What are the Income Law Requirements in the State of Massachusetts?
Income tax is a monetary charge that is levied on your income by the government. It is the income that is usually generated by businesses and individuals within a state’s jurisdiction. According to the law, it is mandatory for taxpayers such as yourself to file an income tax return annually and to determine what your tax obligations are. It is essential to know that income tax is a source of revenue for the government. The monetary gains are used by the government to fund public services, pay for government obligations, and provide goods for citizens.
In the U.S, some taxes are imposed at a separate federal, state, and local government level. Taxe charges are imposed upon income, payroll, property, sales, capital gains, dividends, imports, estates, and gifts, as well as various fees. The taxes, however, fall much more heavily on labor income than on capital income.
Individuals pay federal income taxes to the Internal Revenue Service every April 15th. Most of the states in the U.S. also impose personal income taxes on state residents. The few countries that do not have an income tax makes up for the lack of revenue in other ways, often with higher sales taxes and property taxes.
Massachusetts' income tax laws are relatively straightforward, and income is generally taxed at a 5.85 percent rate. Similarly, in many other states, partnerships are not subject to personal income tax. But, a "corporate trust" that is engaged in business in Massachusetts is taxed.
If you are a resident of Massachusetts and your gross income was more than $8,000, whether you have received from sources inside or outside the state, it is mandatory for you to file a Massachusetts income tax return. If your gross income was $8,000 or less, you do not need to file a return.
Who is required to file personal income taxes in Massachusetts?
The following people and entities must file personal income taxes in Massachusetts:
- Individuals (including fiduciaries),
- Estates of deceased Massachusetts inhabitants,
- Nonresidents earning income in Massachusetts; and
- A "corporate trust" engaged in business in Massachusetts is taxed.
Tax rates in Massachusets
Massachusetts is one of only eight states that imposes a personal income tax at a flat rate of 5.1% as of 2018. There are no tax brackets in Massachusetts compared to the progressive tax system that is followed in other states, which levies a higher tax rate as an individual's income increases. Everyone pays the same tax rate regardless of the income they earn, with one exception. That exception includes those with minimal incomes who may qualify for Massachusetts' "No Tax Status." They are required to file a tax return, but they are exempt from paying any state income tax.
Income that is taxable in Massachusetts
The state of Massachusetts generally follows the federal guidelines for taxable income, but it also includes a few exceptions.
- The interest income received from state and local bonds other than Massachusetts bonds is taxable in the states, although it's not taxed on the federal return. Likewise, revenue garnered from foreign sources which are possibly excluded on federal return is taxable in Massachusetts.
- The retirement income received from government pensions, either federal or state, as well as Social Security benefits is not liable to be taxed by the state.
- Disability income that is a result of an injury related to military action or a terrorist attack is also not taxable.
Filing Your Returns in Massachusetts
Individuals are required to file an income tax return in Massachusets if their total income before deductions exceeds $8,000. The returns are due on April 15 every year, and they can file their returns on paper or electronically.