Showing posts with label Tax credit. Show all posts
Showing posts with label Tax credit. Show all posts

Wednesday, April 1, 2020

Economic impact payments: What you need to know

The Treasury Department and the Internal Revenue Service today (3/30/20) announced that distribution of economic impact payments will begin in the next three weeks and will be distributed automatically, with no action required for most people. However, some seniors and others who typically do not file returns will need to submit a simple tax return to receive the stimulus payment.

Who is eligible for the economic impact payment?
Tax filers with adjusted gross income up to $75,000 for individuals and up to $150,000 for married couples filing joint returns will receive the full payment. For filers with income above those amounts, the payment amount is reduced by $5 for each $100 above the $75,000/$150,000 thresholds. Single filers with income exceeding $99,000 and $198,000 for joint filers with no children are not eligible.

Eligible taxpayers who filed tax returns for either 2019 or 2018 will automatically receive an economic impact payment of up to $1,200 for individuals or $2,400 for married couples. Parents also receive $500 for each qualifying child.

How will the IRS know where to send my payment?
The vast majority of people do not need to take any action. The IRS will calculate and automatically send the economic impact payment to those eligible.

For people who have already filed their 2019 tax returns, the IRS will use this information to calculate the payment amount. For those who have not yet filed their return for 2019, the IRS will use information from their 2018 tax filing to calculate the payment. The economic impact payment will be deposited directly into the same banking account reflected on the return filed.

The IRS does not have my direct deposit information. What can I do?
In the coming weeks, Treasury plans to develop a web-based portal for individuals to provide their banking information to the IRS online, so that individuals can receive payments immediately as opposed to checks in the mail.

I am not typically required to file a tax return. Can I still receive my payment?
Yes. People who typically do not file a tax return will need to file a simple tax return to receive an economic impact payment. Low-income taxpayers, senior citizens, Social Security recipients, some veterans and individuals with disabilities who are otherwise not required to file a tax return will not owe tax.

How can I file the tax return needed to receive my economic impact payment?
IRS.gov/coronavirus will soon provide information instructing people in these groups on how to file a 2019 tax return with simple, but necessary, information including their filing status, number of dependents and direct deposit bank account information.

I have not filed my tax return for 2018 or 2019. Can I still receive an economic impact payment?
Yes. The IRS urges anyone with a tax filing obligation who has not yet filed a tax return for 2018 or 2019 to file as soon as they can to receive an economic impact payment. Taxpayers should include direct deposit banking information on the return.

I need to file a tax return. How long are the economic impact payments available?
For those concerned about visiting a tax professional or local community organization in person to get help with a tax return, these economic impact payments will be available throughout the rest of 2020.

Where can I get more information?
The IRS will post all key information on IRS.gov/coronavirus as soon as it becomes available.

The IRS has a reduced staff in many of its offices but remains committed to helping eligible individuals receive their payments expeditiously. Check for updated information on IRS.gov/coronavirus rather than calling IRS assistors who are helping process 2019 returns.

 
Economic impact payments: What you need to know
Economic impact payments: What you need to know

Tuesday, February 12, 2019

MassBudget: Why Top-Income Households Receive Most Tax Benefits from Charitable Deduction



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February 11, 2019



Why Top-Income Households Receive Most Tax Benefits from Charitable Deduction

BOSTON - Our Commonwealth does best when all people experience rising prosperity. But for several decades, the wealth and income of the top 1 percent of households has grown briskly while others have been left behind. While there are many reasons for this trend, one contributing factor is the way the federal tax deduction for charitable giving disproportionately rewards the giving of those with incomes over $1 million compared with donations made by moderate- and low-income tax filers.
While higher-income households have more money to give away - and therefore give larger dollar amounts to charity than households with less income - the benefits of charitable tax deductions remain heavily skewed towards top-income households, according to a new Massachusetts Budget and Policy Center (MassBudget) report. The top incomes average 160 times more than those earning incomes below $50,000, but their average charitable deduction is about 1,320 times larger.
"In Massachusetts, taxpayers who have incomes over $1 million claim almost half of all charitable deductions, though they make up less than 0.5 percent of tax filers. Meanwhile, tax filers with incomes of $200,000 or less claim only 29 percent of charitable tax deductions," said Phineas Baxandall, Senior Policy Analyst at MassBudget and author of the report.
Why Top-Income Households Receive Most Tax Benefits from Charitable Deduction
Research shows high-income households do not necessarily give a larger portion of their incomes to charity than lower-income households. Some studies find that, in fact, low- and middle-income givers actually contribute a larger percentage of their incomes. A key reason the tax benefits for charitable giving are skewed toward high-income households is: charitable giving can only be deducted from federal taxes if they are itemized (listed in detail). 

