department of revenue commonwealth of massachusetts 2007 ... · completing schedule hc:if you were...

Department of Revenue Commonwealth of Massachusetts

2007 MassachusettsResident Income Tax Form 1All Schedules and Instructions Including New Schedule HCand Telefile WorksheetFull-Year Residents Only

Schedule Schedule HCHC Health Health Care Care Information.Information. YYou ou must must enclose enclose this this schedule schedule with with Form Form 1 1 or or Form Form 1-NR/PY1-NR/PY..YYYY20200707

As a result of the new health care reform law, most Massachusetts residents age 18 and over are required to have health insuran ce, if it is affordable for

them. Those who did not have health insurance by December 31, 2007 may lose their personal exemption. This schedule must be completed by all full-year

residents and certain part-year residents (see instructions) age 18 and over to determine the amount of their personal exemptio n.

Completing Schedule HC: If you were enrolled in a health insurance plan as of December 31, 2007, you only need to complete page 1 of Schedule HC,

using the information from Form MA 1099-HC issued to you by your health insurance carrier (see instructions for line 2 if you were not issued a Form MA

1099-HC). After completing page 1 of this schedule and entering your personal exemption amount on Form 1 or Form 1-NR/PY, YY you should skip the re-

mainder of Schedule HC and continue completing your tax return. Note: Failure to enclose Schedule HC will delay the processing of your return.

DATE DATE OF OF BIRTHBIRTHSPOUSE’S SPOUSE’S DATE DATE OF OF BIRTHBIRTH

11 Were you (and/or your spouse if married filing jointly) enrolled in a health insurance plan as of 3 1 You: Yes No

December 31, 2007? For information regarding late 2007 applicants for Young Adult Plans, Spouse: YesYY No

Commonwealth Care and MassHealth, see instructions.

If you (and your spouse if married filing jointly) answer Yes YY in line 1, complete lines 2 or 3 below, whichever is appropriate. Also, enter one of the

following amounts on line 2a of Form 1 or line 4a of Form 1-NR/PY: $4,125 if single or married filing a separate return; $6,375 if head of house-

hold; or $8,250 if married filing jointly. Be sure to fill in the oval(s) in line 2 if you were not issued Form MA 1099-HC (see instructions).

If you are filing a joint return, and one spouse answers Yes in line 1 but the other answers No in line 1, the spouse who answers Yes YY must complete

lines 2 or 3 below, whichever is appropriate, and the spouse who answers No must go to line 4a on page 2.

If you (and your spouse if married filing jointly) answer No to line 1, go to line 4a on page 2.

22 PRIVAVV TE AA HEALTH LL INSURANCE: If you (and/or your spouse if married filing jointly) were enrolled in a private health insurance plan, such as cover-

age provided by an employer or purchased on your own, complete the information below. Note: If you are married filing jointly and you are both

covered under the same insurance plan, you must complete both Parts 1 and 2 below.

Part 1rr . Your YY Health Insurance 3 Fill in if you were not issued Form MA 1099-HC by your insurance carrier.

NAME NAME OF OF INSURANCE COMPANY OR ADMINISTRATOR (from box 1 of Form MA 1099-HC)

INSURANCE COMPANY OR ADMINISTRATOR (from box 1 of Form MA 1099-HC)

FEDERAL FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC)

IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SUBSCRIBER SUBSCRIBER NUMBER NUMBER (from (from box box 6 6 of of Form Form MA MA 1099-HC)1099-HC)

Part 2rr . Spouse’s Health Insurance 3 Fill in if your spouse was not issued Form MA 1099-HC by your insurance carrier.

NAME NAME OF OF INSURANCE INSURANCE COMPANY OR ADMINISTRATOR FOR SPOUSE (from box 1 of Form MA 1099-HC)

COMPANY OR ADMINISTRATOR FOR SPOUSE (from box 1 of Form MA 1099-HC)

FEDERAL FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC)

IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SPOUSE’S SPOUSE’S SUBSCRIBER SUBSCRIBER NUMBER NUMBER (from (from Form Form MA MA 1099-HC)1099-HC)

33 GOVERNMENT-SUBSIDIZED HEALTH LL INSURANCE: If you (and/or your spouse if married filing jointly) were enrolled in a government-subsidized

health insurance plan, fill in the appropriate oval below. Government-subsidized health insurance does not include services provided to individuals who

have received access to care through the Health Safety Net Trust Fund (previously known as the “Uncompensated Care Pool” or “Free Care Pool”).

a. Commonwealth Care . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . 3 3a You: Spouse:

b. MassHealth. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . 3 3b You: Spouse:

c. Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . 3

3c You: Spouse:

d. Veterans Administration Program Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . 3 3d You: Spouse:

e. Other (see instructions). Enter name(s) of program(s) below . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . 3 3e You: Spouse:

NAME NAME OF OF INSURANCE INSURANCE CARRIER CARRIER OR OR PROGRAMPROGRAM

f th health

FIRST FIRST NAMNAME

M

E

M.I..I. LAST LAST NAMENAME

SOCIAL SOCIAL SECURITY SECURITY NUMBERNUMBER

This year Massachusetts

requires that you file the

new health care schedule.

ScheduleHCSee inside for more details.

Save time — E-File through your See if you qualify See page 3Telefile your return tax preparer for free E-filing for details

• AffordabilityFor those taxpayers without health insurance, youÕll be required tocomplete this Affordability section to determine your personal exemptionamount.

• AppealsBe sure to fill in the oval if you are appealing the loss of your personalexemption.

11

Schedule HC Health Care Information. You must enclose this schedule with Form 1 or Form 1-NR/PY. 2007As a result of the new health care reform law, most Massachusetts residents age 18 and over are required to have health insurance, if it is affordable forthem. Those who did not have health insurance by December 31, 2007 may lose their personal exemption. This schedule must be completed by all full-yearresidents and certain part-year residents (see instructions) age 18 and over to determine the amount of their personal exemption.

Completing Schedule HC: If you were enrolled in a health insurance plan as of December 31, 2007, you only need to complete page 1 of Schedule HC,using the information from Form MA 1099-HC issued to you by your health insurance carrier (see instructions for line 2 if you were not issued a Form MA1099-HC). After completing page 1 of this schedule and entering your personal exemption amount on Form 1 or Form 1-NR/PY, you should skip the re-mainder of Schedule HC and continue completing your tax return. Note: Failure to enclose Schedule HC will delay the processing of your return.DATE OF BIRTH SPOUSE’S DATE OF BIRTH

1 Were you (and/or your spouse if married filing jointly) enrolled in a health insurance plan as of 3 1 You: Yes NoDecember 31, 2007? For information regarding late 2007 applicants for Young Adult Plans, Spouse: Yes NoCommonwealth Care and MassHealth, see instructions.

If you (and your spouse if married filing jointly) answer Yes in line 1, complete lines 2 or 3 below, whichever is appropriate. Also, enter one of thefollowing amounts on line 2a of Form 1 or line 4a of Form 1-NR/PY: $4,125 if single or married filing a separate return; $6,375 if head of house-hold; or $8,250 if married filing jointly. Be sure to fill in the oval(s) in line 2 if you were not issued Form MA 1099-HC (see instructions).

If you are filing a joint return, and one spouse answers Yes in line 1 but the other answers No in line 1, the spouse who answers Yes must completelines 2 or 3 below, whichever is appropriate, and the spouse who answers No must go to line 4a on page 2.

If you (and your spouse if married filing jointly) answer No to line 1, go to line 4a on page 2.

2 PRIVATE HEALTH INSURANCE: If you (and/or your spouse if married filing jointly) were enrolled in a private health insurance plan, such as cover-age provided by an employer or purchased on your own, complete the information below. Note: If you are married filing jointly and you are bothcovered under the same insurance plan, you must complete both Parts 1 and 2 below.

Part 1. Your Health Insurance 3 Fill in if you were not issued Form MA 1099-HC by your insurance carrier.NAME OF INSURANCE COMPANY OR ADMINISTRATOR (from box 1 of Form MA 1099-HC)

FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SUBSCRIBER NUMBER (from box 6 of Form MA 1099-HC)

Part 2. Spouse’s Health Insurance 3 Fill in if your spouse was not issued Form MA 1099-HC by your insurance carrier.NAME OF INSURANCE COMPANY OR ADMINISTRATOR FOR SPOUSE (from box 1 of Form MA 1099-HC)

FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SPOUSE’S SUBSCRIBER NUMBER (from Form MA 1099-HC)

3 GOVERNMENT-SUBSIDIZED HEALTH INSURANCE: If you (and/or your spouse if married filing jointly) were enrolled in a government-subsidizedhealth insurance plan, fill in the appropriate oval below. Government-subsidized health insurance does not include services provided to individuals whohave received access to care through the Health Safety Net Trust Fund (previously known as the “Uncompensated Care Pool” or “Free Care Pool”).

a. Commonwealth Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3a You: Spouse:b. MassHealth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3b You: Spouse:c. Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3c You: Spouse:d. Veterans Administration Program Enrollment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3d You: Spouse:e. Other (see instructions). Enter name(s) of program(s) below. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3e You: Spouse:NAME OF INSURANCE CARRIER OR PROGRAM

NAME OF INSURANCE CARRIER OR PROGRAM FOR SPOUSE

STOP! If you (and your spouse if married filing jointly) answered Yes in line 1 and completed line 2 and/or line 3, you meet the requirements of the healthcare reform law and are not subject to the loss of your personal exemption. Enter your personal exemption amount, shown in line 1 above, on your Form 1or Form 1-NR/PY. Skip the remainder of this schedule and continue completing your tax return. If married filing jointly and one spouse answered Yes inline 1 and one spouse answered No in line 1, do not enter a personal exemption amount until page 2 of Schedule HC is completed.

FIRST NAME M.I. LAST NAME SOCIAL SECURITY NUMBER

2

RELIGIOUS EXEMPTION AND CERTIFICATE OF EXEMPTION

Complete this page only if you (and/or your spouse if married filing jointly) do not have health insurance. If married filing jointly and one spouse answeredYes in line 1 on page 1 but the other spouse answered No in line 1 on page 1, only the spouse who answered No must answer the following questions.

4a RELIGIOUS EXEMPTION: Are you (and/or your spouse if married filing jointly) claiming an exemption 3 4a You: Yes Nofrom the requirement to purchase health insurance based on your sincerely held religious beliefs? Spouse: Yes No

If you (and/or your spouse if married filing jointly) answer Yes, go to line 4b. If both answer No, go to line 5.

4b If you (and/or your spouse if married filing jointly) are claiming a religious exemption in line 4a, 3 4b You: Yes Nodid you (and/or your spouse if married filing jointly) receive medical health care during tax year 2007? Spouse: Yes No

If you (and your spouse if married filing jointly) answer No to line 4b, go to line 7a.

If you are filing a joint return and one spouse either has health insurance or answers No to line 4b but the other spouse answers Yes, the spousewho answered Yes must go to line 5 to determine the amount of the personal exemption.

If you (and your spouse if married filing jointly) answer Yes to line 4b, go to line 5.

5 CERTIFICATE OF EXEMPTION: Have you (and/or your spouse if married filing jointly) obtained a Certifi- 3 5 You: Yes Nocate of Exemption for the 2007 tax year issued by the Commonwealth Health Insurance Connector Authority? Spouse: Yes No

If you (and your spouse if married filing jointly) answer Yes to line 5, enter the certificate number(s) below. Also, go to line 7a.

If you are filing a joint return and one spouse either has health insurance or answers Yes to line 5 but the other spouse answers No, the spousewho answered Yes must enter the certificate number below and the spouse who answered No must go to line 6a to determine the amount of thepersonal exemption.

If you (and your spouse if married filing jointly) answered No to line 5, go to line 6a.CERTIFICATE NUMBER SPOUSE’S CERTIFICATE NUMBER

AFFORDABILITY AS DETERMINED BY STATE GUIDELINESNOTE: This section will require the use of worksheets and tables found in the instructions. You must complete the worksheet(s) to determine the amountof your personal exemption to enter on Form 1, line 2a or Form 1-NR/PY, line 4a.

6a Did your employer (or your spouse’s employer if married filing jointly) offer affordable health 3 6a You: Yes Noinsurance as determined by completing the Schedule HC Worksheet for Line 6a in the instructions? Spouse: Yes No

If your employer did not offer health insurance, you were not eligible for health insurance offered by your employer, you were self-employed or youwere unemployed, go to line 6b.

If you answer No, fill in the No oval(s) for yourself (and your spouse if married filing jointly) and go to line 6b. If you answer Yes, fill in the Yes oval(s)for yourself (and your spouse if married filing jointly) and go to line 7b.

6b Are you (or your spouse if married filing jointly) eligible for government-subsidized health insur- 3 6b You: Yes Noance as determined by completing the Schedule HC Worksheet for Line 6b in the instructions? Spouse: Yes No

If you answer No, fill in the No oval(s) for yourself (and your spouse if married filing jointly) and go to line 6c. If you answer Yes, fill in the Yes oval(s)for yourself (and your spouse if married filing jointly) and go to line 7b.

6c Are you (or your spouse if married filing jointly) able to afford private health insurance as 3 6c You: Yes Nodetermined by completing the Schedule HC Worksheet for Line 6c in the instructions? Spouse: Yes No

If you answer No, fill in the No oval(s) for yourself (and your spouse if married filing jointly) and go to line 7a. If you answer Yes, fill in the Yes oval(s)for yourself (and your spouse if married filing jointly) and go to line 7b.

PERSONAL EXEMPTION

7a You are entitled to your personal exemption. Enter one of the following amounts on line 2a of Form 1 or line 4a of Form 1-NR/PY: $4,125 if singleor married filing a separate return; $ 6,375 if head of household; or $8,250 if married filing jointly.

7b You are not entitled to your personal exemption.* If you are not claiming an appeal on Schedule HC-A, enter “0” on line 2a of Form 1 or line 4a ofForm 1-NR/PY. If you are claiming an appeal, see the Appeals section below.

*If you are filing a joint return and one spouse either has health insurance or is claiming an exemption and the other spouse answers Yes to line(s)6a, 6b or 6c and is filing an appeal, go to the Appeals section below. If you are not filing an appeal, the joint filers are allowed to deduct half of thepersonal exemption. Enter $4,125 in line 2a of Form 1 or line 4a on Form 1-NR/PY. Continue completing your tax return.

APPEALSTaxpayers who will lose their personal exemption may submit an appeal by filing Schedule HC-A, Health Care Appeals, claiming a hardship preventedthe purchase of affordable health insurance coverage. Fill in oval if filing Schedule HC-A (page 3 of Schedule HC).

2007 SCHEDULE HC, PAGE 2

Schedule HCThis year Massachusettsrequires that you file thisnew health care schedule

with your 2007 tax return.

Schedule HC InformationAs a result of the new health care reform law, most Massachusetts residentsage 18 and over are required to have health insurance, if it is affordable for them.If you cannot show that you had health insurance by December 31, 2007 you maylose your personal exemption. Schedule HC must be completed to determine theamount of your personal exemption.

Please take a few minutes to read the information below and familiarize yourselfwith the new Schedule HC. Further information can be found in the special healthcare section at the front of this booklet. These instruction pages are shaded blue.

Completing Your Schedule HC

• Health Insurance InformationBe sure you, and your spouse if married filing jointly, complete line 1,and lines 2 or 3 depending on your insurance situation. Most taxpayerswill find this information on the Form MA 1099-HC issued by their healthinsurance carrier.

• Taxpayer InformationPrint all required information in black ink in the spaces provided.

• ExemptionsIf you qualify for a health insurance exemption, be sure to completeline 4 or line 5.

Important Health Insurance Information HC-1

Schedule HCHealth Care InformationAs a result of the new health care reform law,most Massachusetts residents age 18 and overare required to have health insurance, if it is af-fordable for them. Those who cannot show thatthey had health insurance by December 31, 2007may lose their personal exemption. Schedule HC,Health Care Information, must be completed by allfull-year residents to determine the amount oftheir personal exemption. Schedule HC must alsobe completed by taxpayers who moved into Mass-achusetts on or before October 30, 2007 and werepart-year residents as of December 31, 2007.

More information about the new health care re-form law and how to purchase affordable healthinsurance is available at the CommonwealthHealth Insurance Connector Authority’s website atwww.mahealthconnector.org.

If you have health insurance, you only need tocomplete page 1 of Schedule HC using the infor-mation from Form MA 1099-HC issued to you byyour health insurance carrier. You should be is-sued Form MA 1099-HC no later than January 31.After completing page 1 of this schedule and en-tering your personal exemption amount on Form 1or Form 1-NR/PY, you should continue completingyour tax return.

If you do not have health insurance you mustcomplete line 1 and the appropriate informationon page 2 of Schedule HC.

Line 1. Health InsuranceIf you (and/or your spouse if married filing a jointreturn) had health insurance as of December 31,2007, fill in the Yes oval(s) in line 1 and completelines 2 or 3, whichever is appropriate.

If you are filing a joint return, and one spouse an-swers Yes but the other answers No, the spousewho answers Yes must complete lines 2 or 3,whichever is appropriate, and the spouse who an-swers No must go to line 4a on page 2 of Sched-ule HC.

If you (and your spouse if married filing a joint re-turn) do not have health insurance, fill in the Nooval(s) in line 1 and go to line 4a on page 2 ofSchedule HC.

Important Information for Late 2007Applicants for Young Adult Plans,Commonwealth Care and MassHealthIf you were enrolled in a Young Adult Plan withcoverage effective as of January 1, 2008, fill in theYes oval(s) in line 1 and complete line 2. If youwere enrolled in Commonwealth Care with cover-age effective as of January 1, 2008, fill in the Yesoval(s) in line 1 and complete line 3a. If you appliedfor MassHealth in December 2007, fill in the Yesoval(s) in line 1 and complete line 3b.

Note: The Department of Revenue will verifywhether you were ultimately found eligible forMassHealth. If you were found ineligible for Mass-Health, your return will be adjusted without thebenefit of your personal exemption and you willbe billed accordingly.

Line 2. Private Health InsuranceIf you (and/or your spouse if married filing a jointreturn) have health insurance from a private in-surer, such as coverage provided by your employeror purchased on your own, complete Part(s) 1and/or 2, using the information from Form MA1099-HC, Individual Mandate MassachusettsHealth Care Coverage. Form MA 1099-HC will beissued to you by your health insurance carrier,no later than January 31.

Note: Certain taxpayers may not have been issuedForm MA 1099-HC, for example, a taxpayer withan out-of-state or out-of-country health insurancecarrier. If you were not issued a Form MA 1099-HCby your health insurance carrier, only enter thename of your insurance company or administratorand subscriber/policy number, as shown on yourinsurance card, in line 2, Part(s) 1 and/or 2. Also,be sure to fill in the oval(s). If your health insurancecarrier is located in Massachusetts and you did notreceive Form MA 1099-HC or you lost Form MA1099-HC, contact the Customer Service Depart-ment of your insurance carrier to obtain the neces-sary information.

Coverage provided by government programs,such as Medicare, is not considered privatehealth insurance.

Note: Your spouse’s subscriber number may ap-pear first in the “Dependent” section of Form MA1099-HC. Also, students and other dependents maybe reported on the Form MA 1099-HC of the pri-mary policyholder.

Line 3. Government-Subsidized HealthInsuranceIf you (and/or your spouse if married filing a jointreturn) have government-subsidized health insur-ance, such as Commonwealth Care, Medicare,MassHealth or Veterans Administration ProgramEnrollment, fill in the appropriate oval. Government-

subsidized health insurance is generally availableto individuals who meet certain age, income or dis-ability criteria.

“Other” includes government-administered planssuch as: Fishing Partnership Health Plan; TRICARE;or Massachusetts Division of Unemployment As-sistance Medical Security Program. If you filledin the “Other” oval, be sure to enter the name ofthe provider where indicated.

Note: Generally, employees or retirees of the fed-eral, state or local government have private healthinsurance and should complete line 2.

Also, government-subsidized health insurance doesnot include services provided to individuals whohave received access to care through the HealthSafety Net Trust Fund (previously known as the“Uncompensated Care Pool” or “Free Care” Pool).

Important: Schedule HC is complete if you (andyour spouse if married filing a joint return) an-swered Yes in line 1 and filled out the information inline 2 and/or line 3. Skip the remainder of Sched-ule HC and enter one of the following amounts inline 2a of Form 1 or line 4a of Form 1-NR/PY:$4,125 if single or married filing a separate return;$6,375 if head of household; or $8,250 if marriedfiling a joint return. Skip the remainder of Sched-ule HC and continue completing your Form 1 orForm 1-NR/PY.

Lines 4a through 6c only apply to taxpayers with-out health insurance.

If married filing a joint return and one spouse an-swered Yes in line 1 but the other spouse answeredNo in line 1, only the spouse who answered Nomust answer the following questions.

Line 4. Religious ExemptionLine 4a. A religious exemption is available foranyone who has a sincere religious belief that isthe basis of refusal to obtain and maintain healthinsurance coverage. Fill in the Yes oval(s) if you(and/or your spouse if married filing a joint re-turn) are claiming a religious exemption from therequirement to purchase health insurance basedon your sincerely held religious beliefs.

If you (and/or your spouse if married filing a jointreturn) answer Yes, go to line 4b. If you (and yourspouse if married filing a joint return) answer No,go to line 5.

Line 4b. If you (or your spouse if married filing ajoint return) are claiming the religious exemptionbut you (or your spouse if married filing a joint re-turn) received medical health care during tax year2007, such as, treatment during an emergencyroom visit, you may not be entitled to your per-sonal exemption if it is determined that you couldhave afforded health insurance.

