locations in 150 countries around the world. PKF O’Connor Davies LLP and PKF O’Connor Davies Advisory LLC practice in an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations and professional standards.

State Corporate Income Tax Rates and Brackets for 2023

Under the prior law, long-term capital losses were converted into a long-term capital gains tax credit that could reduce long-term gains and Part A capital gains. For example, a taxpayer with $100 of Class B (tax rate 5%) and $100 of Class C (tax rate 4%) long-term capital losses would have a long-term credit carryover of $9. Any unused credit could be carried forward to the next tax year. High income Massachusetts taxpayers who are charitably inclined also may be attracted to charitable remainder trusts, which can be an effective tool for spreading capital gains. A charitable remainder trust provides for payments to one or more individual beneficiaries for their lives or for a term of years.

Changing domicile – Taxpayers may decide to move to a no or lower tax state. If the taxpayer is not domiciled in Massachusetts, the only income taxable to Massachusetts would be Massachusetts-sourced income. For many taxpayers, most of their income as a non-resident would, therefore, not be subject to Massachusetts income tax. Changing domicile has many legal and tax implications and involves several steps to truly substantiate that your domicile has changed from Massachusetts to another state. UltraTax/1040-MA uses the tax laws that were in place on the date of the installment sale to determine the holding period and rate at which the installment payments should be taxed.

for Calculating Income

Taxpayers with certain eligible gains can also consider deferring and partially eliminating those gains by investing in qualified opportunity funds. Similarly, real estate investors could defer gain by entering Section 1031 like-kind exchanges for other real estate. Other taxpayers may also consider making transfers of income-producing assets to trusts that are domiciled outside Massachusetts. All of these strategies must be measured on a case-by-case basis, but it is fair to expect a flurry of year-end tax-driven transactions.

Another option is a1031 Exchange, often referred to as a tax-deferred exchange. If you keep an inherited property as an investment/rental and later wish to sell it, you can defer taxes but rolling the gain into the purchase of a like-kind property (i.e., another investment property). Of course, it could also be deferred again by completing yet another 1031 Exchange. What should taxpayers who may have to pay the new Millionaires Tax do? The tax is brand new and we are yet to see how it is applied in practice.