Most low- and moderate-income taxpayers don't tend to itemize their deductions, instead they usually opt for the larger (and simpler) standard deduction. For most top-income households, the standard deduction is too small compared to the deductions they can claim, so the vast majority choose to itemize deductions and avoid taxation on a larger portion of their incomes.
Massachusetts does not currently have a charitable deduction for state income taxes but, if the state's income tax rate drops to 5.0 percent in January 2020 - as anticipated by the Department of Revenue and following policy triggers enacted in 2002 - then a state charitable deduction would kick in the following year. 

Adding a state charitable deduction would reduce revenues by about $300 million per year, leaving less money for education, public health, transportation, affordable housing, and other programs funded by the state budget.
"In Massachusetts' upside-down tax system, people with lower incomes pay a larger percentage of their incomes in taxes than top-income households. Adding a state charitable deduction on top of the federal one would make this system even more imbalanced," said Marie-Frances Rivera, Interim President of MassBudget.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.

MASSACHUSETTS BUDGET AND POLICY CENTER
15 COURT SQUARE, SUITE 700
BOSTON, MA 02108


Massachusetts Budget and Policy Center, 15 Court Square, Suite 700, Boston, MA 02108

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Sunday, January 14, 2018

MassBudget: Sweeter than SALT



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Sweeter than SALT: Highest-Income Households Get Federal Tax Cuts More Than Twice SALT Losses 
The federal government has enacted very large tax cuts targeted mostly at higher-income taxpayers. The resulting loss of an almost $1.5 trillion in federal revenue is likely to lead to cuts in federal support for programs that are important to people in Massachusetts and to the state budget. Amid these deep tax cuts, a new federal limit on the deductibility of state and local taxes (SALT) has received a lot of attention. Households that itemize deductions and pay over $10,000 in combined state and local taxes will no longer be able to deduct more than this amount when calculating their taxable income for federal taxes.

For Massachusetts' highest-income households-those with annual incomes over $1 million-the average tax cuts from other federal changes in the law are more than twice the average size of the impact from the loss of SALT deductibility.
Massachusetts' highest-income households will become substantially affluent as a result of the federal tax changes. Households with incomes over $1 million in 2019 are projected to have an average income of $3.4 million. For this group the federal tax changes-including the limits to SALT deduction-represent a combined $2.58 billion tax cut. The average tax cut for these taxpayers will be $95,800 after accounting for the effects on the SALT changes.
Read this fact sheet online here.
The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.

MASSACHUSETTS BUDGET AND POLICY CENTER
15 COURT SQUARE, SUITE 700
BOSTON, MA 02108
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Massachusetts Budget and Policy Center, 15 Court Square, Suite 700, Boston, MA 02108

Sent by nberger@massbudget.org in collaboration with
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Friday, March 27, 2015

MassBudget: The Massachusetts Film Tax Credit - Is it worth it?



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The Massachusetts Film Tax Credit

State policy can help build an economy that works for everyone. With high quality education and training opportunities for all, and with functioning core public structures like a reliable transportation system, our entire economy grows stronger. States can also support families across the Commonwealth by setting a fair minimum wage and establishing other policies that improve working conditions and help ensure that everyone who works for a living can afford to pay for life's basic necessities.

As part of our efforts to grow the economy, our state spends close to a billion dollars a year on special business tax breaks. We have no process, however, for systematically assessing this type of economic development spending against our goals. Special business tax breaks apply to specific industries or reward specific activities. In many cases there is no evidence that they are a cost effective way to achieve legitimate public purposes. Yet these tax breaks live on from year to year, partly because - unlike items in the state budget - they are not subject to regular scrutiny through the annual budget process.