Important Health Insurance InformationHC-2

Medical health care excludes certain treatmentssuch as preventive dental care, certain eye exami-nations and vaccinations. It also excludes a phys-ical examination when required by a third party,such as a prospective employer. For additional in-formation, see Department of Revenue regulation830 CMR 111M.2.1, Health Insurance IndividualMandate; Personal Income Tax Return Require-ments, available on the department’s website atwww.mass.gov/dor.

If you (and your spouse if married filing a joint re-turn) answer No to line 4b, enter one of the fol-lowing amounts on line 2a of Form 1 or line 4a ofForm 1-NR/PY: $4,125 if single or married filing aseparate return; $6,375 if head of household; or$8,250 if married filing a joint return. Skip the re-mainder of Schedule HC and continue completingyour tax return.

If you are filing a joint return and one spouse eitherhas health insurance or answers No to line 4b butthe other spouse answers Yes to line 4b, thespouse who answered Yes must go to line 5.

If both answers are Yes to line 4b, go to line 5.

Line 5. Certificate of ExemptionThe Commonwealth Health Insurance ConnectorAuthority provided certificates of exemption toqualified taxpayers who applied in 2007.

If you (and your spouse if married filing a joint re-turn) have a “Certificate of Exemption” issued bythe Commonwealth Health Insurance ConnectorAuthority stating that no Connector health plan isaffordable, fill in the Yes oval(s) in line 5 ofSchedule HC and enter the certificate number(s)in the space(s) provided. Also, enter one of thefollowing amounts on line 2a of Form 1 or line 4aof Form 1-NR/PY: $4,125 if single or married filinga separate return; $6,375 if head of household; or$8,250 if married filing a joint return. Skip the re-mainder of Schedule HC and continue completingyour tax return.

If you are filing a joint return and one spouse an-swers Yes to line 5 but the other spouse answersNo to line 5, the spouse who answered Yes mustenter the certificate number and the spouse whoanswered No must go to line 6a.

If you (and your spouse if married filing a joint re-turn) answered No to line 5, go to line 6a.

For more information about Certificates of Ex-emption, visit the Commonwealth Health In-surance Connector Authority’s website atwww.mahealthconnector.org.

Line 6. Affordability As DeterminedBy State GuidelinesTaxpayers who did not have health insurance asof December 31, 2007 will only lose their per-sonal exemption if they had access to affordablehealth insurance. The following pages contain theworksheets and tables to determine the monthlyhealth insurance premium amount that you shouldhave been able to afford. To complete these work-sheets, you will need to have your completed 2007U.S. Form 1040, 1040A or 1040EZ. You also willneed to know how much it would have cost youto enroll in any health insurance plan offered byan employer in 2007. An employer’s Human Re-sources Department should be able to providethis amount to you.

Note: Check out the easy-to-use online versionsof the worksheets on DOR’s website at www.mass.gov/dor.

If an employer offered health insurance, completethe Schedule HC Worksheet for Line 6a.

If an employer did not offer health insurance or of-fered health insurance that was not affordable foryou (as determined by the Schedule HC Worksheetfor Line 6a), complete the Schedule HC Worksheetfor Lines 6b and 6c.

Even though you may be deemed able to affordhealth insurance based on an affordability table inline(s) 6a, 6b or 6c, you may believe that you can-not afford health insurance because you experi-enced a hardship. If you experienced a hardshipduring 2007, see Schedule HC-A.


If line 1 is more than:

• $50,000 if single or married filing a separatereturn;

• $80,000 if married filing a joint return with nodependents; or

• $110,000 if head of household or married fil-ing a joint return with one or more dependents,

you are deemed able to afford health insuranceand are subject to the loss of your personal ex-emption. Fill in the Yes oval in line 6a for your-self (and your spouse, if applicable, if marriedfiling a joint return) and go to line 7b.

If line 1 is:

• more than $15,315 but less than or equal to$50,000 if single or married filing a separatereturn;

• more than $20,535 but less than or equal to$80,000 if married filing a joint return with nodependents; or

• more than $25,755 but less than or equal to$110,000 if head of household or married filinga joint return with one or more dependents,

go to line 2.

2. Enter the monthly premium that correspondswith your income range (from line 1 of work-sheet) and filing status from Table 1: Afford-ability on page HC-5. To find this amount, lookat the row for your income range in col. a of theappropriate table based on your filing statusand go to col. b to find the monthly premiumamount . . . . . . . . . . . . . . . . . . . . . .

3. Enter the lowest monthly premium cost ofhealth insurance that would cover you, andyour spouse and dependent children, if any,offered to you in 2007 through an employer.The employer’s Human Resources Depart-ment should be able to provide this amountto you . . . . . . . . . . . . . . . . . . . . . . .

Note: If you declined employer sponsoredhealth insurance, the monthly premium amountmay be found on the Health Insurance Respon-sibility Disclosure Form (HIRD) you should havereceived from your employer.

If line 3 is less than or equal to line 2, you aredeemed able to afford health insurance and aresubject to the loss of your personal exemption.Fill in the Yes oval in line 6a for yourself (andyour spouse, if applicable, if married filing ajoint return) and go to line 7b.

If line 3 is greater than line 2, an employer didnot offer you affordable health insurance. Fill inthe No oval in line 6a for yourself (and yourspouse, if applicable, if married filing a joint re-turn) and complete the following Schedule HCWorksheet for Line 6b on page HC-4.

Complete the Schedule HC worksheet(s) only ifyou (and/or your spouse if married filing a jointreturn) answered No to questions 1, 4a and 5Schedule HC.

If married filing jointly and one spouse answersNo to questions 1, 4a and 5, the spouse who an-swered No must complete the Schedule HC work-sheet(s). In that instance, be sure to complete theworksheet using married filing jointly amounts.

Note: Same-sex spouses filing a Massachusettsjoint return should combine their income figuresfrom their separate U.S. returns.

Schedule HC Worksheet for Line 6aComplete the following worksheet only if you (oryour spouse if married filing jointly) were eligiblefor insurance offered by an employer in 2007that covered you, and your spouse and depen-dent children, if any. This worksheet will deter-mine if you could afford the health insuranceoffered by an employer in 2007. If an employerdid not offer health insurance that covered you,and your spouse and dependent children, if any,or if you were not eligible for insurance offeredby an employer, skip this worksheet and com-plete the Schedule HC Worksheet for Line 6b.

If an employer offers you free health insurancecoverage (the employer’s Human Resources De-partment should be able to provide this informa-tion to you), you are deemed able to afford healthinsurance and are subject to the loss of yourpersonal exemption. Fill in the Yes oval in line 6afor yourself (and your spouse, if applicable, ifmarried filing a joint return) and go to line 7b.

1. Enter your federal adjusted gross income(from U.S. Form 1040, line 37, Form 1040A,line 21 or Form 1040EZ, line 4). . . .

If line 1 is less than or equal to:

• $15,315 if single or married filing a separatereturn;

• $20,535 if married filing a joint return with nodependents; or

• $25,755 if head of household or married filinga joint return with one or more dependents,

you are deemed unable to pay for health insur-ance. Fill in the No oval in line 6a for yourself(and your spouse, if applicable, if married filinga joint return). Also, skip the remainder of thisworksheet and go to the following Schedule HCWorksheet for Lines 6b and 6c on page HC-4.

Important Health Insurance InformationHC-4

Note: Same-sex spouses filing a Massachusettsjoint return should combine their income figuresfrom their separate U.S. returns.

Schedule HC Worksheet for Line 6b: Eligibilityfor Government-Subsidized Health Insurance

Complete the following worksheet only if an em-ployer did not offer health insurance or did notoffer health insurance that you could afford, asdetermined in the Schedule HC Worksheet forLine 6a. This worksheet will determine if you areeligible for government-subsidized health insur-ance or could not afford private health insurance.

1. Enter your income before adjustments (fromU.S. Form 1040, line 22, Form 1040A, line 15or Form 1040EZ, line 4) . . . . . . . . .

2. Enter the amount from the Income column,based on your family size (do not include de-pendent children age 19 or older in your familysize), from the table to the right . . .

If line 1 is greater than line 2, or

• you are not a citizen or an alien legally residingin the U.S., or

• an employer offers to pay more than 20% of afamily plan or 33% of an individual plan (the em-ployer’s Human Resources Department shouldbe able to provide this information to you), or

• you applied for MassHealth or CommonwealthCare in 2007 and were denied,

you are deemed ineligible for government-subsidized health insurance. Fill in the No oval inline 6b for yourself (and your spouse, if applica-ble, if married filing a joint return) and go to line6c to determine if you are eligible for privatehealth insurance.

If line 1 is less than or equal to line 2 and

• you are a citizen or an alien legally residing inthe U.S. and

• an employer does not offer to pay more than20% of a family plan or 33% of an individualplan (the employer’s Human Resources Depart-ment should be able to provide this informationto you),

you would have been deemed eligible for gov-ernment-subsidized health insurance, whichyou did not obtain. You are subject to the lossof your personal exemption. Fill in the Yes ovalin line 6b for yourself (and your spouse, ifapplicable, if married filing a joint return) andgo to line 7b.

Schedule HC Worksheet for Line 6c:Affordability of Private Health Insurance

Complete the following worksheet only if you(or your spouse if married filing jointly) weredeemed ineligible for government-subsidizedhealth insurance, as determined in the ScheduleHC Worksheet for Line 6b. This worksheet willdetermine if you could not afford private healthinsurance.

1. Enter your federal adjusted gross income(from U.S. Form 1040, line 37, Form 1040A,line 21 or Form 1040EZ, line 4). . . .

2. Enter the monthly premium that correspondswith your county of residency (see page HC-6 inthe Schedule HC instructions if you do not knowwhat county you live in), age (if married filinga joint return, use the age of the older spouse)and filing status from Table 2: Premiums onpage HC-5.

Look at the table that corresponds to yourcounty of residency and go to the row for yourage range and then go to the column based onyour filing status to find the monthly premiumamount . . . . . . . . . . . . . . . . . . . . . .

3. Enter the monthly premium that correspondswith your income range (from line 1 of work-sheet) and filing status from Table 1: Affordabilityon page HC-5. To find this amount, look at therow for your income range in col. a of theappropriate table based on your filing statusand go to col. b to find the monthly premiumamount . . . . . . . . . . . . . . . . . . . . . . .

If line 2 is less than or equal to line 3, you aredeemed able to afford health insurance and aresubject to the loss of your personal exemption.Fill in the Yes oval in line 6c for yourself (andyour spouse, if applicable, if married filing ajoint return) and go to line 7b.

If line 2 is greater than line 3, you are deemedunable to afford health insurance and not sub-ject to the loss of your personal exemption. Fillin the No oval in line 6c for yourself (and yourspouse, if applicable, if married filing a joint re-turn) and enter one of the following amounts inline 2a of Form 1 or line 4a of Form 1-NR/PY:$4,125 if single or married filing a separatereturn; $6,375 if head of household; or $8,250if married filing a joint return. Continue com-pleting your tax return.

Family size* Income

01 $030,636

02 $041,076

03 $051,516

04 $061,956

05 $072,396

06 $082,836

07 $093,276

08 $103,716

09 $114,156

10 $124,596

11 $135,036

12 $145,476

13 $155,916

Table of Income at 300% of theFederal Poverty Level

*For family size over 13, add $10,440 for eachadditional family member (do not include depen-dent children age 19 or older in your family size).


Individual or married filing separately

a. Federal adjusted gross income b. Monthly premium

From To

$ 0 $15,315 $ 0

$15,316 $20,420 $ 35

$20,421 $25,525 $ 70

$25,526 $30,630 $105

$30,631 $35,000 $150

$35,001 $40,000 $200

$40,001 $50,000 $300

Any individual with an annual income over$50,001 $50,000 is deemed to be able to afford

health insurance.

Married filing jointly (no dependents)


From To

$ 0 $20,535 $ 0

$20,536 $27,380 $ 70

$27,381 $34,225 $140

$34,226 $41,070 $210

$41,071 $50,000 $270

$50,001 $60,000 $360

$60,001 $80,000 $500

Any couple with an annual income over$80,001 $80,000 is deemed to be able to afford

health insurance.

Head of household or married filing jointly (1 or more dependents)


From To

$ 0 $ 25,755 $ 0

$25,756 $ 34,340 $ 70

$34,341 $ 42,925 $140

$42,926 $ 51,510 $210

$51,511 $ 70,000 $320

$70,001 $ 90,000 $500

$90,001 $110,000 $720

Any family with an annual income over$110,001 $110,000 is deemed to be able to afford

health insurance.

Region 1. Berkshire, Franklin and Hampshire Counties

Married coupleAge *Individual* (no dependents) **Family**

00–26 $150 $300 $0,720

27–29 $210 $420 $0,720

30–34 $225 $450 $0,800

35–39 $240 $480 $0,820

40–44 $260 $520 $0,830

45–49 $285 $570 $0,830

50–54 $370 $740 $0,900

55–59 $380 $760 $1,030

60+ $380 $760 $1,240

Region 2. Bristol, Essex, Hampden, Middlesex, Norfolk, Suffolk andWorcester Counties


00–26 $150 $300 $0,570

27–29 $185 $370 $0,570

30–34 $185 $370 $0,760

35–39 $185 $370 $0,750

40–44 $235 $470 $0,750

45–49 $235 $470 $0,780

50–54 $280 $560 $0,880

55–59 $370 $740 $1,020

60+ $370 $740 $1,130

Region 3. Barnstable, Dukes, Nantucket and Plymouth Counties


00–26 $150 $300 $0,750

27–29 $210 $420 $0,750

30–34 $220 $440 $0,800

35–39 $260 $520 $0,850

40–44 $300 $600 $0,820

45–49 $355 $710 $0,820

50–54 $410 $820 $0,890

55–59 $410 $820 $1,020

60+ $410 $820 $1,230

Table 1: Affordability Table 2: Premiums

**Includes married filing separately.**Head of household or married couple with dependent(s).

Municipality County

Abington. . . . . . . . . . . . . . . . . . . . PlymouthActon . . . . . . . . . . . . . . . . . . . . . . MiddlesexAcushnet . . . . . . . . . . . . . . . . . . . BristolAdams . . . . . . . . . . . . . . . . . . . . . BerkshireAgawam . . . . . . . . . . . . . . . . . . . . HampdenAlford . . . . . . . . . . . . . . . . . . . . . . BerkshireAmesbury. . . . . . . . . . . . . . . . . . . EssexAmherst . . . . . . . . . . . . . . . . . . . . HampshireAndover . . . . . . . . . . . . . . . . . . . . EssexArlington. . . . . . . . . . . . . . . . . . . . MiddlesexAshburnham . . . . . . . . . . . . . . . . WorcesterAshby . . . . . . . . . . . . . . . . . . . . . . MiddlesexAshfield . . . . . . . . . . . . . . . . . . . . FranklinAshland . . . . . . . . . . . . . . . . . . . . MiddlesexAthol. . . . . . . . . . . . . . . . . . . . . . . WorcesterAttleboro. . . . . . . . . . . . . . . . . . . . BristolAuburn . . . . . . . . . . . . . . . . . . . . . WorcesterAvon . . . . . . . . . . . . . . . . . . . . . . . NorfolkAyer . . . . . . . . . . . . . . . . . . . . . . . MiddlesexBarnstable . . . . . . . . . . . . . . . . . . BarnstableBarre. . . . . . . . . . . . . . . . . . . . . . . WorcesterBecket. . . . . . . . . . . . . . . . . . . . . . BerkshireBedford. . . . . . . . . . . . . . . . . . . . . MiddlesexBelchertown . . . . . . . . . . . . . . . . . HampshireBellingham . . . . . . . . . . . . . . . . . . NorfolkBelmont . . . . . . . . . . . . . . . . . . . . MiddlesexBerkley . . . . . . . . . . . . . . . . . . . . . BristolBerlin . . . . . . . . . . . . . . . . . . . . . . WorcesterBernardston . . . . . . . . . . . . . . . . . FranklinBeverly . . . . . . . . . . . . . . . . . . . . . EssexBillerica. . . . . . . . . . . . . . . . . . . . . MiddlesexBlackstone . . . . . . . . . . . . . . . . . . WorcesterBlandford . . . . . . . . . . . . . . . . . . . HampdenBolton. . . . . . . . . . . . . . . . . . . . . . WorcesterBoston . . . . . . . . . . . . . . . . . . . . . SuffolkBourne . . . . . . . . . . . . . . . . . . . . . BarnstableBoxborough . . . . . . . . . . . . . . . . . MiddlesexBoxford. . . . . . . . . . . . . . . . . . . . . EssexBoylston . . . . . . . . . . . . . . . . . . . . WorcesterBraintree. . . . . . . . . . . . . . . . . . . . NorfolkBrewster. . . . . . . . . . . . . . . . . . . . BarnstableBridgewater . . . . . . . . . . . . . . . . . PlymouthBrimfield. . . . . . . . . . . . . . . . . . . . HampdenBrockton. . . . . . . . . . . . . . . . . . . . PlymouthBrookfield. . . . . . . . . . . . . . . . . . . WorcesterBrookline . . . . . . . . . . . . . . . . . . . NorfolkBuckland . . . . . . . . . . . . . . . . . . . FranklinBurlington . . . . . . . . . . . . . . . . . . MiddlesexCambridge . . . . . . . . . . . . . . . . . . MiddlesexCanton . . . . . . . . . . . . . . . . . . . . . NorfolkCarlisle . . . . . . . . . . . . . . . . . . . . . MiddlesexCarver. . . . . . . . . . . . . . . . . . . . . . PlymouthCharlemont. . . . . . . . . . . . . . . . . . FranklinCharlton . . . . . . . . . . . . . . . . . . . . WorcesterChatham. . . . . . . . . . . . . . . . . . . . BarnstableChelmsford. . . . . . . . . . . . . . . . . . MiddlesexChelsea. . . . . . . . . . . . . . . . . . . . . SuffolkCheshire . . . . . . . . . . . . . . . . . . . . BerkshireChester . . . . . . . . . . . . . . . . . . . . . HampdenChesterfield . . . . . . . . . . . . . . . . . HampshireChicopee . . . . . . . . . . . . . . . . . . . HampdenChilmark. . . . . . . . . . . . . . . . . . . . DukesClarksburg . . . . . . . . . . . . . . . . . . BerkshireClinton . . . . . . . . . . . . . . . . . . . . . WorcesterCohasset . . . . . . . . . . . . . . . . . . . NorfolkColrain . . . . . . . . . . . . . . . . . . . . . FranklinConcord . . . . . . . . . . . . . . . . . . . . MiddlesexConway . . . . . . . . . . . . . . . . . . . . FranklinCummington . . . . . . . . . . . . . . . . HampshireDalton. . . . . . . . . . . . . . . . . . . . . . BerkshireDanvers . . . . . . . . . . . . . . . . . . . . EssexDartmouth . . . . . . . . . . . . . . . . . . BristolDedham . . . . . . . . . . . . . . . . . . . . NorfolkDeerfield . . . . . . . . . . . . . . . . . . . . FranklinDennis . . . . . . . . . . . . . . . . . . . . . BarnstableDighton. . . . . . . . . . . . . . . . . . . . . BristolDouglas . . . . . . . . . . . . . . . . . . . . WorcesterDover . . . . . . . . . . . . . . . . . . . . . . NorfolkDracut. . . . . . . . . . . . . . . . . . . . . . MiddlesexDudley . . . . . . . . . . . . . . . . . . . . . WorcesterDunstable . . . . . . . . . . . . . . . . . . . MiddlesexDuxbury . . . . . . . . . . . . . . . . . . . . PlymouthEast Bridgewater . . . . . . . . . . . . . PlymouthEast Brookfield . . . . . . . . . . . . . . . WorcesterEast Longmeadow . . . . . . . . . . . . HampdenEastham . . . . . . . . . . . . . . . . . . . . BarnstableEasthampton . . . . . . . . . . . . . . . . HampshireEaston . . . . . . . . . . . . . . . . . . . . . Bristol