Our new factsheet, The Massachusetts Film Tax Credit, describes one of the state's most generous tax breaks. This program provides movie producers with a tax credit of 25% of the cost of making a movie in Massachusetts, meaning that if a company spends $20 million shooting a movie here, it receives a tax credit of $5 million. If a movie star is paid $10 million, the state reimburses $2.5 million of that cost through our tax code - even though most of that $10 million in salary will likely leave the state economy and be spent where the star lives.

Studies by the state's Department of Revenue have detailed the results of providing film tax credits:

  • The economic activity generated by film tax credits between 2006 and 2012 led to $55.1 million in tax revenue for the state. But that is substantially less than the $411 million cost of credits the state issued in those years.
  • Almost two thirds of the wages paid in connection with the film tax credits went to people who are not Massachusetts residents - including large salaries to movie stars from other states.
  • The cost per Massachusetts job created was about $119,000 a year.

To read the report, please click HERE.

MassBudget chart on film tax credit  


The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.

MASSACHUSETTS BUDGET AND POLICY CENTER
15 COURT SQUARE, SUITE 700
BOSTON, MA 02108
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Massachusetts Budget and Policy Center | 15 Court Square | Suite 700 | Boston | MA | 02108

Thursday, March 26, 2015

MassBudget: Massachusetts's Earned Income Tax Credit



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Massachusetts's Earned Income Tax Credit  
 

The Earned Income Tax Credit (EITC) improves the economic security of working families by increasing the after tax incomes of low and moderate wage workers. Massachusetts's Earned Income Tax Credit explains how the tax credit works, describes how many families and individuals it helps in Massachusetts, and examines the long-term effects of the EITC on families and children.

To read the factsheet, please click HERE.

Recent research has linked EITC increases to a number of positive outcomes:
  • Improved college attendance and graduation rates and better test scores, particularly in math.
  • More work and higher earnings as adults for children raised in these low income families.
  • Reductions in the early onset of disabilities and illnesses that often afflict poor children.
Over 400,000 working people in Massachusetts benefit from the state EITC. Most of them are supporting families. Increasing the state EITC helps those working people make ends meet and pay for basic necessities. The increased income can also make it more likely that their children will be able to reach their full potential. When low income working people have more purchasing power, and their children can grow up to contribute their full potential to our economy, that is good for all of us.

Below is an infographic detailing the lifelong effects of the EITC, produced by the Center on Budget and Policy Priorities. MassBudget is affiliated with CBPP as a member of the State Priorities Partnership.




The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts.

MASSACHUSETTS BUDGET AND POLICY CENTER
15 COURT SQUARE, SUITE 700
BOSTON, MA 02108
TwitterFacebook


Massachusetts Budget and Policy Center | 15 Court Square | Suite 700 | Boston | MA | 02108

Tuesday, June 5, 2012

State releases first Tax Credit Transparency Report identifying recipients o...

Sent to you by Steve Sherlock via Google Reader:

via Commonwealth Conversations: Revenue by Robert Bliss on 6/4/12

The Executive Office for Administration and Finance today released the first-ever Massachusetts Tax Credit Transparency Report compiled by the Department of Revenue based on reports received from the various state agencies that administer thirteen tax credits.

The reporting requirement was proposed by Gov. Deval Patrick and enacted by the Legislature in the FY11 budget. The report identifies receipients of the credits and the amount either received or awarded in calendar 2011.

"The Patrick-Murray Administration continues to build on its record of making government spending more transparent to the public with today's publication of the Tax Credit Report," said A&F Secretary Jay Gonzalez.

"This release, along with other transparency initiatives like the recent launch of 'Open Checkbook' on the state's website gives taxpayers access to information they need and deserve to understand how government funds are being spent and to hold those of us in government accountable for the management of their tax dollars," Gonzalez said.

The credits reported on are the Film Tax Credit, Historic Rehabilitation Tax Credit, Low-Income Housing Tax Credit, Brownfields Tax Credit, Medical Device Company Tax Credit, Dairy Farmer Tax Credit, Life Sciences Tax Incentive Program (with its Investment, Research, User Fee  and Jobs Tax Credits), Economic Development Incentive Program Credit, Certified Housing Development Tax Credit, and Conservation Land Tax Credit. 

Things you can do from here:

Saturday, December 3, 2011

DOR warns of Senior Circuit Breaker Tax Credit scam

Sent to you by Steve Sherlock via Google Reader:

via Commonwealth Conversations: Revenue by Robert Bliss on 12/2/11

The Department of Revenue today released a statement from Taxpayer Advocate Dennis Buckley warning the public, tax preparers, and those who assist seniors in preparing tax returns of a scam that surfaced last year involving the popular Senior Circuit Breaker Tax Credit.

"The Senior Circuit Breaker Tax Credit last year helped nearly 80,000 state residents receive a refundable tax credit. Unfortunately, several unscrupulous tax preparers coaxed elderly public housing residents to fraudulently apply for the credit (residents of public housing are ineligible for the credit).

"The preparers who participated in this scam asked for a payment to submit the fraudulent application, and some seniors received the credit without actually qualifying for it. The Department of Revenue has notified those senior residents that the refund was obtained fraudulently and must be paid back.
"We ask you to share knowledge of this scam with your colleagues. Seniors are not eligible for the Senior Circuit Breaker Tax Credit if they live in public or subsidized housing," Buckley wrote.
The Senior Circuit Breaker will deliver a maximum tax credit of $980 in tax year 2011.

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Saturday, October 1, 2011

Senior Circuit Breaker Tax Credit increases to $980 for 2011

 
 

Sent to you by Steve Sherlock via Google Reader:

 
 

via Commonwealth Conversations: Revenue by Robert Bliss on 9/30/11

Bliss for Blog IMG_9679_resized

Posted by:

Robert Bliss, Director of Communication, Department of Revenue

The Department of Revenue published yesterday the Technical Information Release that presents the new income, valuation and credit amounts for the Senior Circuit Breaker Tax Credit for tax year 2011.

The $980 maximum value of this credit for tax year 2011 is $10 more than the previous year.

There is no other refundable state tax credit that puts more money into the wallets of taxpayers 65 and older than the Senior Circuit Breaker Tax Credit. In tax year 2009, the most recent tax year for which complete information is available, 80,566 taxpayers received $61.1million in cash or credits used to lower income tax payments, an average of $759 per taxpayer. 

The circuit breaker tax credit is based upon the actual real estate taxes -- or rent -- paid by a taxpayer who is eligible to claim the credit.

It is equal to the amount by which the taxpayer's property tax payments in the current tax year, including water and sewer charges but excluding any abatement or exemption granted, exceeds 10 percent of the taxpayer's total income, provided that the credit does not exceed the maximum credit amount for tax year 2011 of $980.

A taxpayer's total income may not exceed $52,000 for a single individual who is not head of a household, $65,000 for a head of household, and $78,000 for a married couple filing jointly.

The maximum assessed valuation of a residence may not exceed $729,000, which is down from last year's maximum valuation of $764,000, reflecting a decline in the valuation of homes.

The credit also works for renters. It is equal to the amount by which 25 percent of the rent actually paid during the taxable year exceeds 10 percent of the taxpayer's total income, with the credit capped at $980.

How does this credit work in practice? Take the example of a married couple with an annual income of $60,000 and $8,000 in property tax and water and sewer bills for their home. Ten percent of their income is $6,000 and their combined property tax and water and sewer bills total $8,000, which is $2,000 more than 10 percent of their income, so they qualify for the maximum credit of $980.

For a married couple filing jointly that rents, take the example of a married couple with a $28,000 income who pay $12,000 annually in rent. Ten percent of their income is 2,800, which is $200 less than 25 percent of their rent, so they qualify for a credit of $200.

If you are eligible, you can go back three years and claim the credit retroactively. If you owe tax, the credit is deducted from the amount owed. And if you don't owe tax, the state cuts you a check. It's worth taking a few minutes to do the math on this.

Historic information on the number and amount of credits issued to taxpayers in each of the Commonwealth's 351 cities and towns over the years is published on DOR's web page. Click on the link that says Senior Circuit Breaker Usage Report.