Municipality County

Edgartown . . . . . . . . . . . . . . . . . . DukesEgremont . . . . . . . . . . . . . . . . . . . BerkshireErving . . . . . . . . . . . . . . . . . . . . . . FranklinEssex . . . . . . . . . . . . . . . . . . . . . . EssexEverett . . . . . . . . . . . . . . . . . . . . . MiddlesexFairhaven . . . . . . . . . . . . . . . . . . . BristolFall River . . . . . . . . . . . . . . . . . . . BristolFalmouth . . . . . . . . . . . . . . . . . . . BarnstableFitchburg . . . . . . . . . . . . . . . . . . . WorcesterFlorida . . . . . . . . . . . . . . . . . . . . . BerkshireFoxborough . . . . . . . . . . . . . . . . . NorfolkFramingham. . . . . . . . . . . . . . . . . MiddlesexFranklin. . . . . . . . . . . . . . . . . . . . . NorfolkFreetown . . . . . . . . . . . . . . . . . . . BristolGardner . . . . . . . . . . . . . . . . . . . . WorcesterGay Head . . . . . . . . . . . . . . . . . . . DukesGeorgetown . . . . . . . . . . . . . . . . . EssexGill . . . . . . . . . . . . . . . . . . . . . . . . FranklinGloucester . . . . . . . . . . . . . . . . . . EssexGoshen. . . . . . . . . . . . . . . . . . . . . HampshireGosnold . . . . . . . . . . . . . . . . . . . . DukesGrafton . . . . . . . . . . . . . . . . . . . . . WorcesterGranby . . . . . . . . . . . . . . . . . . . . . HampshireGranville . . . . . . . . . . . . . . . . . . . . HampdenGreat Barrington. . . . . . . . . . . . . . BerkshireGreenfield. . . . . . . . . . . . . . . . . . . FranklinGroton . . . . . . . . . . . . . . . . . . . . . MiddlesexGroveland. . . . . . . . . . . . . . . . . . . EssexHadley . . . . . . . . . . . . . . . . . . . . . HampshireHalifax . . . . . . . . . . . . . . . . . . . . . PlymouthHamilton. . . . . . . . . . . . . . . . . . . . EssexHampden . . . . . . . . . . . . . . . . . . . HampdenHancock . . . . . . . . . . . . . . . . . . . . BerkshireHanover . . . . . . . . . . . . . . . . . . . . PlymouthHanson. . . . . . . . . . . . . . . . . . . . . PlymouthHardwick . . . . . . . . . . . . . . . . . . . WorcesterHarvard. . . . . . . . . . . . . . . . . . . . . WorcesterHarwich . . . . . . . . . . . . . . . . . . . . BarnstableHatfield . . . . . . . . . . . . . . . . . . . . . HampshireHaverhill . . . . . . . . . . . . . . . . . . . . EssexHawley . . . . . . . . . . . . . . . . . . . . . FranklinHeath . . . . . . . . . . . . . . . . . . . . . . FranklinHingham. . . . . . . . . . . . . . . . . . . . PlymouthHinsdale . . . . . . . . . . . . . . . . . . . . BerkshireHolbrook . . . . . . . . . . . . . . . . . . . NorfolkHolden . . . . . . . . . . . . . . . . . . . . . WorcesterHolland. . . . . . . . . . . . . . . . . . . . . HampdenHolliston. . . . . . . . . . . . . . . . . . . . MiddlesexHolyoke . . . . . . . . . . . . . . . . . . . . HampdenHopedale . . . . . . . . . . . . . . . . . . . WorcesterHopkinton. . . . . . . . . . . . . . . . . . . MiddlesexHubbardston . . . . . . . . . . . . . . . . WorcesterHudson. . . . . . . . . . . . . . . . . . . . . MiddlesexHull . . . . . . . . . . . . . . . . . . . . . . . . PlymouthHuntington . . . . . . . . . . . . . . . . . . HampshireIpswich. . . . . . . . . . . . . . . . . . . . . EssexKingston. . . . . . . . . . . . . . . . . . . . PlymouthLakeville . . . . . . . . . . . . . . . . . . . . PlymouthLancaster . . . . . . . . . . . . . . . . . . . WorcesterLanesborough . . . . . . . . . . . . . . . BerkshireLawrence . . . . . . . . . . . . . . . . . . . EssexLee . . . . . . . . . . . . . . . . . . . . . . . . BerkshireLeicester. . . . . . . . . . . . . . . . . . . . WorcesterLenox . . . . . . . . . . . . . . . . . . . . . . BerkshireLeominster . . . . . . . . . . . . . . . . . . WorcesterLeverett . . . . . . . . . . . . . . . . . . . . FranklinLexington . . . . . . . . . . . . . . . . . . . MiddlesexLeyden . . . . . . . . . . . . . . . . . . . . . FranklinLincoln . . . . . . . . . . . . . . . . . . . . . MiddlesexLittleton . . . . . . . . . . . . . . . . . . . . MiddlesexLongmeadow . . . . . . . . . . . . . . . . HampdenLowell. . . . . . . . . . . . . . . . . . . . . . MiddlesexLudlow . . . . . . . . . . . . . . . . . . . . . HampdenLunenburg . . . . . . . . . . . . . . . . . . WorcesterLynn . . . . . . . . . . . . . . . . . . . . . . . EssexLynnfield. . . . . . . . . . . . . . . . . . . . EssexMalden . . . . . . . . . . . . . . . . . . . . . MiddlesexManchester . . . . . . . . . . . . . . . . . EssexMansfield . . . . . . . . . . . . . . . . . . . BristolMarblehead . . . . . . . . . . . . . . . . . EssexMarion . . . . . . . . . . . . . . . . . . . . . PlymouthMarlborough . . . . . . . . . . . . . . . . MiddlesexMarshfield . . . . . . . . . . . . . . . . . . PlymouthMashpee. . . . . . . . . . . . . . . . . . . . BarnstableMattapoisett . . . . . . . . . . . . . . . . . PlymouthMaynard . . . . . . . . . . . . . . . . . . . . MiddlesexMedfield . . . . . . . . . . . . . . . . . . . . NorfolkMedford . . . . . . . . . . . . . . . . . . . . Middlesex

Municipality County

Medway . . . . . . . . . . . . . . . . . . . . NorfolkMelrose . . . . . . . . . . . . . . . . . . . . MiddlesexMendon . . . . . . . . . . . . . . . . . . . . WorcesterMerrimac . . . . . . . . . . . . . . . . . . . EssexMethuen . . . . . . . . . . . . . . . . . . . . EssexMiddleborough. . . . . . . . . . . . . . . PlymouthMiddlefield . . . . . . . . . . . . . . . . . . HampshireMiddleton . . . . . . . . . . . . . . . . . . . EssexMilford . . . . . . . . . . . . . . . . . . . . . WorcesterMillbury . . . . . . . . . . . . . . . . . . . . WorcesterMillis. . . . . . . . . . . . . . . . . . . . . . . NorfolkMillville . . . . . . . . . . . . . . . . . . . . . WorcesterMilton . . . . . . . . . . . . . . . . . . . . . . NorfolkMonroe. . . . . . . . . . . . . . . . . . . . . FranklinMonson . . . . . . . . . . . . . . . . . . . . HampdenMontague . . . . . . . . . . . . . . . . . . . FranklinMonterey . . . . . . . . . . . . . . . . . . . BerkshireMontgomery . . . . . . . . . . . . . . . . HampdenMount Washington . . . . . . . . . . . BerkshireNahant . . . . . . . . . . . . . . . . . . . . . EssexNantucket . . . . . . . . . . . . . . . . . . . NantucketNatick . . . . . . . . . . . . . . . . . . . . . . MiddlesexNeedham . . . . . . . . . . . . . . . . . . . NorfolkNew Ashford . . . . . . . . . . . . . . . . BerkshireNew Bedford . . . . . . . . . . . . . . . . BristolNew Braintree. . . . . . . . . . . . . . . . WorcesterNew Marlborough . . . . . . . . . . . . BerkshireNew Salem . . . . . . . . . . . . . . . . . . FranklinNewbury. . . . . . . . . . . . . . . . . . . . EssexNewburyport . . . . . . . . . . . . . . . . EssexNewton. . . . . . . . . . . . . . . . . . . . . MiddlesexNorfolk . . . . . . . . . . . . . . . . . . . . . NorfolkNorth Adams . . . . . . . . . . . . . . . . BerkshireNorth Andover . . . . . . . . . . . . . . . EssexNorth Attleborough . . . . . . . . . . . BristolNorth Brookfield. . . . . . . . . . . . . . WorcesterNorth Reading . . . . . . . . . . . . . . . MiddlesexNorthampton . . . . . . . . . . . . . . . . HampshireNorthborough . . . . . . . . . . . . . . . WorcesterNorthbridge . . . . . . . . . . . . . . . . . WorcesterNorthfield . . . . . . . . . . . . . . . . . . . FranklinNorton . . . . . . . . . . . . . . . . . . . . . BristolNorwell . . . . . . . . . . . . . . . . . . . . . PlymouthNorwood . . . . . . . . . . . . . . . . . . . NorfolkOak Bluffs. . . . . . . . . . . . . . . . . . . DukesOakham . . . . . . . . . . . . . . . . . . . . WorcesterOrange . . . . . . . . . . . . . . . . . . . . . FranklinOrleans. . . . . . . . . . . . . . . . . . . . . BarnstableOtis. . . . . . . . . . . . . . . . . . . . . . . . BerkshireOxford . . . . . . . . . . . . . . . . . . . . . WorcesterPalmer . . . . . . . . . . . . . . . . . . . . . HampdenPaxton . . . . . . . . . . . . . . . . . . . . . WorcesterPeabody . . . . . . . . . . . . . . . . . . . . EssexPelham . . . . . . . . . . . . . . . . . . . . . HampshirePembroke. . . . . . . . . . . . . . . . . . . PlymouthPepperell . . . . . . . . . . . . . . . . . . . MiddlesexPeru . . . . . . . . . . . . . . . . . . . . . . . BerkshirePetersham . . . . . . . . . . . . . . . . . . WorcesterPhillipston . . . . . . . . . . . . . . . . . . WorcesterPittsfield . . . . . . . . . . . . . . . . . . . . BerkshirePlainfield. . . . . . . . . . . . . . . . . . . . HampshirePlainville . . . . . . . . . . . . . . . . . . . . NorfolkPlymouth . . . . . . . . . . . . . . . . . . . PlymouthPlympton . . . . . . . . . . . . . . . . . . . PlymouthPrinceton . . . . . . . . . . . . . . . . . . . WorcesterProvincetown . . . . . . . . . . . . . . . . BarnstableQuincy . . . . . . . . . . . . . . . . . . . . . NorfolkRandolph . . . . . . . . . . . . . . . . . . . NorfolkRaynham . . . . . . . . . . . . . . . . . . . BristolReading . . . . . . . . . . . . . . . . . . . . MiddlesexRehoboth . . . . . . . . . . . . . . . . . . . BristolRevere . . . . . . . . . . . . . . . . . . . . . SuffolkRichmond. . . . . . . . . . . . . . . . . . . BerkshireRochester. . . . . . . . . . . . . . . . . . . PlymouthRockland . . . . . . . . . . . . . . . . . . . PlymouthRockport . . . . . . . . . . . . . . . . . . . EssexRowe . . . . . . . . . . . . . . . . . . . . . . FranklinRowley . . . . . . . . . . . . . . . . . . . . . EssexRoyalston . . . . . . . . . . . . . . . . . . . WorcesterRussell . . . . . . . . . . . . . . . . . . . . . HampdenRutland. . . . . . . . . . . . . . . . . . . . . WorcesterSalem . . . . . . . . . . . . . . . . . . . . . . EssexSalisbury . . . . . . . . . . . . . . . . . . . EssexSandisfield . . . . . . . . . . . . . . . . . . BerkshireSandwich . . . . . . . . . . . . . . . . . . . BarnstableSaugus . . . . . . . . . . . . . . . . . . . . . EssexSavoy . . . . . . . . . . . . . . . . . . . . . . BerkshireScituate . . . . . . . . . . . . . . . . . . . . Plymouth

Municipality County

Seekonk . . . . . . . . . . . . . . . . . . . . BristolSharon . . . . . . . . . . . . . . . . . . . . . NorfolkSheffield . . . . . . . . . . . . . . . . . . . . BerkshireShelburne. . . . . . . . . . . . . . . . . . . FranklinSherborn . . . . . . . . . . . . . . . . . . . MiddlesexShirley . . . . . . . . . . . . . . . . . . . . . MiddlesexShrewsbury . . . . . . . . . . . . . . . . . WorcesterShutesbury. . . . . . . . . . . . . . . . . . FranklinSomerset . . . . . . . . . . . . . . . . . . . BristolSomerville . . . . . . . . . . . . . . . . . . MiddlesexSouth Hadley . . . . . . . . . . . . . . . . HampshireSouthampton . . . . . . . . . . . . . . . . HampshireSouthborough . . . . . . . . . . . . . . . WorcesterSouthbridge . . . . . . . . . . . . . . . . . WorcesterSouthwick . . . . . . . . . . . . . . . . . . HampdenSpencer . . . . . . . . . . . . . . . . . . . . WorcesterSpringfield . . . . . . . . . . . . . . . . . . HampdenSterling. . . . . . . . . . . . . . . . . . . . . WorcesterStockbridge . . . . . . . . . . . . . . . . . BerkshireStoneham. . . . . . . . . . . . . . . . . . . MiddlesexStoughton . . . . . . . . . . . . . . . . . . NorfolkStow. . . . . . . . . . . . . . . . . . . . . . . MiddlesexSturbridge . . . . . . . . . . . . . . . . . . WorcesterSudbury . . . . . . . . . . . . . . . . . . . . MiddlesexSunderland. . . . . . . . . . . . . . . . . . FranklinSutton. . . . . . . . . . . . . . . . . . . . . . WorcesterSwampscott . . . . . . . . . . . . . . . . . EssexSwansea. . . . . . . . . . . . . . . . . . . . BristolTaunton . . . . . . . . . . . . . . . . . . . . BristolTempleton . . . . . . . . . . . . . . . . . . WorcesterTewksbury . . . . . . . . . . . . . . . . . . MiddlesexTisbury . . . . . . . . . . . . . . . . . . . . . DukesTolland . . . . . . . . . . . . . . . . . . . . . HampdenTopsfield. . . . . . . . . . . . . . . . . . . . EssexTownsend. . . . . . . . . . . . . . . . . . . MiddlesexTruro . . . . . . . . . . . . . . . . . . . . . . BarnstableTyngsborough . . . . . . . . . . . . . . . MiddlesexTyringham . . . . . . . . . . . . . . . . . . BerkshireUpton . . . . . . . . . . . . . . . . . . . . . . WorcesterUxbridge. . . . . . . . . . . . . . . . . . . . WorcesterWakefield . . . . . . . . . . . . . . . . . . . MiddlesexWales . . . . . . . . . . . . . . . . . . . . . . HampdenWalpole . . . . . . . . . . . . . . . . . . . . NorfolkWaltham. . . . . . . . . . . . . . . . . . . . MiddlesexWare. . . . . . . . . . . . . . . . . . . . . . . HampshireWareham . . . . . . . . . . . . . . . . . . . PlymouthWarren . . . . . . . . . . . . . . . . . . . . . WorcesterWarwick . . . . . . . . . . . . . . . . . . . . FranklinWashington . . . . . . . . . . . . . . . . . BerkshireWatertown . . . . . . . . . . . . . . . . . . MiddlesexWayland . . . . . . . . . . . . . . . . . . . . MiddlesexWebster . . . . . . . . . . . . . . . . . . . . WorcesterWellesley . . . . . . . . . . . . . . . . . . . NorfolkWellfleet . . . . . . . . . . . . . . . . . . . . BarnstableWendell . . . . . . . . . . . . . . . . . . . . FranklinWenham. . . . . . . . . . . . . . . . . . . . EssexWest Boylston . . . . . . . . . . . . . . . WorcesterWest Bridgewater. . . . . . . . . . . . . PlymouthWest Brookfield . . . . . . . . . . . . . . WorcesterWest Newbury . . . . . . . . . . . . . . . EssexWest Springfield. . . . . . . . . . . . . . HampdenWest Stockbridge. . . . . . . . . . . . . BerkshireWest Tisbury . . . . . . . . . . . . . . . . DukesWestborough . . . . . . . . . . . . . . . . WorcesterWestfield . . . . . . . . . . . . . . . . . . . HampdenWestford . . . . . . . . . . . . . . . . . . . MiddlesexWesthampton. . . . . . . . . . . . . . . . HampshireWestminster. . . . . . . . . . . . . . . . . WorcesterWeston. . . . . . . . . . . . . . . . . . . . . MiddlesexWestport . . . . . . . . . . . . . . . . . . . BristolWestwood . . . . . . . . . . . . . . . . . . NorfolkWeymouth . . . . . . . . . . . . . . . . . . NorfolkWhately . . . . . . . . . . . . . . . . . . . . FranklinWhitman. . . . . . . . . . . . . . . . . . . . PlymouthWilbraham . . . . . . . . . . . . . . . . . . HampdenWilliamsburg . . . . . . . . . . . . . . . . HampshireWilliamstown . . . . . . . . . . . . . . . . BerkshireWilmington. . . . . . . . . . . . . . . . . . MiddlesexWinchendon. . . . . . . . . . . . . . . . . WorcesterWinchester . . . . . . . . . . . . . . . . . . MiddlesexWindsor . . . . . . . . . . . . . . . . . . . . BerkshireWinthrop . . . . . . . . . . . . . . . . . . . SuffolkWoburn . . . . . . . . . . . . . . . . . . . . MiddlesexWorcester. . . . . . . . . . . . . . . . . . . WorcesterWorthington. . . . . . . . . . . . . . . . . HampshireWrentham . . . . . . . . . . . . . . . . . . NorfolkYarmouth . . . . . . . . . . . . . . . . . . . Barnstable

HC-6 Important Health Insurance Information

What Is E-File?E-File is filing your state personal income tax return electronically throughone of three methods offered by the Massachusetts Department of Rev-enue (DOR). Last year, more than one million taxpayers electronicallyfiled their state income tax returns in the Commonwealth. On average,they received their refunds in three days.

TelefileTelefile allows eligible taxpayers to E-File by telephone. Millionsof taxpayers have used Telefile, completing their calls inminutes. It’s free and available 24 hours a day, 7 days a

week. Call (617) 660-2007 or (413) 827-7100 to see if you qualify. TheTelefile worksheet and instructions can be found in your Form 1 instruc-tion booklet.

Paid PreparerMillions of taxpayers have had their returns electronically filedthrough DOR-approved tax preparers. If your tax preparer does

not offer E-File, ask him or her to give it a try!

Note: For tax years beginning on or after January 1, 2005, income taxreturn preparers who completed 100 or more original MassachusettsForms 1 and 1-NR/PY, including those E-Filed, during the previous cal-endar year are required to use electronic means to file all personal in-come tax returns, unless the taxpayer specifically directs that the filingbe on paper and signs Form EFO, Personal Income Tax Declaration ofPaper Filing.

If you prefer to file using paper, your preparer must use a DOR-approvedtax preparation software package that supports 2-Dimensional (2-D)barcodes. Visit www.mass.gov/dor for a list of approved preparers.

Be sure to use the proper address when mailing your 2-D barcodedreturn. Refund/no tax due: Massachusetts Department of Revenue,PO Box 7001, Boston, MA 02204-7001. Payment: MassachusettsDepartment of Revenue, PO Box 7002, Boston, MA 02204-7002.

Commercial Tax Preparation SoftwareYou can also E-File using DOR-approved commercial tax filing web-sites or software products or you may be eligible to file your return

electronically for free through the Massachusetts Free File Alliance. Visitwww.mass.gov/dor for a complete listing of approved websites andproducts. If you prefer to file using a paper copy, you must use a prod-uct that incorporates 2-D barcodes into their software. This will expeditethe processing of your return. If your software-generated return doesnot print with a 2-D barcode in the upper right hand corner of all pages,you may have a problem with your printer. To avoid penalties or havingyour return rejected, contact your software vendor for instructions onhow to print the 2-D barcode.

Be sure to use the proper address when mailing your 2-D barcodedreturn. Refund/no tax due: Massachusetts Department of Revenue,PO Box 7001, Boston, MA 02204-7001. Payment: MassachusettsDepartment of Revenue, PO Box 7002, Boston, MA 02204-7002.

Personal Identification Number (PIN)If you received this booklet in the mail, be sure to retain the PIN printedon the back cover. You will need it to Telefile and to access the Depart-ment’s telephone and Web-based systems that allow you to check thestatus of your refund and perform other actions. If you did not get this

YOUR 2007 STATE TAX FORM

booklet in the mail and do not have a PIN, you will need the amount ofyour requested refund or tax due from your 2006 Massachusetts taxreturn to access these systems. If you are a first-time filer, you will stillbe able to access these systems without a PIN.

Why Should You E-File?◗ Less stress. If you E-File you will not have to worry about math errors,missing schedules or other common mistakes which could delay yourrefund or cause other problems that take time to resolve. And E-File issafe. Plus, you will receive immediate confirmation that serves as proofyou filed.

◗ Fast refunds. Whether you E-File in January or mid-April, you willreceive your refund, on average, in three days. You also have the optionof having your refund deposited directly into your bank account. (Somecommercial tax preparation products may not offer direct deposit.)

◗ Easy to use. Whether you call or click to file your return, or have yourpreparer E-File for you, the E-File system walks you through it step bystep, and does the calculations for you.

◗ Convenient payment options. If you have a tax due, you can file nowand pay later (by April 15, 2008) through Web Services for Income atwww.mass.gov/dor or by Electronic Funds Withdrawal, credit or checkcard. You can also file now and pay later using Form PV, MassachusettsIncome Tax Payment Voucher (by April 15, 2008). Form PV is attachedto the back of the envelope found in this booklet. If you choose to payby check, be sure to include Form PV to ensure proper crediting ofyour account.

Automatic Extension Granted if 100% Tax Due is Paidby Tax Return Due DateIf line 3 of the worksheet below is “0” and 100% of the tax due for 2007has been paid through:

◗ withholding;

◗ timely estimated payments of tax;

◗ credits from your 2007 return; and

◗ a refund from the prior tax year applied to the next year’s tax liability,

you are no longer required to file Form M-4868, Application for AutomaticExtension of Time to File Massachusetts Income Tax Return. However, ifyou do choose to file Form M-4868 in this instance, you must do so elec-tronically, either by telephone or via DOR’s website. See TIR 06-21 formore information.

Also, if you owe no tax or you are making a payment of $5,000 or more,you are required to file your extension by telephone or via the web. If youare making a payment of less than $5,000, you also have the option offiling your extension electronically. If there is a tax due with your exten-sion, payment can be made through Electronic Funds Withdrawal.