 

 


 
 

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Saturday, February 26, 2011

Franklin residents gain with the Senior Circuit Breaker

The MA Dept of Revenue released numbers on the Senior Circuit Breaker program for all communities in the Commonwealth on Friday. Franklin does well with this credit. There has been steady growth in the number of filers, total credit received, and as a result the average credit per filer. The data released covers the tax years from 2001 through 2009. Now that the data is available, I'll watch to see when each new year is added to the table and update the numbers.



Tax Year Number of Filers Amount of Credit Claimed Average Credit
2001 87  $28,251  $325
2002 109  $66,448  $610
2003 150  $90,818  $605
2004 171  $107,020  $626
2005 202  $122,377  $606
2006 234  $158,800  $679
2007 248  $173,524  $700
2008 302  $217,429  $720
2009 324  $240,692  $743


Of the 335 communities where residents did receive the credit Franklin ranked 90th in the total number of filers. Franklin ranked 89th in total credit received but dropped to 175th in average credit received.


What is the Senior Circuit Breaker?
No other refundable tax credit equals the Senior Circuit Breaker Tax Credit for putting money into the wallets of average taxpayers 65 and older. In tax year 2009, more than 77,000 senior taxpayers who were either homeowners or renters received credits of nearly $60 million. 
Yet it is safe to say that many eligible taxpayers have never heard of the credit. If you are reading this and have older relatives or friends who might benefit, pass on the word. The maximum credit, after all, is worth $970 in the coming tax year. 
The Department of Revenue has just released the rules and regulations for the Senior Circuit Breaker Tax Credit in tax year 2010. The credit is based on the actual property tax or rent paid by the eligible taxpayer who is either living in their own home or paying rent. 
A taxpayer's total income may not exceed $51,000 for a single individual; $64,000 for a head of household; or $77,000 for married couples filing a joint return. The assessed valuation of a residence may not exceed $764,000. Many taxpayers 65 and over fall within these limits. 
The credit is equal to the amount by which the taxpayer's property tax payments in the current tax year, including water and sewer charges but excluding any abatement or exemption, exceeds 10 percent of the taxpayer's total income. 
The credit also works for renters. It is equal to the amount by which 25 percent of the rent actually paid during the taxable year exceeds 10 percent of the taxpayer's total income, with the credit capped at $970.

For additional info on the credit, check the State website here

To view (or download) the data from the state, check the web page here

The table of Franklin's data is also posted as a Google document and can be found here. I pulled from each year, the data specific for Franklin to make this table. The info in this table drove the chart and table found above.

Related post on credits or abatements for seniors
http://franklinmattersweekly.blogspot.com/2010/03/fmw-59-week-ending-3710.html


Franklin, MA

Friday, October 8, 2010

"No other refundable tax credit equals the Senior Circuit Breaker Tax Credit"

No other refundable tax credit equals the Senior Circuit Breaker Tax Credit for putting money into the wallets of average taxpayers 65 and older. In tax year 2009, more than 77,000 senior taxpayers who were either homeowners or renters received credits of nearly $60 million.
Yet it is safe to say that many eligible taxpayers have never heard of the credit. If you are reading this and have older relatives or friends who might benefit, pass on the word. The maximum credit, after all, is worth $970 in the coming tax year.
The Department of Revenue has just released the rules and regulations for the Senior Circuit Breaker Tax Credit in tax year 2010. The credit is based on the actual property tax or rent paid by the eligible taxpayer who is either living in their own home or paying rent.
A taxpayer's total income may not exceed $51,000 for a single individual; $64,000 for a head of household; or $77,000 for married couples filing a joint return. The assessed valuation of a residence may not exceed $764,000. Many taxpayers 65 and over fall within these limits.
The credit is equal to the amount by which the taxpayer's property tax payments in the current tax year, including water and sewer charges but excluding any abatement or exemption, exceeds 10 percent of the taxpayer's total income.
The credit also works for renters. It is equal to the amount by which 25 percent of the rent actually paid during the taxable year exceeds 10 percent of the taxpayer's total income, with the credit capped at $970.
Read the full posting here:
http://revenue.blog.state.ma.us/blog/2010/10/senior-circuit-breaker-tax-credit-delivers-big-bucks-.html

Spread the word amongst the seniors you know, this could be something to help them!




Franklin, MA