Call (617) 660-2222 to file your extension by telephone or visit www.mass.gov/dor to file via the Web or to obtain Form M-4868.

Extension Worksheet

1. Enter amount from Form 1, line 31 . . . . . . . . . . . . . . 2. Enter the total of Form 1, lines 35 through 37 and 39 through 41 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Amount due. Subtract line 2 from line 1, not less than “0” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Important NoteAt the time this booklet was printed, the IRS hadnot released final versions of its forms and sched-ules. Therefore, taxpayers should double-checkreferences to U.S. forms and schedules withinthis booklet before filing their returns.

Form 1 Checklist✔ If you received a booklet in the mail, be sureto retain the four-digit Personal Identification Num-ber (PIN) printed on the back cover. You may needit to use DOR’s Web-based and/or Interactive VoiceResponse (IVR) applications, such as checking thestatus of your refund.

✔ Have you entered your Social Security num-ber(s) on Form 1?

✔ Have you completed and enclosed ScheduleHC, Health Care Information? You must completeSchedule HC to calculate your personal exemption.

✔ If you changed your name, did you enclose acopy of your Social Security card or driver’s licenseshowing your new name?

✔ Have you, and your spouse if married filingjointly, signed your return at the bottom of page 1of Form 1?

✔ Have you marked an “X” in any form orschedule box that shows a loss?

✔ Have you completed Schedule DI, DependentInformation, if claiming a dependent exemption onForm 1, line 2b or taking a deduction/credit(s) onForm 1, lines 12, 13 or 39 (if applicable)?

✔ If making a payment, have you enclosedyour check and Form PV with your return? FormPV is attached to the back of the envelope found inthis booklet. Be sure to use the light blue mailinglabel when mailing your Form 1 with the Form PV.

Major 2007Tax ChangesHealth Care Reform ActAs a result of the recently enacted MassachusettsHealth Care Reform Act (the “Act”), most Mass-achusetts residents age 18 and over are requiredto have health insurance, if it is affordable to them.Residents who have access to affordable cover-age but do not obtain the coverage, or do not ob-tain a waiver from the mandate, may face state taxpenalties pursuant to G.L. c. 111M, sec. 2. In tax-able year 2007, the penalty for failing to obtain af-fordable coverage by December 31, 2007 is loss ofthe personal exemption. New Schedule HC, HealthCare Information, must be completed by all full-year residents and certain part-year residents age

18 and over to notify the Department whether ornot they have health insurance, and to determinethe amount of their personal exemption. See thespecial Health Care section in this booklet for moreinformation about Schedule HC.

For more information about the new health carelaw, including the Connector’s regulation at 956CMR 6.00, Determining Affordability for the Indi-vidual Mandate, see the Health Care Connector’swebsite at www.mahealthconnector.org. Also, theDepartment plans to issue regulations explainingits role in enforcing the individual mandate to ob-tain health insurance by means of the c.111M,sec. 2 penalty (loss of the personal exemption fortaxable year 2007).

Exemption from Imputed Income forEmployer-Provided Health InsuranceCoverageThe Massachusetts Health Care Reform Act re-quires health benefit plan coverage to extend togrown children of an employee under 26 years ofage or for two years after the end of the calendaryear in which such persons last qualified as depen-dents under Internal Revenue Code sec. 106,whichever occurs first. Extending employer-pro-vided health insurance coverage to an employee’schild up until age 26 may, in certain situations,create imputed income for the employee for fed-eral income tax purposes.

Although generally Massachusetts follows federallaw in the area of noncash fringe benefits, in thecase of imputed income with respect to employer-provided health insurance, the Legislature haschosen to depart from the federal treatment. Recentlegislation provides for the exclusion from Mass-achusetts gross income of any imputed income re-sulting from employer-provided health insurance ofa person included in the employee’s family healthinsurance plan where the coverage is required bystate law. See M.G.L. c. 62, sec. 2(a)(2)(Q) addedby St. 2007, c. 205, sec. 6; TIR 07-16.

Veterans BenefitsVeterans who served in the Armed Forces of theUnited States in active service as part of Opera-tion Enduring Freedom, Operation Iraqi Freedomor Operation Noble Eagle, who were dischargedunder honorable conditions and were domiciledfor six months in Massachusetts immediatelyprior to entry into the Armed Forces, may be eligi-ble for certain veterans benefits, including a Wel-come Home Bonus. The Department of Revenuewill forward the name and address to the Depart-ment of Veterans’ Services and the adjutant gen-eral of the Massachusetts National Guard to verifyeligibility for benefits you may be entitled to. Wel-come Home Bonus payments are not subject tofederal or Massachusetts income tax.

Personal Exemptions IncreasedMassachusetts law provides that personal exemp-tions may increase for tax years beginning on orafter January 1, 2004 if tax revenues increase. Ap-plicable for the 2007 tax year, the personal incometax exemptions have increased from $3,850 to$4,125 for single and married filing separately fil-ers, from $5,950 to $6,375 for head of householdfilers, and from $7,700 to $8,250 for joint filers.

No Tax Status/Limited Income CreditThresholdsBecause the income level for No Tax Status forjoint filers and heads of household is based in parton the personal exemption amounts, the thresholdfor No Tax Status for these taxpayers has beenchanged to reflect changes to the personal exemp-tions the Limited Income Credit calculation is sim-ilarly affected.

Joint Filers. No tax is imposed if the Massachu-setts adjusted gross income (AGI) does not ex-ceed $15,850 plus $1,000 per dependent. Jointfilers are eligible for the Limited Income Credit ifMassachusetts AGI does not exceed $27,738 plus$1,750 per dependent.

Head of Household. No tax is imposed if theMassachusetts adjusted gross income (AGI) doesnot exceed $13,975 plus $1,000 per dependent.Heads of household are eligible for the Limited In-come Credit if Massachusetts AGI does not exceed$24,456 plus $1,750 per dependent.

Single Filers. No Tax Status for single filers is un-affected by the increase in the personal exemp-tion amount. For single filers, no tax is imposed ifthe taxpayer’s Massachusetts AGI does not ex-ceed $8,000. Single filers are eligible for the Lim-ited Income Credit if Massachusetts AGI does notexceed $14,000.

Note: If married filing separately, you do not qual-ify for No Tax Status or the Limited Income Credit.

Circuit Breaker Tax Credit IncreasedA credit is allowed to an owner or tenant of resi-dential property located in Massachusetts equal tothe amount by which the real estate tax paymentor 25% of the rent constituting real estate tax pay-ment exceeds 10% of the taxpayer’s total income,not to exceed $900. The amount of the credit issubject to limitations based on the taxpayer’s totalincome and the assessed value of the real estate,which must not exceed $772,000. For tax year2007, an eligible taxpayer’s total income cannot ex-ceed $48,000 for a single individual who is not thehead of a household, $60,000 for a head of house-hold, and $72,000 for a husband and wife filing ajoint return. In order to qualify for the credit, a tax-payer must be age 65 or older and must occupythe property as his or her principal residence. SeeTIR 07-14 for more information.

4 Before You Begin

Film Incentive CreditsOn July 20, 2007, Massachusetts enacted an Actproviding incentives to the motion picture indus-try (the “new Act”). See St. 2007, c. 63. This Actmade revisions to statutory provisions enacted bya prior Act with the same title that was signed intolaw on November 23, 2005. See St. 2005, c. 158;amended by St. 2005, c. 167. Pursuant to the newAct, the film credit remaining after reducing tax li-ability and other credits will be refunded at 90%.Motion picture production companies qualify toelect a refundable film credit if they have nottransferred or carried forward a portion of the filmcredit for the production/certificate number to berefunded. Transferees of the film credit do notqualify for the refundable film credit. Transfereesshould claim their film credit on Schedule Z. Amotion picture production company that elects toclaim a refund of the film credit is not permittedto seek a partial refund and a partial transfer orcarryover of the credit. However, the refund can beapplied as an estimated payment for the subse-quent tax year.

In addition, the new Act made changes to the filmincentives statute as follows: the minimum ex-penditure threshold required to be met in a twelve-month period has been lowered from $250,000 to$50,000; the payroll credit has been increased toapply to 25% of a taxpayer's qualifying expendi-tures; the $7,000,000 limitation on the amount ofcredits taken on any one motion picture has beeneliminated; a "digital media project" is now includedin the definition of a "motion picture"; and, the sun-set date for the film incentives statute has beenextended from January 1, 2013 to January 1,2023. See TIR 07-15 for more information.

New Current Code ProvisionAs a general rule, Massachusetts will not adoptany federal tax law changes incorporated into theInternal Revenue Code (“Code”) after January 1,2005. However, certain specific provisions of thepersonal income tax automatically adopt the cur-rent Code.

Effective for tax years on or after January 1, 2007,a new current Code provision has been adopted.Under the federal Small Business and Work Op-portunity Tax Act of 2007 (P. L. 110-28, enactedMay 25, 2007) the IRC sec. 179 election to ex-pense property in its initial year is extendedthrough 2010 and increased from $100,000 to$125,000 effective for years beginning after 2006.The expense deduction begins to phase out if morethan $500,000 of eligible property is placed inservice during the year (up from $400,000). Theseamounts will be adjusted for inflation annually.

Provisions of the Code adopted on a current Codebasis are (i) Roth IRAs, (ii) Education IRAs, (iii) theexclusion for gain on the sale of a principal resi-dence, (iv) trade or business expenses, (v) travel

expenses, (vi) meals and entertainment expenses,(vii) the maximum deferral amount of govern-ment employees’ deferred compensation plans,(viii) deduction for health insurance costs of self-employed, (ix) medical and dental expenses, (x)annuities, and (xi) health savings accounts. SeeTIRs 98-8, 02-11, and 07-4 for further details onMassachusetts’ personal income tax current Codeprovisions.

Tax-Free Distributions from IndividualRetirement AccountsQualified Charitable Distribution from anIndividual Retirement Account (“IRA”)IRC sec. 408(d)(8)The Pension Protection Act of 2006 (P.L. 109-280,enacted August 17, 2006) allows taxpayers age701⁄2 or greater to make tax-free distributionsfrom traditional and Roth IRAs to qualified chari-ties for the 2006 and 2007 tax years, not to ex-ceed $100,000 per tax year. Even though thisfederal Act was enacted after January 1, 2005,Massachusetts adopts this exclusion from grossincome given this federal Code provision for IRAsis adopted by Massachusetts on a current Codebasis. See TIR 06-20 and Schedule X, line 2 forfurther details.

Expired Deductions — No Longer AllowedMassachusetts allows certain federal deductionsbased on the Internal Revenue Code as amendedand in effect on January 1, 2005. Under the Janu-ary 1, 2005 Code, certain federal deductions pre-viously allowed have now expired. Even if thedeductions are renewed federally, Massachusettswill not adopt the renewal because it will occurafter January 1, 2005.

Tuition and Fees Deduction — IRC secs.62(a)(18) and 222Effective for tax years on or after January 1, 2006,Massachusetts does not allow the federal deduc-tion for qualified higher education expenses.However, there is a separate Massachusetts de-duction for undergraduate tuition if the total paidexceeds 25% of the taxpayer’s Massachusetts ad-justed gross income. See TIR 97-13 for additionalinformation.

Educators Deduction — IRC sec.62(a)(2)(D)Effective for tax years on or after January 1, 2006,Massachusetts does not allow the federal deduc-tion for expenses paid or incurred by an eligibleeducator for books, supplies, equipment and otherqualified materials used in the classroom.

New Deduction — Not Allowed Deduction for Attorneys Fees Relating toAwards to Whistleblowers IRC sec. 62(a)(21)The federal Tax Relief and Health Care Act of 2006(P.L. 109-432, enacted December 20, 2006) added

this federal deduction. Massachusetts does notadopt this deduction given it was enacted afterJanuary 1, 2005.

Privacy Act NoticeUnder the authority of 42 U.S.C. sec. 405(c)(2)(C)(i), and M.G.L. c. 62C, sec. 5, the Departmentof Revenue has the right to require an individual tofurnish his or her Social Security number on astate tax return. This information is mandatory.The Department of Revenue uses Social Securitynumbers for taxpayer identification to assist inprocessing and keeping track of returns and in de-termining and collecting the proper amount of taxdue. Under M.G.L. c. 62C, sec. 40, the taxpayer’sidentifying number is required to process a refundof overpaid taxes. Although tax return informationis generally confidential pursuant to M.G.L. c. 62C,sec. 21, the Department of Revenue may disclosereturn information to other taxing authorities andthose entities specified in M.G.L. c. 62C, secs. 21,22 or 23, and as otherwise authorized by law.

Common Form 1MistakesAn incomplete or incorrect return can delay theprocessing of your return. Listed below are anumber of tips to help us process your return asquickly as possible.

Note: You should not staple any items, other thanany required Form(s) W-2 or 1099, to Form 1. Anyenclosures such as schedules, statements, FormPV, etc. should simply be placed in the envelopealong with Form 1 when mailing.

◗ Missing Social Security number(s). Be sure toenter your Social Security number(s) in the spacesprovided.

◗ Missing Schedule HC. Be sure you have com-pleted and enclosed Schedule HC, Health Care In-formation. We cannot process your return withoutthis schedule.

◗ Incorrect computation. The Department cor-rects many returns each year due to errors incomputation. Before mailing your return, checkyour arithmetic to make sure the computationsare correct.

◗ Filing status. Be sure to fill in the correct ovalin line 1, Filing Status. This line is frequentlyoverlooked.

◗ Exemptions. Be sure that you specify the num-ber of exemptions you are claiming in line 2, itemsb, c and d. Enter the appropriate number(s) in thesmall white box(es). Note: You must completeSchedule DI, Dependent Information, if claiming adependent exemption in line 2b.

52007 Form 1 — Before You Begin

◗ Missing withholding statement(s). Be sure thestate copy of Form(s) W-2 (Wages), W-2G (Win-nings), PWH-WA (Promoter Withholding), 2G andany Form 1099 that show Massachusetts incometax withheld are attached with a single staple. Theseforms are frequently missing and must be obtainedlater from you in order to process the return.

◗ Missing supporting schedules. Be sure all re-quired schedules are enclosed to support the in-formation on your Form 1. These includeMassachusetts Schedules HC, X, Y, Z, B, C, C-2,D, DI, E, and CB. We cannot process your returnwithout these forms.

◗ Government employee pension contributions.If you were a state, local or county employee andmade contributions to a Massachusetts state orlocal pension plan, your total wages for state pur-poses will be different from the amount you re-port on your U.S. return. Report your total statewages from your Form(s) W-2 on Form 1. This isgenerally box 16 of Form W-2.

◗ Earned Income Credit. You must have yourfederal earned income credit amount from yourU.S. return or as computed by the IRS if you wishto claim the Earned Income Credit on Form 1.

Also, you must complete Schedule DI, DependentInformation, if you have one or more qualifyingchildren/dependents for the Earned Income Credit.

◗ Missing signatures. Thousands of unsignedreturns are received by the Department every year.These returns must be returned to the taxpayers forsignatures. If a joint return is filed, both spousesmust sign the return. Make sure signatures are onthe correct lines. Remember to sign your return atthe bottom of page 1 of Form 1.

◗ Missing Form PV. If you are making a payment,make certain you fill out Form PV, MassachusettsIncome Tax Payment Voucher. Form PV is attachedto the back of the envelope found in this booklet.Enclose Form PV and your check with your return.Be sure to use the light blue mailing label whenmailing your Form 1 with the Form PV. Note: Go towww.mass.gov/dor and click on Web Services forIncome for online payment options.

Filing YourMassachusettsReturnIf you were a legal resident of Massachusetts andyour gross income was more than $8,000 —whether received from sources inside or outside ofMassachusetts — you are required to file a Mass-achusetts income tax return. If your gross incomewas $8,000 or less, you do not need to file a return.

If you did not live in Massachusetts but receivedMassachusetts source income in excess of yourpersonal exemption amount multiplied by the ratioof your Massachusetts income to your total in-come, you must file as a nonresident on the Non-resident/Part-Year Resident Income Tax Return,Form 1-NR/PY. Generally, this means you must fileForm 1-NR/PY if you were a nonresident of Mass-achusetts and you received Massachusetts sourceincome in excess of $4,125 if single or married fil-ing separately, $6,375 if head of household or$8,250 if married filing jointly.

If, during the taxable year, you either moved toMassachusetts or terminated your status as aMassachusetts resident to establish residency out-side the state, and your gross income was morethan $8,000 — whether received from sources in-side or outside of Massachusetts — you must fileas a part-year resident on the Nonresident/Part-Year Resident Income Tax Return, Form 1-NR/PY.

What Is Gross Income?Massachusetts gross income includes the following:◗ all wages, salaries, tips, bonuses, fees andother compensation;◗ taxable pensions and annuities;◗ pension income from another state or politicalsubdivision before any deduction;◗ taxable IRA/Keogh and Roth IRA distributions;◗ alimony;◗ income from a business, trade, profession, part-nership, S corporation, trust or estate;◗ rental, royalty and REMIC income;◗ unemployment compensation;◗ taxable interest and dividends;◗ gambling winnings;◗ capital gains;◗ taxable portion of scholarships and fellowships;and◗ any other income not specifically exempt.Massachusetts gross income also includes the fol-lowing which are not subject to U.S. income tax:◗ interest from obligations of states and their po-litical subdivisions, other than Massachusetts andits political subdivisions; and◗ income earned by a resident from foreignemployment.

Massachusetts gross income does not include:◗ interest on obligations of the U.S. and U.S.territories;◗ amounts received as U.S. Social Security, pub-lic welfare assistance, Veterans Administrationdisability payments, G.I. Bill education payments,worker’s compensation, gifts, accident or life insur-ance payments, or certain payments received byHolocaust survivors; and◗ compensation earned by members of the armedforces for service in a combat zone (excluded tothe same extent as under federal law).

Am I a Resident, Nonresident,or Part-Year Resident?There are three different categories of residentstatus under Massachusetts tax law:

1. You are a Full-Year Resident if your legal resi-dence (domicile) is in Massachusetts or if youmaintain a permanent place of abode in Massachu-setts and during the year spend more than 183days, in the aggregate, in the state. If you fit thisdescription you should file a Massachusetts Resi-dent Income Tax Return, Form 1.

2. You are a Nonresident if you were not a residentof Massachusetts but earned Massachusetts in-come (e.g., from a job in Massachusetts). Youmust report such income by filing a MassachusettsNonresident/Part-Year Resident Income Tax Re-turn, Form 1-NR/PY.

3. You are a Part-Year Resident if you eithermoved into or moved out of Massachusetts dur-ing the taxable year. In this case, you must reducecertain income, deductions and exemptions basedon the number of days you were a resident or onthe amount of your income that is subject toMassachusetts tax. Part-year residents must file aMassachusetts Nonresident/Part-Year ResidentIncome Tax Return, Form 1-NR/PY.

If both categories 2 and 3 apply to you, you willhave to file both as a nonresident and as a part-year resident. In these cases, you must file oneMassachusetts Form 1-NR/PY and complete theResident/Nonresident Worksheet, Schedule R/NR,to calculate the portion of income earned while apart-year resident and the portion of incomeearned while a nonresident. If you are required tofile as both a part-year resident and a nonresident,be sure to fill in the oval below the address sectionof Form 1-NR/PY to indicate that you are complet-ing Schedule R/NR and enclose Schedule R/NRwith your return.

See TIR 95-7 for more information regarding res-ident status. For information on how to file as apart-year resident/nonresident, visit DOR’s websiteat www.mass.gov/dor or call (617) 887-MDOR ortoll-free in Massachusetts 1-800-392-6089.

6 2007 Form 1 — Before You Begin

Are Military Personnel Requiredto File?If you enlisted in the service as a Massachusettsresident and have not established a new domicile(legal residence) elsewhere, and if your gross in-come is more than $8,000, you are required to filea Massachusetts resident income tax return. Thisapplies even though you may be stationed outsideof Massachusetts. The terms “legal residence” and“domicile” are used to denote that place where youhave your permanent home and to which, when-ever you are absent, you have the intention of re-turning. Nonresident military personnel stationedin Massachusetts may be subject to Massachu-setts taxes and should file Form 1-NR/PY if theyearn income other than from military sources.

The following example illustrates circumstancesunder which military pay is or is not taxable inMassachusetts. No guidance is intended on the taxstatus of such pay under the laws of other states.Generally, when income is taxable in two jurisdic-tions, a credit for taxes paid to the other jurisdic-tion is allowed on the taxpayer’s return in thestate of his/her residence.

Example: Betsy enlisted in the Navy in Massachu-setts, but moved with her husband, Eric, fromMassachusetts to Delaware when she was sta-tioned there. They did not change their domicile toDelaware. She received military income while herhusband received income working as a reporter fora local newspaper.

Betsy’s income from the Navy, as well as her hus-band’s income from the newspaper, are both sub-ject to Massachusetts income tax since sheenlisted in the Navy in Massachusetts and theydid not become legal residents of Delaware. Betsyand her husband are, therefore, Massachusettsresidents, and any income they receive, whetherderived in Massachusetts or not, is included intheir Massachusetts gross income.

What Are the Rules for Filinga Joint Return?A joint Form 1 is not allowed if both spouses werenot Massachusetts residents for the same portionof 2007.

If you are legally married, you have the option offiling either a joint return or a married filing sepa-rate return. Married taxpayers who file a joint re-turn are allowed to claim the following exemptions,deductions and credits which married taxpayersfiling separate returns may not claim:

◗ a deduction of $3,600 ($7,200 for two or moredependents) for a dependent member of house-hold under age 12, or dependent age 65 or over asof December 31, 2007 (not you or your spouse)or a disabled dependent;

◗ No Tax Status if joint Massachusetts AGI was$15,850 or less plus $1,000 for each dependent;

◗ Limited Income Credit if joint MassachusettsAGI is between $15,850 and $27,738 plus $1,750for each dependent;

◗ excess unused exemptions against interest in-come (other than interest from Massachusettsbanks), dividends or capital gain income; and

◗ a senior circuit breaker tax credit which allowssenior citizens meeting certain eligibility criteriato claim a refundable credit on their state incometaxes for the real estate taxes paid on the Mass-achusetts residential property they own or rent, andwhich they occupy as their principal residence. Thecredit is the amount by which the real estate taxpayment or 25% of the rent constituting real es-tate tax payments exceeds 10% of their total in-come, but not more than $900. The credit isrefundable to the extent the credit exceeds the tax-payer’s tax liability.

If your spouse died during 2007, you may stillchoose to file a joint return.

How Do I File a Decedent’s Return?A final income tax return must be filed for a tax-payer who died during the taxable year. This re-turn should include income received until date ofdeath. It must be signed and filed by his/her ex-ecutor, administrator or surviving spouse for theportion of the year before the taxpayer’s death. Besure to fill in oval 1 if the taxpayer who was listedfirst on last year’s income tax return is deceased,or oval 2 if the taxpayer who was listed second onlast year’s income tax return is deceased. Also,enclose a statement with the refund claimant’sname and Social Security number clearly printed.

A joint return may be filed by a surviving spouse.In the case of the death of both spouses, a final re-turn must be filed by their legal representative.

Any income received for the decedent for the tax-able year after the decedent’s death, and for suc-ceeding taxable years until the estate is completed,must be reported each year on Massachusetts Form2, Massachusetts Fiduciary Income Tax Return.Form 2 is available online at www.mass.gov/dor.

If the decedent’s return shows a refund due, and ifthe Probate Court has not appointed a legal repre-sentative and none is contemplated, a Massachu-setts Form M-1310, Statement of Claimant toRefund Due on Behalf of Deceased Taxpayer, mustbe enclosed with the return so the refund checkmay be made payable to the proper person.

Should I Make Estimated TaxPayments in 2008?Every resident or nonresident who expects to paymore than $400 in Massachusetts income tax onincome which is not covered by Massachusettswithholding must pay Massachusetts estimatedtaxes. Estimated tax payments can be made on-line by using Web Services for Income by visitingwww.mass.gov/dor or by filing MassachusettsForm 1-ES. See line 37 instructions and TIR 04-25for more information.

When to FileYour ReturnYour Massachusetts Form 1 is due on or beforeApril 15, 2008.

Automatic Extension Granted if100% Tax Due is Paid by Tax ReturnDue DateIf line 3 of the Extension Worksheet on page 3 is“0” and 100% of the tax due for 2007 has beenpaid through:

◗ withholding;

◗ timely estimated payments of tax;

◗ credits from your 2007 return; and

◗ a refund from the prior tax year applied to thenext year’s tax liability,

you are no longer required to file Form M-4868,Application for Automatic Extension of Time toFile Massachusetts Income Tax Return. However,if you do choose to file Form M-4868 in this in-stance, you must do so electronically, either bytelephone or via DOR’s website. See TIR 06-21for more information.

Also, if you owe no tax or you are making a pay-ment of $5,000 or more, you are required to fileyour extension by telephone or via the web. If youare making a payment of less than $5,000, youalso have the option of filing your extension elec-tronically. If there is a tax due with your exten-sion, payment can be made through ElectronicFunds Withdrawal.

Call (617) 660-2222 to file your extension bytelephone or visit www.mass.gov/dor to file viathe Web.

Note: Your extension will not be valid if you fail topay 80% of your total tax liability through with-holding, estimated tax payments or with your ex-tension. Form M-4868 is available at www.mass.gov/dor or by calling (617) 887-MDOR or toll-freein Massachusetts 1-800-392-6089.

72007 Form 1 — Before You Begin

Must I File on a Calendar Year Basis?No. You may file on a fiscal year basis if you keepyour books and records on that fiscal year basisand if you receive permission from the Commis-sioner of Revenue. If you file on a fiscal year basis,you must file on or before the fifteenth day of thefourth month after the end of your fiscal year. Tax-payers filing on a fiscal year basis must completeand file Form 13, Notice of Designation of FiscalYear, available at www.mass.gov/dor or by calling(617) 887-MDOR or toll-free in Massachusetts 1-800-392-6089.

What Should I Do If I Make a Mistakeor Leave Something Off My Return?If, after filing your income tax return, you receivean additional tax statement or discover that anerror was made, do not submit a second tax re-turn. If corrections are necessary, go to www.mass.gov/dor and use DOR’s online abatement ap-plication or file Form CA-6, Application for Abate-ment/Amended Return. Form CA-6 is available atwww.mass.gov/dor, or you may have one mailedto you by calling (617) 887-MDOR or toll-free inMassachusetts 1-800-392-6089.

What If I am Unable to Pay?If you are unable to pay the full amount of tax thatyou owe, you should pay as much of your tax lia-bility as possible with this return. You will receivea bill from the Department for the remainingamount of tax due plus accrued interest andpenalty charges. If the amount of that bill is lessthan $5,000 and you still cannot pay it in full, youmust apply formally to the Department for a smallpayment agreement in order to avoid collectionactivity. You can apply for a small payment agree-ment by visiting Web Services for Income atwww.mass.gov/dor.

Note: Do not mail your request for a paymentagreement with your tax return. Requests can alsobe made once a bill is received by calling the De-partment at (617) 887-MDOR or toll-free in Mass-achusetts 1-800-392-6089. Setting up a smallpayment agreement will allow you to make monthlypayments within a set time period to meet your un-paid liability.

Name and AddressPrint the full name, address, and Social Securitynumber of each person filing the return in thespaces provided. Enter names as they appear onyour federal return. Be sure to retain the four-digitPersonal Identification Number (PIN) printed onthe back cover. You will need it to use DOR’sWeb-based and/or Interactive Voice Response(IVR) applications, such as checking the status ofyour refund.

Social Security Number(s)Be sure to enter your Social Security number(s) onyour return. Also, enter your Social Security num-ber on page 2 of Form 1 and on page 2 of Sched-ules B or C, if filed. Failure to show the correctSocial Security number in the space provided willdelay the processing of your return. If filing jointly,list your numbers in the order they appear on yourfederal return. Taxpayers filing their U.S. returnusing an Individual Taxpayer Identification num-ber (ITIN) should enter that ITIN as their SocialSecurity number in the appropriate space. Also, besure your employer has listed the correct SocialSecurity number on your Form W-2. If you aremarried, you must list your spouse’s Social Secu-rity number even if you are filing a separate return.

To apply for an SSN, you must complete FormSS-5. Form SS-5 is available online at www.socialsecurity.gov, from your local Social Security Admin-istration (SSA) office, or by calling the SSA at 1-800-772-1213. It usually takes about 2 weeks toreceive an SSN. If you are a nonresident or residentalien and you do not have and are not eligible to getan SSN, you must apply for an ITIN. For details onhow to do so, see Form W-7 and its instructions.Form W-7 is available online at www.irs.gov or bycalling the IRS at 1-800-829-1040. It usually takesabout four to six weeks to receive an ITIN.

Name/Address ChangeIf you legally changed your name or address in2007, fill in the oval. If you changed your name,enclose a copy of your Social Security card ordriver’s license showing your new name. Failure toinclude this documentation could delay processingof your return. If you move after filing, be sure toleave a forwarding address with your local post of-fice and file a Change of Address Form with theMassachusetts Department of Revenue. This formis available to be filed online at www.mass.gov/dor,or by calling (617) 887-MDOR or toll-free inMassachusetts 1-800-392-6089.

Deceased TaxpayerBe sure to fill in the appropriate oval if a taxpayerdied during the taxable year. For further informa-tion, refer to the section “How Do I File a Dece-dent’s Return?”

Veterans BenefitsFill in the appropriate oval(s) for you, and/or yourspouse if married filing a joint return, if you are aveteran who served in the Armed Forces of theUnited States in active service as part of OperationEnduring Freedom, Operation Iraqi Freedom orOperation Noble Eagle and were discharged underhonorable conditions and were domiciled for sixmonths in Massachusetts immediately prior toentry into the Armed Forces. The Department ofRevenue will then forward the name and address

to the Department of Veterans’ Services and theadjutant general of the Massachusetts NationalGuard to verify eligibility for any benefits you maybe entitled to.

Voluntary Contribution toState Election Campaign FundYou, and your spouse if filing jointly, may volun-tarily contribute $1 each to the State Election Cam-paign Fund. The purpose of this fund is to providelimited public financing for campaigns of eligiblecandidates for statewide and elective office. Thiscontribution will not change your tax or reduceyour refund.

Note: Lines without specific instructions are con-sidered to be self-explanatory.

Line 1. Filing StatusNote: More than one filing status may apply to you.If so, you may wish to figure your taxes basedupon more than one filing status to see which sta-tus is to your benefit.

SingleFill in the “Single” oval if you were single as of De-cember 31, 2007. This status applies to you if atthe close of the taxable year you fit into any of thefollowing categories:

◗ you were unmarried;

◗ you were a widow or widower whose spousedied before 2007; or

◗ you were legally separated under a final judg-ment of the probate court.

Please note that you are not single if: (1) you haveobtained a judgment of divorce which has not yetbecome final; (2) you have a temporary supportorder; or (3) you and your spouse simply chooseto live apart.

Married Filing Joint ReturnFill in the “Married filing joint return” oval if youwere legally married as of December 31, 2007.Both spouses are responsible for the accuracy ofall information entered on a joint return and bothmust sign. A joint return is allowed even if only onespouse had income or if one spouse died during2007. For further information, refer to the section“What Are the Rules for Filing a Joint Return?”

Note: Same-sex spouses filing a Massachusettsjoint return should combine their figures fromtheir separate U.S. returns.

Married Filing Separate ReturnFill in the “Married filing separate return” oval ifyou were legally married as of December 31, 2007,and if you and your spouse are not filing a jointreturn. Be sure to enter your spouse’s Social Se-curity number in the space provided.

8 Line by Line Instructions

Head of HouseholdFill in the “Head of household” oval if you qualifyto file this status federally. This status is for un-married people who paid over half the cost ofkeeping up a home for a qualifying person, such asa child who lived with you or your dependent par-ent. Certain married people who lived apart fromtheir spouse for the last six months of 2007 mayalso be able to use this status. See IRS Publication501, Exemptions, Standard Deduction, and FilingInformation, for more information.

Noncustodial ParentFill in this oval if you are a “noncustodial parent.”A noncustodial parent is defined as a person whohas a minor child, but does not live with the child.

Note: If you are the biological parent of a child,but your parental rights have been terminated, youare not the noncustodial parent of that child.

Schedule TDS — Inconsistent FilingPosition PenaltyFill in the oval and attach Schedule TDS, TaxpayerDisclosure Statement, if you are disclosing any in-consistent filing positions. Schedule TDS is avail-able on our website at www.mass.gov/dor. Theinconsistent filing position penalty (see TIR 06-5,section IV) applies to taxpayers that take an in-consistent position in reporting income. Thesetaxpayers must “disclose the inconsistency” whenfiling their Massachusetts return. If such inconsis-tency is not disclosed, the taxpayer will be subjectto a penalty equal to the amount of tax attributableto the inconsistency. This penalty is in addition toany other penalties that may apply.

A taxpayer is deemed to have taken an “inconsis-tent position” when the taxpayer pays less tax inMassachusetts based upon an interpretation ofMassachusetts law that differs from the positiontaken by the taxpayer in another state where thetaxpayer files a return and the governing law in thatother state “is the same in all material respects” asthe Massachusetts law. The Commissioner maywaive or abate the penalty if the inconsistency orfailure to disclose was attributable to reasonablecause and not willful neglect.

Whole Dollar Method Now RequiredThe Department of Revenue now requires that thewhole dollar method be used for entries made onforms or schedules. For example, amounts be-tween $1.00 and $1.49 should be entered as $1.00and amounts between $1.50 and $2.00 should beentered as $2.00. However, calculations on work-sheets used to reach amounts shown on the re-turn may be made in one of two ways: (1) roundamounts before adding them up and enter the re-

sulting total on the form, or (2) add amounts tothe penny, and then round to the whole dollar forentry on the form. Either method is acceptable aslong as one method is used consistently through-out the return.

Line 2. ExemptionsLine 2a: Personal ExemptionsEach taxpayer is entitled to claim a personal ex-emption. The amount of your personal exemptiondepends on your filing status as filled in line 1.

If you are age 18 or over as of December 31, 2007,you must complete Schedule HC, Health Care In-formation, to determine the amount of your per-sonal exemption. See the special Health Caresection in this booklet for more information aboutSchedule HC.

If you are under age 18, be sure to fill in the ovaland enter one of the following amounts:

◗ If you are single or married filing a separate re-turn, enter $4,125 in line 2a.

◗ If filing as head of household, enter $6,375 inline 2a.

◗ If married filing a joint return, enter $8,250 inline 2a.

Line 2b: Number of DependentsYou may claim a $1,000 exemption for each ofyour dependents if you claimed them on your U.S.return. Enter in the box in item b the number ofdependents you listed on U.S. Form 1040, line 6cor U.S. Form 1040A, line 6c. Do not include your-self or your spouse. Then, multiply that total by$1,000 and enter the total amount in line 2b. Besure to fill out Schedule DI, Dependent Informa-tion, if you are claiming a dependent exemp-tion(s). Failure to do so will delay the processingof your return.

Note: In a few cases, the number of dependentsclaimed for Massachusetts purposes and for U.S.purposes may differ. For U.S. tax purposes, a de-pendent exemption is not allowed for a person whowould otherwise be a dependent but who fileshis/her own income tax return and claims a per-sonal exemption. For Massachusetts tax pur-poses, you can claim a dependent exemption forsuch a person. If you claim such a dependent inMassachusetts, increase the number reported initem b from your U.S. return by the number ofsuch additional dependents. Also, same-sex jointfilers should combine the number of dependentsfrom their federal returns to arrive at the numberof Massachusetts dependents. See TIR 04-17 formore information.

Line 2c: Age 65 or Over Before 2008You are allowed an additional $700 exemption ifyou were age 65 or over before January 1, 2008.If your spouse was age 65 or over and you are fil-ing a joint return, you may also claim a $700 ex-emption for your spouse. Fill in the appropriateoval(s) and enter the total number of persons age65 or over in the small box. Multiply that total by$700 and enter the total in line 2c.

Line 2d: Blindness ExemptionYou are allowed an additional $2,200 exemption ifyou are legally blind. If your spouse is also legallyblind and you are filing a joint return, you may alsoclaim a $2,200 exemption for your spouse. Fill inthe appropriate oval(s) and enter the total numberof blindness exemptions in the small box. Multiplythat total by $2,200 and enter the total in line 2d.

Legal Definition of BlindnessYou are legally blind and qualify for the blindnessexemption if your visual acuity with correction is20/200 or less in the better eye, or if your peripheralfield of vision has been contracted to a 10-degreeradius or less, regardless of visual acuity.

Line 2e: Other: Medical/Dental Expensesand Adoption Agency FeeYou may claim an exemption for medical and den-tal expenses paid during 2007 only if you itemizedthese expenses on your U.S. Form 1040, Sched-ule A. If you are married filing a joint U.S. Form1040, you must file a joint Massachusetts Form 1to claim this exemption. Enter in line 2e, item 1 theamount reported on your U.S. Form 1040, Sched-ule A, line 4.

Note: Same-sex joint filers should recalculate theirU.S. Form 1040, Schedule A by combining allow-able expenses as reported on U.S. Form 1040,Schedule A, line 1 and their adjusted gross incomesas reported on U.S. Form 1040, Schedule A, line 2in calculating U.S. Form 1040, Schedule A, line 4.

If you paid adoption fees to a licensed adoptionagency during 2007, you are eligible for an ex-emption of the total amount of the fees paid dur-ing the year. Fees paid during 2007 to an agencylicensed to place children for adoption on accountof the adoption process of a minor child regard-less of whether an adoption actually took placeduring 2007 should also be included for this ex-emption. Enter this amount in line 2e, item 2.

Add items 1 and 2 and enter the total in line 2e.

Line 2f: Total ExemptionsAdd items 2a through 2e and enter the total in line2f. This amount should also be entered on line 18of Form 1.

92007 Form 1 — Line by Line Instructions

5.3% IncomeNote: DOR and the IRS maintain an extensive ex-change program, routinely sharing computer tapesand audit results. Discrepancies between income,deductions, and schedules reported federally andon this return, except those allowed under statelaw, will be identified and may result in a state auditor further investigation.

Line 3. Wages, Salaries, Tips andOther Employee CompensationReport in line 3 total state wages and allocated tipsfrom Form(s) W-2. Income earned by a Massachu-setts resident in another state is subject to taxationin Massachusetts. Generally, your total wages andallocated tips will be the same amount reported onyour U.S. 1040 or 1040A, line 7; or 1040EZ, line 1.Following are instances that require an adjustmentto these amounts.

Massachusetts Legal Residents Workingin a Foreign CountryIncome earned by a Massachusetts resident in aforeign country is subject to taxation in Massachu-setts. If you excluded part or all of the compensa-tion earned in a foreign country on your U.S. return(under Section 911 of the U.S. IRC), you must in-clude any such amount in line 3 for Massachusettstax purposes.

State or Local Employees Contributing toPension PlansIf you are a Massachusetts state, city, town orcounty employee and contributed to your pensionplan, enter in line 3 the Massachusetts W-2 statewage amount. This is generally box 16 of FormW-2. This amount will be higher than the U.S.amount because your pension contributions areexcluded from your income for U.S. tax purposes.Contributions up to $2,000 per taxpayer may stillbe deducted in line 11.

Line 4. Taxable Pensions andAnnuitiesIncome from most private pensions or annuityplans is taxable in Massachusetts. Certain govern-ment pensions, however, are exempt under Mass-achusetts law. In general, exempt pensions includecontributory pensions from the U.S. Governmentor the Commonwealth of Massachusetts and itspolitical subdivisions, and noncontributory militarypensions. The following section describes somespecific pensions which are exempt. If your pen-sion is exempt, enter “0” in line 4 and note thesource on the dotted line to the left.

If your pension is not exempt, you should generallyenter in line 4 the taxable amount reported on yourU.S. Form 1040, line 16b, or U.S. Form 1040A, line12b. In some cases, however, Massachusetts lawrequires an adjustment to the federal amount.Distributions from annuity, stock bonus, pension,profit-sharing or deferred payment plans or con-tracts described in Sections 403(b) and 404 of theU.S. IRC must be adjusted to account for your con-tributions that have been previously taxed. Sub-tract from such income (as reported on your U.S.Form 1040, line 16a, or U.S. Form 1040A, line 12a)the amount of your contributions which was pre-viously taxed by Massachusetts until the total ofyour taxed contributions is received. If your pen-sion falls into this category, enter the adjustedamount in line 4. If you are receiving distributionsfrom an IRA or Keogh plan, do not report the in-come here; instead, see the instructions for Sched-ule X, line 2.

Note: Massachusetts does not tax Social Securityincome; therefore, you should not report such in-come on Massachusetts Form 1.

What pensions are exempt?◗ Pension income received from a contributoryannuity, pension, endowment or retirement fundof the U.S. Government or the Commonwealth ofMassachusetts and its political subdivisions.

◗ Pensions from other states or its political subdi-visions which do not tax such income from Mass-achusetts or its political subdivisions may beeligible to be deducted from Massachusetts taxableincome. This pension income, however, should bereported in line 4. Refer to Schedule Y, line 13 in-structions to determine eligibility for this deduction.

◗ Noncontributory pension income or survivorshipbenefits received from the U.S. uniformed services(Army, Navy, Marine Corps, Air Force, Coast Guard,commissioned corps of the Public Health Serviceand National Oceanic and Atmospheric Adminis-tration) is exempt from taxation in Massachusetts.

◗ Massachusetts state court judges who were ap-pointed on or after January 2, 1975 are participantsin the Massachusetts contributory retirement sys-tem and their pensions are nontaxable. State courtjudges who were appointed prior to January 2,1975 receive taxable noncontributory pensions.

If you retired under Chapter 32, Sections 56–60 ofMassachusetts General Laws and are a veteran whobegan Massachusetts state service prior to July 1,1939, all or part of your pension income may besubject to tax. If you elected to receive your pro-ceeds from contributions in one lump-sum distrib-

ution, your original contributions to the retirementsystem are not taxable. Noncontributory pensionincome received after a lump-sum distribution isfully taxable and should be reported in line 4.

How do I report lump-sum distributions?If you were an employee of the U.S., Massachusettsor one of its political subdivisions and left public em-ployment prior to retirement, you are not requiredto report as income the lump-sum distribution.

Lump-sum distributions of qualified employee ben-efit plans in excess of the employee’s contributionswhich were previously subject to Massachusetts tax(or not previously excluded from Massachusettstax) must be reported in line 4. Generally, qualifiedrollovers are not taxable in Massachusetts to theextent they are not taxable on your U.S. return.Lump-sum distributions related to IRA/Keogh andRoth IRA distributions should be reported in line 9.

Rollover from a traditional IRA to a Roth IRA.Taxpayers with $100,000 or less in federal adjustedgross income are allowed to make partial or com-plete rollovers from existing IRAs to Roth IRAs.Any taxable portion of these rollovers included infederal gross income is also included in Massachu-setts gross income, except for amounts previouslysubject to Massachusetts personal income tax. SeeSchedule X, line 2 instructions for further details.

Line 5. Interest from MassachusettsBanksEnter in line 5a the total amount of interest re-ceived or credited to deposit accounts (term andtime deposits, including certificates of deposit, sav-ings accounts, savings shares, and NOW accounts)in Massachusetts banks. Then, enter your exemp-tion amount in line 5b (if married filing jointly,enter $200; otherwise, enter $100). Subtract line5b from 5a and enter the result in line 5, but notless than “0.”

Note: This exemption amount does not apply toyour U.S. tax return.

Do not subtract interest forfeited or penaltiescharged to you for early savings withdrawal. You willbe allowed to deduct these amounts on ScheduleY, line 2. All other interest, unless exempt, shouldbe entered on Massachusetts Schedule B. Intereston an IRA/Keogh is not taxable until distributed.

Lines 6, 7 and 10. If showing a loss in lines 6, 7 or10, be sure to mark over the “X” in the box to theleft. Do not use parentheses or negative signs toindicate losses.

10 2007 Form 1 — Line by Line Instructions

Line 6. Business/Profession orFarm Income or LossEnter in line 6 the amount of income or loss froma business or profession from MassachusettsSchedule C, line 31. You must enclose Massachu-setts Schedule C with this return. Also, enclose acopy of your U.S. Schedule C or Schedule C-EZ ifsubstituting U.S. Schedule C or C-EZ for Mass-achusetts Schedule C.

Note: You may substitute U.S. Schedule C or C-EZfor Massachusetts Schedule C if there are no dif-ferences between the amounts reported on U.S.Schedule C or C-EZ and amounts that would bereported on Massachusetts Schedule C. Be sureto write “No Massachusetts Differences” on thetop of the U.S. Schedule C or C-EZ.

If you operate a farm as an individual or coopera-tive, enter the amount of income or loss from op-erating a farm from U.S. Schedule F, Profit or Lossfrom Farming, line 36. Enclose a copy of U.S.Schedule F. Complete a pro-forma U.S. ScheduleF to report Massachusetts differences, such asbonus depreciation.

Line 7. Rental, Royalty, REMIC,Partnership, S Corporation,Trust Income or LossEnter in line 7 the total of: Massachusetts ScheduleE, Part I, line 5; Part II, line 8; and Part III, line 11.Remember to subtract losses when calculating thetotal. You must enclose Massachusetts ScheduleE. You must retain with your records documenta-tion to substantiate any differences in amountsentered on the Massachusetts and U.S. sched-ules. See Massachusetts Schedule E instructionsfor an explanation of possible differences.

Line 8a. UnemploymentCompensationIf you received unemployment compensation,enter in line 8a the amount reported on U.S. Form1040, line 19; 1040A, line 13; or 1040EZ, line 3. Ifyou elected voluntary withholding of Massachu-setts state income taxes on your unemploymentcompensation, be sure to include the amount ofMassachusetts state income tax withheld, as re-ported on Form 1099-G, on Form 1, line 35 andattach with a single staple, where indicated on thereturn, Form 1099-G.

Note: DOR routinely matches the amounts in line8a with files from the Division of UnemploymentAssistance.

Line 8b. Massachusetts StateLottery WinningsEnter in line 8b all winnings from the Massachu-setts state lottery. Do not enter less than “0.” Youmay only deduct the price of your winning ticket.Lottery losses claimed as itemized deductions onU.S. Form 1040, Schedule A are not allowed onyour Massachusetts return.

Note: DOR routinely matches the amounts in line8b with files from the Lottery Commission.

Add lines 8a and 8b and enter the result in line 8.

Line 9. Other Income(from Schedule X)Alimony Received, Taxable IRA/Keoghand Roth IRA Conversion Distributions,Other Gambling Winnings, Fees andOther 5.3% Income“Other 5.3% income” includes the items listedabove and must be included on Schedule X. Enterthe total from Schedule X, line 5. Not less than “0.”Be sure to enclose Schedule X with your return.Failure to enclose this schedule will delay theprocessing of your return.

DeductionsLines 11 through 15Massachusetts allowable deductions differ from“Itemized Deductions” on Schedule A of U.S. Form1040. You may claim only the deductions speci-fied on Massachusetts Form 1, lines 11 through14 and Schedule Y.

Please read the instructions for lines 12 and 13 todetermine which deduction you qualify for or whichis better for you. You cannot claim a deduction inboth lines 12 and 13.

You are not allowed to deduct amounts unless theyare directly related to income that is subject to tax-ation and reported on Massachusetts Form 1.

Line 11. Amount Paid to SocialSecurity (FICA), Medicare,Railroad, U.S. or MassachusettsRetirement SystemsIf you have paid into any of the retirement systemslisted above during 2007, you may deduct thosecontributions, up to a maximum of $2,000.

Enter in lines 11a and 11b the amount you, andyour spouse if filing jointly, paid to Social Security(FICA), Medicare or Railroad Retirement and theU.S. or Massachusetts retirement systems during2007 as shown on your Form W-2, but not morethan $2,000 each. Payment amounts may not be

combined or transferred from one spouse to theother. Add lines 11a and 11b and enter the result inline 11. Be sure to add any amount of Medicare taxwithheld as shown on Form W-2 and any amountof self-employment tax as reported on your U.S.Form 1040 to the amount of Social Security taxwithheld, the total not to exceed $2,000 per person.

Note: Medicare premiums deducted from yourSocial Security or retirement payments are notdeductible.

Payments to an IRA, Keogh, Simplified EmployeePension Plan (SEP), or Savings Incentive MatchPlan for Employees (SIMPLE) Account are not de-ductible for Massachusetts income tax purposes.

Line 12. Child Under Age 13,or Disabled Dependent/SpouseCare ExpensesMassachusetts now allows taxpayers to exceedthe federal limit on employment-related expensesfor the care of a qualified child under the age of 13,a disabled dependent or a disabled spouse. Themaximum deduction is $4,800 for one qualifyingindividual, and $9,600 for two or more qualifyingindividuals. Complete the following worksheet tocalculate your Massachusetts child or disabled de-pendent/spouse care expense deduction.

Note: You cannot claim this deduction if marriedfiling a separate U.S. 1040 or 1040A return. If youare filing a joint U.S. 1040 or 1040A return but aremarried filing separately for Massachusetts pur-poses, either spouse may claim the deduction forexpenses he or she incurred, but their combineddeduction cannot exceed $4,800 for one qualify-ing individual or $9,600 for two or more qualify-ing individuals.

Taxpayers who received dependent care benefitsshould complete a pro forma U.S. Form 2441 orU.S. Form 1040A, Schedule 2. When completingthis pro forma form, taxpayers should enter$4,800 (or $9,600 for two or more qualifying per-sons) in line 31 of U.S. Form 2441 or line 25 ofU.S. Form 1040A, Schedule 2. The amount fromthis pro forma Form 2441, line 35 or U.S. Form1040A, Schedule 2, line 29 should then be en-tered in line 1 of the following worksheet.

Note: Same-sex joint filers should complete a proforma U.S. Form 2441 or U.S. Form 1040A,Schedule 2. In addition to changing the maximumamount of the deduction allowed on U.S. Form2441 or U.S. Form 1040A, Schedule 2 (see pre-ceding paragraph), same-sex spouses should pre-pare the pro forma federal forms as though theywere filing a joint federal return. See TIR 04-17for more information.


Line 12 Worksheet — Child Under 13 orDisabled Dependent/Spouse Care Deduction

Use this worksheet to calculate your Mass-achusetts child under age 13 or disableddependent/spouse care deduction.

1. Enter the amount of qualified expensesyou incurred and paid in 2007 for a qualifyingperson(s). This amount may exceed the federallimit of $3,000 for one qualifying person or$6,000 for two or more persons. However,do not enter more than $4,800 for onequalifying person or $9,600 for two ormore persons . . . . . . . . . . . . . . . . . 2. Enter the amount from U.S. Form 2441,line 4, or U.S. Form 1040A, Schedule 2, line 4 . . . . . . . . . . . . . . . . . . . . . . . . 3. Enter the amount from U.S. Form 2441,line 5, or U.S. Form 1040A, Schedule 2, line 5 . . . . . . . . . . . . . . . . . . . . . . . . 4. Enter the smallest of line 1, 2 or 35. If you paid 2006 expenses in 2007, enter theamount of the allowed 2006 expenses used tocompute the credit on U.S. Form 2441, line 9,or U.S. Form 1040A, Schedule 2, line 9.Otherwise, enter “0” . . . . . . . . . . . . 6. Add lines 4 and 5. Enter here and in Form 1,line 12 . . . . . . . . . . . . . . . . . . . . . . .

Note: If you choose to take a deduction in line12, you cannot take the deduction in line 13.

Line 13. Dependent Member(s)of Household Under Age 12,or Dependents Age 65 or Over(not you or your spouse) as ofDecember 31, 2007, or DisabledDependentYou may deduct $3,600 for a dependent member ofhousehold, or $7,200 for two or more dependents,under age 12, or dependent age 65 or over (notyou or your spouse) as of December 31, 2007, ordisabled dependent. Enter the number of qualifieddependents in line 13a, not to exceed two, and mul-tiply that amount by $3,600. Enter the result in line13. Only if single, head of household or married fil-ing jointly. You cannot claim this deduction if mar-ried filing a separate return.

Note: You may claim an amount in line 13 only ifthere is no entry in line 12.

Line 14. 50% Rental DeductionYou may be entitled to a rental deduction equal toone-half (50%) of the rent you paid during 2007(up to a maximum of $3,000 per return) for yourprincipal residence in Massachusetts. Enter thetotal amount of qualified rent paid by you during2007 in line 14a. Divide line 14a by 2 and enter the

result, or $3,000 ($1,500 if married filing a sepa-rate return) — whichever is smaller — in line 14.

Note: This deduction amount does not apply toyour U.S. tax return.

What Qualifies for the Rental Deduction?The deduction must be for rent you paid to a land-lord for the rental or lease of your principal resi-dence in Massachusetts.

If two or more persons jointly rent a unit, each oc-cupant using it as his/her principal residence is en-titled to a deduction based on the amount of rentthat each person paid.

If the rent is paid by a third party (such as a parent)who maintains a principal residence elsewhere, no50% rental deduction is allowed for either party.

A principal residence does not include any resi-dence for vacation, an apartment for a person ona temporary assignment or a student or facultymember who has a principal residence elsewhere.It also does not include any apartment or housein Massachusetts of a nonresident who has alegal residence in another state or country.

Payment for occupying a hotel, motel or roominghouse is not considered rent unless a rental agree-ment exists. All separately stated charges such asutilities, furnishings or parking cannot be includedin rent for purposes of this deduction. Also, rentdoes not include any advance payments (such assecurity deposit, last month’s rent, etc.) until ac-tually applied as rent.

How Do I Calculate My Rental DeductionIf I Am Married Filing Separately?If a husband and wife file separate returns, they areeach entitled to a rental deduction equal to 50% ofthe rent each pays, not to exceed $1,500 per re-turn. However, a married couple filing separatelymay allocate the rent deduction differently, pro-vided the amount taken by each spouse does notexceed 50% of the rent actually paid by thatspouse, and provided their combined rental deduc-tions do not exceed $3,000. If the allocation re-sults in one spouse claiming a deduction in excessof $1,500, that spouse must enclose with his/herreturn a statement signed by the other spouse in-dicating consent to the allocation. The statementmust contain the name, address and Social Secu-rity number of the consenting spouse and theamount of rental deduction taken by that spouse.

Line 15. Other Deductions(from Schedule Y)Enter the total from Schedule Y, line 16. Be sure toenclose Schedule Y with your return. Failure to doso will delay the processing of your return.

Line 17. 5.3% Income AfterDeductionsSubtract line 16 from line 10. Enter the result in line17. If line 16 exceeds line 10, enter “0” in line 17.

Line 19. 5.3% Income AfterExemptionsSubtract line 18 from line 17. If line 18 exceedsline 17, enter “0” in line 19.

If line 18 exceeds line 17 and you received interestincome (other than interest from Massachusettsbanks), dividends or capital gain income, com-plete the worksheet for Schedule B, line 36 andSchedule D, line 19, if applicable. All others pro-ceed to line 20.

Line 20. Interest and DividendIncomeIf you have any interest income other than interestfrom deposits in banks located in Massachusetts,dividend income in excess of $1,500, certain cap-ital gains or losses, or any adjustments to interestincome (other than interest from Massachusettsbanks), you must complete Schedule B. Be sure toenclose Massachusetts Schedule B. To determineif you need to file Schedule B, refer to the Sched-ule B instructions in this booklet.

Enter in line 20 the amount from Schedule B, line38. If not required to file Schedule B, enter divi-dend income of $1,500 or less (from U.S. Form1040 or 1040A, line 9a) in line 20.

Tax on 5.3% IncomeLine 22. 5.3% Tax (from Tax Table)Based upon the amount in line 21, find the properamount of tax in the blue table at the back of thisbooklet. Enter the tax in line 22. If line 21 is morethan $24,000, multiply the amount in line 21 by.053 and enter the result in line 22. You must usethe tax table if line 21 is $24,000 or less.

Note: Personal income tax forms must provide anelection to voluntarily pay tax at a rate of 5.85% ontaxable income which would otherwise be taxedat a rate of 5.3%. The election to pay tax at the rateof 5.85% does not apply to items of income taxedat 12% (short-term capital gains and gains on col-lectibles). If choosing the optional 5.85% tax rate,multiply line 21 and Schedule D, line 20 by .0585and fill in the oval.


12% Income &TaxLine 23. 12% Income from CertainCapital GainsIf you have any interest income other than interestfrom deposits in banks located in Massachusetts,dividend income in excess of $1,500, certain cap-ital gains or losses, or any adjustments to interestincome (other than interest from Massachusettsbanks), you must complete Schedule B. Be sure toenclose Massachusetts Schedule B. To determineif you need to file Schedule B, refer to the Sched-ule B instructions in this booklet.

Enter in line 23a the amount from Schedule B, line39. Multiply this amount by .12 (12%) and enterthe tax in line 23.

Tax on Long-TermCapital GainsLine 24. Schedule D (Long-TermCapital Gains and Losses ExcludingCollectibles)Enter in line 24 the amount from Schedule D, line21, but not less than “0.” To determine if you needto file Schedule D, refer to the Schedule D instruc-tions in this booklet.

Schedule B, Line 36 and Schedule D, Line 19Worksheet — Exemptions from Interest andDividend Income, 12% Income and Long-TermCapital Gain Income (Only if Single, Head ofHousehold, or Married Filing Jointly)

If your total exemptions in line 18 are more thanthe amount of your 5.3% income after deduc-tions in line 17, the excess may be appliedagainst all your interest and dividend incomeand income taxed at 12%. Any remaining ex-cess amount may then be applied against allyour long-term capital gain income. Completethe following worksheet only if line 17 is lessthan line 18 to determine if you qualify for theexcess exemption. Enter all losses as “0.”

1. Enter amount from Schedule B, line 35.Not less than “0” . . . . . . . . . . . . . . . 2. Enter amount from Form 1, line 18 . . . . . . . . . . . . . . . . . . . . . . . 3. Enter amount from Form 1, line 17 . . . . . . . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If “0” or less,you do not qualify for this exemption.Omit remainder of worksheet . . . . .

5. Excess exemptions applied against interestand dividend income and 12% income. If line 1is larger than line 4, enter line 4 here and inSchedule B, line 36. If line 4 is equal to orlarger than line 1, enter line 1 here and inSchedule B, line 36. Complete lines 6 through 8. . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 4. If “0,” omitremainder of worksheet . . . . . . . . . 7. Enter Schedule D, line 18. Not less than “0” . . . . . . . . . . . . . . . . . . . . . . 8. Excess exemptions applied against long-termcapital gain income. If line 7 is larger than line 6,enter line 6 here and in Schedule D, line 19. Ifline 6 is equal to or larger than line 7, enter line7 here and in Schedule D, line 19 . .

Excess ExemptionsIf excess exemptions were used in calculating lines20, 23 or 24 (see Schedule B, line 36 and/or Sched-ule D, line 19), be sure to fill in the oval in line 24.

Line 25. Credit Recapture AmountIf any Brownfields Credit (BC), Economic Opportu-nity Area Credit (EOA), Low Income Housing Credit(LIH) or Historic Rehabilitation Credit (HR) prop-erty is disposed of or ceases to be in qualified useprior to the end of its useful life, the difference be-tween the credit taken and the total credit allowedfor actual use must be added back to your tax onForm 1. Complete and enclose Schedule H-2,Credit Recapture. Schedule H-2 is available atwww.mass.gov/dor or by calling (617) 887-MDORor toll-free in Massachusetts 1-800-392-6089.

MassachusettsAdjusted GrossIncome (AGI)No Tax Status — Single, Married Filing aJoint Return or Head of Household OnlyIf your Massachusetts AGI was $8,000 or less ifsingle, $13,975 or less plus $1,000 per depen-dent if head of household, or $15,850 or less plus$1,000 per dependent if married filing a joint re-turn, you qualify for No Tax Status and are not re-quired to pay any Massachusetts income taxes.

Limited Income Credit — Single, Married Filing a Joint Returnor Head of Household OnlyIf you do not qualify for No Tax Status, but you aresingle and your Massachusetts AGI is between$8,000 and $14,000, or if you are filing as head ofhousehold and your Massachusetts AGI is be-

tween $13,975 and $24,456 plus $1,750 per de-pendent, or if you are married filing a joint returnand your Massachusetts AGI is between $15,850and $27,738 plus $1,750 per dependent, you mayqualify for the Limited Income Credit. This creditis an alternative tax calculation that can result in asignificant tax reduction for people whose incomeis close to the No Tax Status threshold.

Massachusetts AGIMassachusetts AGI is not the same as taxable in-come. Massachusetts AGI includes:◗ wages, salaries, tips;◗ taxable pensions and annuities;◗ pension income from another state or politicalsubdivision before any deduction;◗ taxable IRA/Keogh and Roth IRA distributions;◗ fees and unemployment compensation;◗ income or loss from a business or profession;◗ income or loss from partnerships, S corpora-tions and trusts;◗ rents, royalties and REMIC income;◗ alimony and other 5.3% income;◗ interest from Massachusetts banks before ex-emptions; and◗ other interest, dividends, and capital gains.

Complete the Massachusetts AGI Worksheet to seeif you may qualify for the College Tuition Deduction(Schedule Y, line 11), No Tax Status or the LimitedIncome Credit.

Massachusetts AGI Worksheet

1. Enter your total 5.3% income from Form 1,line 10. Not less than “0”* . . . . . . . 2. Enter the total of Schedule Y, lines 1through 10. . . . . . . . . . . . . . . . . . . . 3. Subtract line 2 from line 1. Not less than “0” . . . . . . . . . . . . . . . . . . . . . . 4. Enter total Massachusetts bank interest or theinterest exemption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . . . . . . . . . . . . . . . . . . . . .

Note: If Form 1, line 10 is a loss, do not completeline 4 above. Instead, combine Form 1, line 10with the smaller amount of total Massachusettsbank interest or the interest exemption amount.Enter the result in line 4 above, unless the resultis a loss. If the result is a loss, enter “0.”

5. Enter amount from Schedule B, line 35. Ifthere is no entry in Schedule B, line 35 or ifnot filing Schedule B, enter the amount fromForm 1, line 20 . . . . . . . . . . . . . . . . 6. Enter the amount from Schedule D, line 18.**Not less than “0” . . . . . . . . . . . . . . . 7. Add lines 3 through 6 . . . . . . . . .

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If you are single and the total in line 7 is $8,000or less, you qualify for No Tax Status (see line26 instructions). If you are single but do notqualify for No Tax Status, and your total in line 7is $14,000 or less, complete line 27 and see line28 instructions for the Limited Income Credit.If you are filing as head of household or marriedfiling a joint return, compare line 7 with the NoTax Status/Limited Income Credit chart to see ifyou may qualify for No Tax Status or the LimitedIncome Credit.

*Add back any Abandoned Building Renovationdeduction claimed on Schedule(s) C and/or Ebefore entering an amount in line 1.

**If filing Schedule D-IS, Installment Sales, seethe Schedule D-IS instructions for the amountto enter in line 6. Schedule D-IS and instruc-tions are available on DOR’s website at www.mass.gov/dor.

Line 26. No Tax StatusIf you qualify for No Tax Status, fill in the oval inline 26, enter “0” in line 27 and omit lines 28through 30. Also, enter “0” in line 31 and completeForm 1. However, if there is an amount entered inline 25, Credit Recapture Amount, enter thatamount in line 27 and complete lines 29 and 30.

Note: If married filing separately, you do not qual-ify for No Tax Status.

Line 27. Total TaxAdd line 22 (5.3% tax), line 23 (12% tax), line 24(tax on long-term capital gains) and line 25 (creditrecapture amount). Enter the total in line 27.

Line 28. Limited Income Credit

Line 28 Worksheet — Limited Income Credit(Only if Single, Head of Household, or MarriedFiling Jointly)

1. Enter amount from line 7 of MassachusettsAGI Worksheet . . . . . . . . . . . . . . . . 2. Enter $8,000 if single. If married filing a jointreturn or head of household, enter the amountfrom the blue column of the No Tax Status/Limited Income Credit chart . . . . . . 3. Subtract line 2 from line 1. . . . . . 4. Enter in line 4 the amount of tax from Form 1,line 27 . . . . . . . . . . . . . . . . . . . . . . . 5. Multiply line 3 by 10% (.10) . . . . 6. If line 4 is smaller than line 5, you are noteligible for this credit. Enter “0.” If line 4 islarger than line 5, subtract line 5 from line 4and enter the result here and in line 28 onForm 1. . . . . . . . . . . . . . . . . . . . . . .

Line 29. Other Credits(from Schedule Z)Enter the total from Schedule Z, line 15. Be sure toenclose Schedule Z with your return. Failure to doso will delay the processing of your return.

Line 32. Voluntary ContributionsYou may contribute any amount you choose to thefollowing funds. Remember, these amounts areadded to your tax. They increase the amount ofyour payment or reduce the amount of your refund.

a. Endangered Wildlife Conservation: The NaturalHeritage and Endangered Species Fund is admin-istered by the Division of Fisheries and Wildlife.Contributions are used to protect and restore rareand endangered wildlife and plants, and their habi-tats. This fund has helped restore and conserve inthe Commonwealth populations of the Bald Eagle,Hessel’s Hairstreak Butterfly, the Redbelly Turtleand the Plymouth Gentian.

b. Organ Transplant Fund: The Organ TransplantFund is administered by the Massachusetts De-partment of Public Health. All contributions re-ceived by the Fund assist patients with the costsof medications without which they might losetheir transplanted organs.

c. Massachusetts AIDS Fund: The MassachusettsAIDS Fund is administered by the MassachusettsDepartment of Public Health. Contributions areused for research, experimental treatment and ed-ucation related to Acquired Immune DeficiencySyndrome (AIDS). Massachusetts residents livingwith AIDS receive experimental treatment throughclinical trials which are wholly supported with thisFund. The Fund also educates people with AIDSabout treatment options and how to gain accessto medication and experimental treatment.

d. Massachusetts United States Olympic Fund:Contributions to this fund are used to assist Mass-achusetts residents in paying all or part of any costsassociated with the development, maintenance andoperation of the United States Olympic Team par-ticipating in the Olympics and the United StatesParalympic Team participating in the Paralympics.

e. Massachusetts Military Family Relief Fund:The Massachusetts Military Family Relief Fund Isadministered by the Friends of Massachusetts Na-tional Guard and Reserve Families. Contributionsto this fund are used to help members of the Mass-achusetts National Guard and Massachusetts res-idents who are members of the reserves of thearmed forces of the United States and who havebeen called to active duty after the September 11,2001 terrorist attacks, and their families, to defraythe costs of food, housing, utilities, medical serv-ices, and other expenses.

Add items a, b, c, d and e and enter the total inline 32.

Line 33. Massachusetts Use TaxDue On Out-of-State PurchasesMade in 2007A 5% Massachusetts use tax is due on your tax-able purchases of tangible personal property pur-chased for use in Massachusetts on which youdid not pay Massachusetts sales or use tax.These include, but are not limited to, purchasesmade out-of-state, on the Internet or from a cata-log, where no Massachusetts sales tax was paid.The use tax does not apply to out-of-state pur-chases that are exempt from the sales tax (for ex-ample, clothing that costs $175 or less). Examplesof taxable items include automobiles, computers,furniture, jewelry, cameras, appliances, and any


Filing status:Head of household. Line 7 of Married filing a joint return.the AGI worksheet is less than Line 7 of the AGI worksheet or equal to: is less than or equal to:

Number of dependents(from Form 1, line 2b):

0123456

$13,975$14,975$15,975$16,975$17,975$18,975$19,975you qualify forNo Tax Status

$24,456$26,206$27,956$29,706$31,456$33,206$34,956you may qualifyfor the LimitedIncome Credit

$15,850$16,850$17,850$18,850$19,850$20,850$21,850you qualify forNo Tax Status

$27,738$29,488$31,238$32,988$34,738$36,488$38,238you may qualifyfor the LimitedIncome Credit

If the number of dependents is more than 6, add $1,000 per dependent to the blue column for No TaxStatus, or $1,750 per dependent to the red column for the Limited Income Credit.

If you qualify for No Tax Status, see the instructions for line 26. If you may qualify for the Limited IncomeCredit, go to line 27 and complete the worksheet for line 28.

No Tax Status/Limited Income Credit Chart

other item that is not exempt. Generally, anyonewho pays a sales or use tax to another state orterritory of the United States on tangible personalproperty to be used in Massachusetts is entitled toa credit against the Massachusetts use tax, up to5%. This credit is allowed for sales or use tax paidto another state only if that state has a correspond-ing credit similar to the Massachusetts credit. SeeTIR 03-1 for more information. Prepare and retainwith your records a list of your purchases in 2007that are subject to the Massachusetts use tax.

Taxpayers may use the following table to self-re-port a “safe-harbor” amount of use tax based ontheir Massachusetts adjusted gross income. Ataxpayer may pay this amount in lieu of the actualamount of use tax that would otherwise be due withrespect to such purchases. Individual taxpayerselecting to report use tax under this method willnot be assessed additional use tax on audit, even ifthe actual amount of use tax due would have beengreater than the amount from the schedule.

The estimated liability applies only to purchasesof any individual items each having a total salesprice of less than $1,000. For each taxable itempurchased at a sales price of $1,000 or greater,the actual use tax liability for each purchase mustbe added to the amount of the estimated liabilityderived from the table below. See TIR 04-26.

Mass. AGI per return* Use tax liability$25,010 – $025,000 $20$25,001 – $040,000 $15$40,001 – $060,000 $25$60,001 – $080,000 $35$80,001 – $100,000 $45Above $100,000 Multiply Mass. AGI* by .0005

*From line 7 of Massachusetts AGI worksheet.

Complete the following worksheet to calculate youruse tax if you are not self-reporting a “safe-harbor”amount. For more information about use tax, visitDOR’s website at www.mass.gov/dor.

Form 1, Line 33 Worksheet —Use Tax Due on Out-of-State Purchases

1. Total of purchases in 2007 subjectto Massachusetts use tax . . . . . . . . 2. Use tax. Multiply line 1 by .05 (5%) . . . . . . . . . . . . . . . . . . . . . . . . 3. Credit for sales/use tax paid to other states orjurisdictions. Add the amount of any sales/usetax paid to another state or jurisdiction, or 5%of the sales price, whichever is less, on eachpurchase reported in line 1 . . . . . . . 4. Total amount due. Subtract line 3 from line 2.Not less than “0.” Enter the result here and onForm 1, line 33 . . . . . . . . . . . . . . . .

Line 35. Massachusetts IncomeTax WithheldThis represents all income taxes withheld for theCommonwealth of Massachusetts as indicated onyour copies of Forms W-2, W-2G, PWH-WA (pro-moter withholding), 2G, K-1 and certain 1099s, ifapplicable. Enter the total of all Massachusettswithholdings in line 35. Attach, with a single staple,state copies to your return; otherwise your claim ofamounts withheld will not be allowed. If you havelost your state copy, ask the payer for a duplicate.Copies of 1099s need only be attached if theyshow an amount for Massachusetts tax withheld.

Line 36. 2006 Overpayment Appliedto Your 2007 Estimated TaxInclude the exact amount of any 2006 overpay-ment you applied to your 2007 estimated taxes onyour 2006 Massachusetts Form 1, line 43 or Form1-NR/PY, line 48. Do not include any 2006 refundin this line.

Line 37. 2007 MassachusettsEstimated Tax PaymentsIf you paid Massachusetts estimated income taxfor 2007, enter in line 37 the total of all Massachu-setts estimated tax payments. Be sure to includeany last quarter (of 2007) payment made on or be-fore January 15, 2008. Do not include any 2006overpayment applied to your 2007 estimated tax.Every resident who expects to pay more than $400in Massachusetts income tax on income which isnot covered by Massachusetts withholding mustpay Massachusetts estimated taxes. Estimated taxpayments can be made online by using Web Serv-ices for Income by visiting www.mass.gov/dor orby filing Massachusetts Form 1-ES.

Income which is not subject to withholding includes:◗ salaries and wages where the employer is notsubject to Massachusetts withholding;◗ dividends and interest, including interest fromMassachusetts banks;◗ gains from capital assets;◗ income from an individual trade, business, pro-fession, partnership or S corporation;◗ income from any estate or trust not taxed directly;◗ certain pensions;◗ taxable Keogh or IRA distributions;◗ rental, royalty or REMIC income;◗ unemployment compensation (from which noMassachusetts income tax was withheld);◗ alimony received;◗ contributions to SIMPLE accounts;◗ illegal income; and◗ any other income received while a Massachu-setts resident from which Massachusetts tax willnot be withheld.

Generally, the first payment must be filed on orbefore April 15 of the taxable year. The estimatedtax may be paid in full with the first payment or infour installments on or before April 15, June 15,September 15 of the current taxable year and Jan-uary 15 of the following year.

If you wish to verify estimated tax payments thathave already been made, check the Estimated TaxPayment History Application at www.mass.gov/dor.You will need to know the PIN that appeared on theback of your Form 1 booklet or the amount of lastyear’s refund or balance due to access your account.

You may request your employer to withhold addi-tional amounts from your salary on Form M-4,Massachusetts Employee’s Withholding ExemptionCertificate to cover the taxes on other income sothat you do not have to file and pay estimated taxes.

If 80% of the tax is not paid throughout the yearthrough withholding and/or estimated payments,a penalty may be imposed.

Line 38. Payments Made withExtensionIf you filed Massachusetts Form M-4868, Applica-tion for Automatic Six-Month Extension of Time toFile Massachusetts Income Tax Return, for 2007 onor before April 15, 2008, enter in line 38 the amountyou paid with Massachusetts Form M-4868.

Line 39. Earned Income CreditThe earned income credit is a tax credit for certaintaxpayers who work and have earned incomeunder $39,783. Taxpayers who qualify for andclaim the federal earned income credit are alloweda refundable credit equal to 15% of the federalamount. If the credit due the taxpayer exceeds theamount of the total income tax payable for the yearby the taxpayer, the excess amount of the creditwill be refunded to the taxpayer without interest.You must enter the number of qualifying children,if any, in line 39a. Then, enter the federal earnedincome credit amount from your U.S. Form 1040,line 66a, 1040A, line 40a; or 1040EZ, line 8a. Mul-tiply this amount by .15 (15%) and enter the re-sult in line 39. Be sure to fill out Schedule DI,Dependent Information, if you are claiming thiscredit for one or more qualifying children/depen-dents. Failure to do so will delay the processing ofyour return.

If you choose to have the IRS compute your federalearned income credit, wait until the IRS notifiesyou of that amount before making an entry in line39. If you have not received your earned incomecredit amount as computed by the IRS by April 15,2008, you may file Massachusetts Form M-4868,Application for Automatic Six-Month Extension of


Time to File Massachusetts Income Tax Return.See page 3 for information about filing your exten-sion by telephone or via the Web. For more infor-mation about the federal earned income tax credit,see IRS publication 596, available at www.irs.gov.

Line 40. Senior Circuit Breaker CreditCertain senior citizens in Massachusetts may beeligible to claim a refundable credit on their stateincome taxes for the real estate taxes paid on theMassachusetts residential property they own orrent and which they occupy as their principal resi-dence. The maximum credit allowed is $900 for thetax year beginning January 1, 2007. If the creditdue the taxpayer exceeds the amount of the totalincome tax payable for the year by the taxpayer,the excess amount of the credit will be refunded tothe taxpayer without interest. To determine if youqualify for this credit, refer to the Senior CircuitBreaker Credit instructions in this booklet.

If you qualify for this credit and you are a home-owner, enter the amount from Schedule CB, Cir-cuit Breaker Credit, line 20; if you are a renter, enterthe amount from line 24. Be sure to complete andenclose Schedule CB with your return.

Line 41. Refundable Film CreditMotion picture production companies qualify toelect a refundable film credit if they have not trans-ferred or carried forward a portion of the filmcredit for the production/certificate number to berefunded. Transferees of the film credit do notqualify for the refundable film credit. Transfereesshould claim their film credit on Schedule Z, line 9.

Note: If an election to refund the film credit for aproduction/certificate number is made, the entirefilm credit remaining after reducing tax liability andother credits will be refunded at 90%. A motionpicture production company that elects to claim arefund of the film credit is not permitted to seek apartial refund and a partial transfer or carryover ofthe credit. However, the refund can be applied asan estimated payment for the subsequent tax year.

Enter in line 41 any amount of refundable filmcredit from Schedule RFC, Refundable Film Credit,line 5.

Refund AmountLine 43. OverpaymentIf line 34 is smaller than line 42, subtract line 34from line 42 and enter the result in line 43. This isthe amount of your overpayment. If line 34 is largerthan line 42, go to line 46. If line 34 and line 42are equal, enter “0” in line 45.

Line 44. Amount of OverpaymentYou Want Applied to Your 2008Massachusetts Estimated TaxEnter the amount of your 2007 overpayment thatyou wish to apply to your 2008 Massachusettsestimated tax. Once an election is made to applyyour overpayment to your 2008 estimated tax, itcannot be refunded later or applied to any addi-tional tax you may owe for 2007. The amount en-tered in this line can only be claimed as a credit onyour 2008 Massachusetts return.

Line 45. Refund AmountSubtract line 44 from line 43. Enter the result inline 45. This is the amount of your refund.

Note: Your state tax refund may be taxable on yourU.S. tax return if you deducted state income taxpaid as an itemized deduction on U.S. Schedule A.

You may elect to have your refund deposited di-rectly into your savings or checking account.Check with your financial institution to make surethat it accepts direct deposit and verify the routingtransit number (RTN) of the issuing financial insti-tution. If we are unable to honor your request fora direct deposit, a paper check will be sent to you.

The routing number of your financial institutionis nine digits and begins with 01 through 12 or 21through 32. The account number can be up to 17characters (both numbers and letters). Omit hy-phens, spaces and special symbols. Enter thenumber from left to right and leave any unusedboxes blank. You must enter the routing numberand the account number in the spaces provided inline 45 if you are requesting direct deposit. Failureto do so will result in your request for direct de-posit being denied. See sample check for locationof this information.

Note: Only one direct deposit is allowed per ac-count number.

Tax DueLine 46. Tax DueIf line 34 is larger than line 42, subtract line 42from line 34, and enter the result in line 46. Thisis the amount of tax you owe with your return.Pay in full with your return. Go to Web Servicesfor Income at www.mass.gov/dor for online pay-ment options. If you need to mail your payment,make your check or money order payable to theCommonwealth of Massachusetts and write yourSocial Security number on the front of your checkor money order in the lower left corner. Completeand remove Form PV, Massachusetts Income TaxPayment Voucher, attached to the back of the en-velope included in this booklet. Enclose the checkand Form PV with your return. Form PV must beincluded with your check to ensure proper credit-ing of your account. Be sure to use the light bluemailing label when mailing your Form 1 with theForm PV.

Failure to file or failure to pay the proper amount oftax when due will result in an increasing amountof interest and penalties. It is to your advantage tofile when your return is due, whether or not youare able to make full payment.

If you owe any interest, penalty or addition for theunderpayment of estimated tax, add thoseamounts to the tax you owe and enter the totalamount in line 46.

What Are Interest and Penalties?Interest: If you fail to pay the tax when due, inter-est will be charged. For an explanation of how in-terest is compounded in Massachusetts, see TIR92-6 or call the Customer Service Bureau at (617)887-MDOR or toll-free, in Massachusetts at1-800-392-6089.

Penalty for Late Payment: The penalty for latepayment is 1⁄2% per month (or fraction thereof) ofthe tax due, up to a maximum of 25%.

Penalty for Failure to File: The penalty for failureto file a tax return by the due date is 1% per month(or fraction thereof) of the tax due, up to a maxi-mum of 25%. If you were required to file a tax re-turn for income received in any prior year and youdid not file, you must file for that prior year.

Penalty for Protested (“Bad”) Check: If yourcheck is not honored by your bank because of in-sufficient funds or any other reason, a penalty maybe added of $30 or the amount of the check,whichever is less.

Addition for Underpayment of Estimated Tax: Youwill generally be subject to this addition to tax ifyou did not have withholding and/or estimatedpayments equal to 80% of the total tax liability re-quired to be paid and your 2007 tax due after cred-


its and withholding is greater than $400. The 80%requirement is reduced to 662⁄3% for individualswho receive two-thirds of their income from fish-ing or farming. If you failed to meet these require-ments, you must complete and enclose Massachu-setts Form M-2210 to calculate the amount youmust add to line 46. You do not have to completeForm M-2210 if the balance due with your returnis $400 or less.

You may not be subject to an underpayment penaltyif you qualify for one of the following exceptions:

◗ you are a qualified farmer or fisherman and arepaying the full amount of the tax due on or beforeMarch 1, 2008;

◗ you were a Massachusetts resident and werenot liable for 2006 taxes (where the taxable yearwas 12 months); or

◗ the sum of your estimated payments and with-holding equals or exceeds your 2006 total tax due(where the taxable year was 12 months and a re-turn was filed).

If you qualify for one of these exceptions, please fillin the oval marked “EX” under line 46 on Form 1and enclose Form M-2210 indicating which of theexceptions applies to your circumstances.

A limited number of taxpayers may also qualify fora waiver of the underpayment penalty for one ormore installments if:

◗ the underpayment was because of casualty ordisaster; or

◗ during 2006 or 2007 you retired after reachingage 62 or became disabled and the underpaymentwas due to reasonable cause and not willful neglect.

If you think you qualify for one of these waivers,go to www.mass.gov/dor and use DOR’s onlineapplication for abatement/amended return atwww.mass.gov/dor or enclose Form M-2210 andan explanatory statement with your return and fillin the oval marked “EX” under line 46. If yourwaiver is not for all four installments, completeForm M-2210 to calculate the underpaymentpenalty for the installments which are not coveredby the waiver. Form M-2210 is available by visit-ing www.mass.gov/dor.

Penalty for Failure to Report Federal Change: Ifthe U.S. Internal Revenue Service changes yourincome for a prior year (generally through audit),file an online application for abatement/amendedreturn at www.mass.gov/dor within one year of thefinal federal determination to avoid this penalty.This penalty is equal to 10% of the additional taxdue or $100, whichever is smaller. If the change in-dicates a refund, file an online application for abate-ment/amended return within one year, includingacceptance of an amended federal return by theInternal Revenue Service.

17

Sign HereNow that you have completed Form 1, sign yourname. Your spouse must also sign if this is a jointreturn. Write the date you signed the return. Re-member to sign your name(s) at the bottom ofpage 1 of Form 1.

Attach to your Form 1, with a single staple, all statecopies of your Forms W-2, W-2G, PWH-WA, 2Gand any Forms 1099 which included Massachu-setts withholding. If making a payment, be sure toenclose Form PV with your Form 1. Form PV is at-tached to the back of the envelope found in thisbooklet. Form PV must be included with your checkto ensure proper crediting of your account. Makeyour check or money order payable to Common-wealth of Massachusetts and be sure to sign thecheck and write your Social Security number onit. Also, be sure to use the light blue mailing labelwhen mailing your Form 1 with the Form PV.

Paid Preparer Must Sign Your ReturnGenerally, anyone you pay to prepare your returnmust sign it in the space provided. Tax return pre-parers are authorized to sign the return by meansof a rubber stamp, mechanical device, or computersoftware program, which must include either a fac-simile or printed name of the preparer. Preparersare personally responsible for affixing their signa-tures to returns. Preparers must also provide theirSocial Security Number (SSN) or Preparer TaxIdentification Number (PTIN) and Employer Identi-fication Number (EIN) in the spaces provided. Thepreparer must give you a copy of the return for yourrecords. Someone who prepares your return butdoes not charge you should not sign your return.

Paid Preparer AuthorizationIf you want to allow the Massachusetts Depart-ment of Revenue (DOR) to discuss your 2007 taxreturn with the paid preparer who signed it, fill inthe “Yes” oval in the signature area of the return.This authorization applies only to the individualwhose signature appears in the “Paid Preparer”section of your return. It does not apply to thefirm, if any, shown in that section.

If you fill in the “Yes” oval, you, and your spouse iffiling a joint return, are authorizing DOR to call thepaid preparer to answer any questions that mayarise during the processing of your return. You arealso authorizing the paid preparer to:

◗ give DOR any information that is missing fromyour return;

◗ call DOR for information about the processingof your return or the status of your refund or pay-ment(s); and

◗ respond to certain DOR notices that you haveshared with the preparer about math errors, offsets

and return preparation. The notices will not be sentto the preparer.

You are not authorizing the paid preparer to receiveany refund check, bind you to anything (includingany additional tax liability), or otherwise representyou before DOR. If you want to expand the paidpreparer’s authorization, see Form M-2848, Powerof Attorney and Declaration of Representative. FormM-2848 is available by visiting www.mass.gov/dor.

The authorization cannot be revoked. However, theauthorization will automatically end no later thanthe due date (without regard to extensions) forfiling your 2008 tax return. This is April 15, 2009for most people.

E-File Opt OutFor tax years beginning on or after January 1,2005, income tax return preparers who completed100 or more original Massachusetts Forms 1 and1-NR/PY, including those E-filed, during the previ-ous calendar year are required to use electronicmeans to file all personal income tax returns, un-less the taxpayer specifically directs on the paperform that the filing be on paper and signs FormEFO, Personal Income Tax Declaration of Paper Fil-ing. Fill in oval if you do not want your preparer tofile your return electronically. See TIR 04-30 formore information.

MailingIf you are expecting a refund or if you have no taxdue, use the white mailing label on the back of theenvelope that came with this booklet. If you do nothave one, mail Form 1 to: Massachusetts Depart-ment of Revenue, PO Box 7000, Boston, MA02204-7000. If using a tax software product, besure to use the correct PO box. See page 3.

If you have a tax due, use the light blue mailinglabel on the back of the envelope that came withthis booklet. If you do not have one, mail Form 1to: Massachusetts Department of Revenue, POBox 7003, Boston, MA 02204-7003. If using a taxsoftware product, be sure to use the correct PObox. See page 3.

Note: Schedule lines without specific instructionsare considered to be self-explanatory. Be sure tolist on each schedule the name and Social Securitynumber that appears first on Form 1. Do not cutor separate schedules.


Schedule XOther IncomeBe sure to enclose with Form 1.

Line 1. Alimony ReceivedEnter in Schedule X, line 1 the total amount of allperiodic payments of alimony or separate mainte-nance received under a court judgment or decree,or for excess alimony amounts recaptured, as re-ported on U.S. Form 1040, line 11. Paymentsspecified as child support are not taxable.

Line 2. Taxable IRA/Keogh,Qualified Charitable IRADistributions and RothIRA Conversion DistributionsComplete the Schedule X, line 2 worksheet to cal-culate the taxable portion of any amount you re-ceived as an Individual Retirement Account (IRA),Keogh, qualified charitable IRA distribution or RothIRA conversion distribution. Since Massachusettsdoes not allow a deduction for amounts originallycontributed to an IRA or Keogh, the distributionsare not taxable until the full amount of your con-tributions which were previously subject to Mass-achusetts taxes are recovered.

Contributions made to Keogh accounts prior to1975 were deductible when made. Therefore, nodeduction may be taken from a Keogh distribu-tion for amounts contributed before 1975.

Massachusetts generally adopts the federal con-version rules for partial or complete rollovers fromexisting IRAs to Roth IRAs. Generally, the rolloveramount is treated as a distribution and included infederal gross income to the extent it is attributableto investment growth or previously deducted con-tributions. See TIR 98-8, Massachusetts 1998 Re-ducing Income Taxes Act, for further details.

Note: Massachusetts adopts the federal exclusionfor qualified charitable distributions from IRAs andRoth IRAs. See TIR 06-20, The Pension ProtectionAct of 2006: Charitable IRA Distributions, for fur-ther information.

Schedule X, Line 2 Worksheet — TaxableIRA/Keogh Plan, Qualified Charitable IRADistributions and Roth IRA ConversionDistributions

Complete this worksheet to report conventionalIRA/Keogh distributions, qualified charitableIRA distributions or Roth IRA conversiondistributions.

1. Total IRA/Keogh plan distributions, qualifiedcharitable IRA deductions, Roth IRA conversiondistributions in 2007 . . . . . . . . . . . . 2. Total IRA/Keogh plan contributions previously taxed by Massachusetts

3. Total distributions received in previous years . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If line 3 is largerthan line 2, enter “0” . . . . . . . . . . . . 5. Subtract line 4 from line 1 and enter theresult here. Not less than “0” . . . . . 6. Total qualified charitable IRA distributionsin 2007 included in line 1 . . . . . . . . 7. Taxable IRA/Keogh distributions or RothIRA conversion distributions. Subtract line 6from line 5 and enter result here and inSchedule X, line 2. Not less than “0”

Note: You must complete separate worksheetsif married filing a joint return and both you andyour spouse received IRA/Keogh Plan, qualifiedcharitable IRA distributions, and/or Roth IRAconversion distributions.

Line 3. Other Gambling WinningsEnter in Schedule X, line 3 all gambling winningsfrom casinos, raffles, races, beano or other eventsof chance, wherever held, and winnings from non-Massachusetts lotteries. Do not enter less than“0.” You may only deduct the price of the winningticket. Gambling losses are not deductible underMassachusetts law. Gambling losses claimed asitemized deductions on U.S. Form 1040, ScheduleA are not allowed on your Massachusetts return.

Note: Do not report Massachusetts state lotterywinnings in Schedule X, line 3. Instead, report themon Form 1, line 8b.

Line 4. Fees and Other 5.3% IncomeThe following items should be reported on line 4 ofSchedule X. Do not enter less than “0.” Encloseadditional statements if more space is needed.

◗ All fee income, such as payments for jury duty,election worker payments, director’s fees, compen-sation received as executor or administrator of anestate, and commission income or tips not reportedin line 3 of Form 1 are taxable. Also, report allbartering income not reported on Schedule C (thefair market value of goods or services received inpayment for your services).

◗ All prizes and awards won in a quiz program,drawing, beauty contest, etc. are taxable at fairmarket value. Awards and bonuses received fromyour employer for performance of services notpart of a qualified award plan are also taxable.

◗ Other Massachusetts 5.3% income reportedon U.S. Form 1040, line 21 and not reported else-where in Form 1, lines 3 through 8 or Schedule X,lines 1 through 3 must be reported in line 4 ofSchedule X.

◗ Pre-1996 installment sales classified as ordinaryincome for Massachusetts purposes (from Mass-achusetts Schedule D, line 9) are taxed as 5.3%

income and must be reported on line 4 of Sched-ule X.

◗ Embezzled or other income from illegal activi-ties is taxable and should be reported on Sched-ule X, line 4.

The following items should not be reported on yourMassachusetts return:

◗ Any “net operating loss” reported as a negativeamount on U.S. Form 1040, line 21 cannot be en-tered on Schedule X. A net operating loss from abusiness or profession cannot be carried forwardor backward to offset individual income in anyother year under Massachusetts law.

◗ Refunds of U.S. and Massachusetts incometaxes are not considered income under Massachu-setts law. If you received interest on refunds, re-port such interest on Massachusetts Schedule B.

Schedule YOther DeductionsBe sure to enclose with Form 1.

Line 1. Allowable EmployeeBusiness ExpensesGenerally, reimbursed employee business ex-penses are not included in your wages or salaryand therefore are not allowed as deductions.However, there are unreimbursed and certain re-imbursed expenses for which you are allowed adeduction. Complete the following worksheet inorder to calculate your Massachusetts employeebusiness expense deduction. The expenses mustrelate to income reported in lines 3 or 9 on Form 1.

Employees may deduct the following:

◗ unreimbursed travel and transportation ex-penses including lodging and meals away fromhome incurred by an employee; and

◗ all federally deductible unreimbursed employeebusiness expenses, if the employee is a sales-person who solicits business for an employer awayfrom the employer’s place of business.

Unreimbursed expenses are only deductible if allof the following conditions are met:

◗ you itemize deductions;

◗ if you filed a joint U.S. return, you must file ajoint Massachusetts return; and

◗ your unreimbursed business expenses takentogether with the other miscellaneous itemized de-ductions reported on U.S. Form 1040, Schedule A,lines 21, 22 and 23 exceed 2% of your federal ad-justed gross income reported on U.S. Form 1040,Schedule A, line 26. See the following worksheetfor Schedule Y, line 1.

18 Schedule Instructions

If you are a qualified performing artist or a fee-basisstate or local government official, do not completethe worksheet. Enter on Schedule Y, line 9 your fed-erally deductible business expenses included onU.S. Form 1040, line 24 and fill in the appropriateoval in Schedule Y, line 9.

Note: Same-sex joint filers should recalculatetheir U.S. Form 1040, Schedule A by combiningallowable expenses as reported on U.S. Form1040, Schedule A, lines 24 and 28 and their ad-justed gross incomes as reported on U.S. Form1040, Schedule A, line 25 in calculating U.S.Form 1040, Schedule A, line 27. Same-sex jointfilers should also recalculate their US. Form 2106 or2106-EZ by combining allowable expenses as re-ported on U.S. Form 2106, lines 4, 9b and 10 orU.S. Form 2106-EZ, lines 4, 5 and 6. See TIR 04-17for more information.

Schedule Y, Line 1 — Massachusetts EmployeeBusiness Expense Deduction Worksheet

1. Enter the amount from U.S. Form 2106,line 10, or 2106-EZ, line 6 . . . . . . . . 2. If you are an employee other than an outsidesalesperson, enter the amount of unreimbursedexpenses included in U.S. Form 2106 or2106-EZ, line 4 . . . . . . . . . . . . . . . . 3. If you are an employee other than an outsidesalesperson, enter the amount of unreimbursedmeals and entertainment expenses included inU.S. Form 2106, line 9, column B or 2106-EZ,line 5, except for meals incurred while awayfrom home. . . . . . . . . . . . . . . . . . . . 4. If you are an individual with a disability,enter the amount of impairment-relatedexpenses included in line 1 and claimedon line 28 of U.S. Schedule A . . . . . 5. Add lines 2 through 4. Enter the result here . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 1. Enter theresult here . . . . . . . . . . . . . . . . . . . . 7. Enter the amount from U.S. Schedule A,line 27 . . . . . . . . . . . . . . . . . . . . . . . 8. Enter the smaller amount of line 6 or line 7here and on Schedule Y, line 1 . . . .

Line 2. Penalty on Early SavingsWithdrawalIf you were charged a penalty because of earlywithdrawal of savings, and interest on the savingsthat such a penalty relates to is reported on thisreturn or on a prior year Massachusetts return,you may deduct the penalty. This deduction is thesame as the amount allowable on U.S. Form 1040,line 30. Enter this amount in line 2 of Schedule Y.

Line 3. Alimony PaidEnter in Schedule Y, line 3 the total amount thatyou paid to your former spouse during 2007 foralimony or separate maintenance under court de-cree, or for excess alimony amounts recaptured,as reported on U.S. Form 1040, line 31a.

Note: Alimony payments specified as child sup-port are not deductible.

Line 4. Amounts Excludible UnderMGL Ch. 41, Sec. 111F or U.S. TaxTreaty Included in Form 1, Line 3.Massachusetts allows an exclusion from incomeof amounts received by a firefighter or police offi-cer incapacitated in the line of duty, per MGL Ch.41, sec. 111F, and an exclusion from income ofamounts received by qualifying students exemptunder a U.S. tax treaty.

Enter any excludible amount of income receivedwhile you were a firefighter or police officer inca-pacitated in the line of duty in line 4 of Schedule Ythat was included in Form 1, line 3, and fill in theappropriate oval.

If you were a qualifying student or a taxpayer withincome exempt under a U.S. tax treaty, enter anyexcludible amount of income received that was ex-empt under a U.S. tax treaty in line 4 of Schedule Ythat was included in Form 1, line 3, and fill in theappropriate oval.

Line 5. Moving ExpensesEnter in Schedule Y, line 5 the amount from U.S.Form 1040, line 26.

Line 6. Medical Savings AccountEnter in Schedule Y, line 6 the amount of the Med-ical Savings Account deduction included in U.S.Form 1040, line 36.

Line 7. Self-Employed HealthInsurance Enter in Schedule Y, line 7 the amount from U.S.Form 1040, line 29.

Note: If you elected to claim the federal credit undersec. 35 and had to reduce the amount on U.S. Form1040, line 29 by the amount of the federal credit,you may add back the amount of the credit to theamount entered on U.S Form 1040, line 29.

Line 8. Health Savings AccountsEnter in Schedule Y, line 8 the amount from U.S.Form 1040, line 25.

Line 9. Other Qualified DeductionsYou may claim only the deductions listed below forSchedule Y, line 9. If you are entitled to claim anyof the deductions in line 9, fill in the appropriateoval(s) and enter the total amount of deductionsclaimed in line 9.

◗ Certain qualified deductions from U.S. Form1040. Do not include any amounts reported onU.S. Form 1040, lines 23 through 35 that are in-cluded in Form 1040, line 36 total. Enter onlyamounts included in U.S. Form 1040, line 36 as anadjustment, except amounts contributed to sec.501(c)(18) pension plans. For Massachusetts pur-poses, contributions to sec. 501(c)(18) pensionplans are not deductible. Also, the IRC sec. 404deduction for contributions on behalf of IRC sec.401(c)(1) employees (sole proprietors and part-ners) is disallowed. See TIR 02-18 (I)(D) and DORDirective 01-7 for more information.

On the dotted line next to line 9, be sure to indicatethe type of deduction being taken, as identified onU.S. Form 1040, line 36. Identify reforestationamortization as “RFST”; repayment of supplemen-tal unemployment benefits under the Trade Act of1974 as “Sub-Pay TRA”; attorney fees and courtcosts involving certain unlawful discriminationclaims as “UDC”; and deductible expenses relatedto income reported on U.S. Form 1040, line 21and Massachusetts Schedule X, line 4 from therental of personal property engaged in for profitas “PPR.” Fill in the appropriate oval in line 9 ofSchedule Y.

◗ Jury duty pay you gave to your employer. Enterthe amount of jury duty pay you gave to your em-ployer included in U.S. Form 1040, line 36 and fillin the appropriate oval in line 9 of Schedule Y.

◗ Business Expenses of National Guard andReserve Members, Performing Artists and Fee-Based Government Officials: Enter the amountfrom U.S. Form 1040, line 24 and fill in the appro-priate oval in line 9 of Schedule Y.

192007 Form 1 — Schedule Instructions

Line 10. Student Loan InterestDeductionEnter the amount from U.S. Form 1040, line 33 or1040A, line 18. This deduction is only allowed ifnot claiming the same expenses in line 12 ofSchedule Y, Undergraduate Student Loan InterestDeduction.

Note: Same-sex joint filers must use the “StudentLoan Interest Deduction” worksheet in the instruc-tions to U.S. Form 1040 or 1040A making sure tocombine their income figures, and performing thecalculation as though they were filing a joint fed-eral return. See TIR 04-17 for more information.

Line 11. College Tuition DeductionA deduction is allowed for tuition payments paidby you, for yourself or a dependent, to a qualifyingtwo- or four-year college leading to an undergrad-uate or associate’s degree, diploma or certificate.Tuition payments for students pursuing graduatedegrees at such a college or university are not eli-gible for the college tuition deduction. The deduc-tion is equal to the amount by which the tuitionpayments, less any scholarships, grants or finan-cial aid received, exceed 25% of MassachusettsAGI. Qualified tuition expenses include only thoseexpenses designated as tuition or mandatory feesrequired for the enrollment or attendance of thetaxpayer or any dependent of the taxpayer at aneligible educational institution. No deduction is al-lowed for any amount paid for room and board,books, supplies, equipment, personal living ex-penses, meals, lodging, travel or research, athleticfees, insurance expenses or other expenses unre-lated to an individual’s academic course of instruc-tion. Complete the Massachusetts AGI Worksheetand the Schedule Y, line 11 worksheet to see ifyou may qualify for this deduction. See TIR 97-13for more information.

Schedule Y, Line 11 Worksheet —College Tuition Deduction

1. Enter total tuition payments paid by you, foryourself or a dependent, to a qualifying two-or four-year college in 2007 . . . . . . 2. Enter amount of scholarships, grants orfinancial aid received in 2007 for amountsshown in line 1 . . . . . . . . . . . . . . . . 3. Subtract line 2 from line 1. If “0” or less,you do not qualify for this deduction4. Enter amount from line 7 of theMassachusetts AGI Worksheet . . . 5. Multiply line 4 by .25. . . . . . . . . . 6. If line 3 is smaller than line 5, you are noteligible for this deduction. Enter “0.” If line 3is larger than line 5, subtract line 5 from line 3and enter the result here and in line 11 onSchedule Y . . . . . . . . . . . . . . . . . . .

Line 12. Undergraduate StudentLoan Interest DeductionA deduction is allowed for interest paid on a qual-ified undergraduate student loan. To be eligible forthe deduction, the “education debt” must be a loanthat is administered by the financial aid office of atwo-year or four-year college at which you, or aqualified dependent, were enrolled as an under-graduate student. Additionally, the loan must havebeen secured through a state student loan pro-gram, a federal student loan program, or a com-mercial lender, and must have been spent solelyfor the purposes of paying tuition and other ex-penses directly related to the school enrollment.Enter the amount of such interest paid in Sched-ule Y, line 12. This deduction is only allowed if notclaiming the same expenses in line 10 of Sched-ule Y, Student Loan Interest Deduction.

Line 13. Deductible Amount ofQualified Contributory PensionIncome from Another State orPolitical Subdivision Included inForm 1, Line 4Massachusetts allows a deduction for contribu-tory pension income received from another stateor one of its political subdivisions which does nottax such income from Massachusetts or its politi-cal subdivisions. For guidelines to determine whichstate’s pensions are exempt in Massachusetts, seeTIR 95-9. Enter any deductible amount of such in-come in line 13 of Schedule Y that was included inForm 1, line 4.

Line 14. Claim of Right DeductionFor tax years beginning on or after January 1, 2005,taxpayers who have paid Massachusetts personalincome taxes in a prior year on income attributedto them under a “claim of right” may deduct theamount of that income from their gross income if itlater develops that they were not in fact entitled tothe income, and have repaid the amounts in ques-tion. The deduction is allowed in the year of repay-ment, provided that the repayment is not otherwisedeductible in determining Massachusetts incometaxable under M.G.L. ch. 62. Some examples inwhich the claim of right may be applied for are:

◗ Stock under claim of ownership. Gains fromsales of stock under a claim of ownership must beincluded, regardless of whether the taxpayer actu-ally owned it;

◗ Employment contracts. Amounts in settlementof employment contracts must be included not-withstanding the prospect of eventual repaymentto the employer of an amount equivalent to orgreater than the amount received;

◗ Dividends. Where a taxpayer receives a dividendthat must be repaid in a later year (e.g., because itimpaired corporate capital), the dividend must beincluded in the year of receipt;

◗ Corporate notes. Where a taxpayer receives adistribution with respect to holding of notes, theincome must be included regardless of whether itcould be challenged by senior creditors;

◗ Mistake in validity of claim. The claim of rightdoctrine applies where a taxpayer merely mistakesthe validity of his claim; or

◗ Advanced insurance commissions.

If you are entitled to claim this deduction, enter theamount claimed in Schedule Y, line 14. For moreinformation, see TIR 06-4.

Line 15. Commuter DeductionA deduction is allowed for certain amounts paid byan individual for tolls paid for through a FastLaneaccount or for weekly or monthly transit commuterpasses for MBTA transit or commuter rail, not in-cluding amounts reimbursed or otherwise deduct-ible. In the case of a single person or a marriedperson filing a separate return or a head of house-hold filing a separate return, this deduction appliesonly to the portion of such expended amount thatexceeds $150, and the total amount deducted can-not exceed $750. In the case of a married couple fil-ing a joint return, this deduction applies only to theportion of such amount expended by each individualthat exceeds $150, and the total amount deductedcannot exceed $750 for each individual. Also, onespouse cannot transfer his or her excess deductionto the other spouse; separate worksheets must becompleted to calculate the deduction. See TIR 06-14for additional information. Complete the worksheetbelow to calculate the commuter deduction.

Schedule Y, Line 15 Worksheet —Commuter Deduction

1. Enter amount paid in 2007 for tolls througha FastLane account . . . . . . . . . . . . . 2. Enter amount paid in 2007 for weekly ormonthly transit commuter passes for MBTAtransit or commuter rail. (Do not include amountsreimbursed or otherwise deductible)3. Add lines 1 and 2. If $150 or less, you do notqualify for this deduction. Omit remainder ofthis worksheet. Otherwise, complete lines 4through 6. . . . . . . . . . . . . . . . . . . . . 4. Enter $150 . . . . . . . . . . . . . . . . . 5. Subtract line 4 from line 3. . . . . . 6. Enter the lesser of line 5 or $750 here andon Schedule Y, line 15 . . . . . . . . . . .

20 2007 Form 1 — Schedule Instructions

Schedule ZOther CreditsBe sure to enclose with Form 1.

Part 1 CreditsLine 1. Lead PaintIf you incurred expenses for covering or remov-ing lead paint on residential premises in Mass-achusetts, you may claim a credit for expenses upto $1,500 for each residential unit. The basic rulesare explained on Massachusetts Schedule LP,Credit for Removing or Covering Lead Paint onResidential Premises. If you qualify for the credit,complete Schedule LP and enter the amount ofcredit in line 1.

Line 2. Economic Opportunity AreaMassachusetts allows a credit equal to 5% of thecost of qualifying property purchased for businessuse within an Economic Opportunity Area (EOA).If you qualify for the credit, complete ScheduleEOAC and enter the amount of credit in line 2.

Line 3. Full EmploymentEvery employer who participates in the Full Em-ployment Program and continues to employ a par-ticipant for at least one full month after any FullEmployment Program subsidy for that participanthas expired may claim the Full Employment Credit.A qualified employer may claim a credit equal to$100 per month of eligible employment per partic-ipant, with a maximum credit of $1,200 per partic-ipant. Qualified participants and employers arethose who participate in the Full Employment Pro-gram under the rules of the Department of Transi-tional Assistance (DTA). A five-year carryover ofany unused credit is allowed. If you qualify for thiscredit, complete Massachusetts Schedule FEC, FullEmployment Credit, and enter the amount of creditin line 3.

Line 4. SepticAn owner of residential property located in Mass-achusetts who occupies the property as his or herprincipal residence is allowed a credit of a maxi-mum of $1,500 per taxable year for expenses in-curred to comply with the sewer system require-ments of Title V as promulgated by the Departmentof Environmental Protection or to connect to a mu-nicipal sewer system pursuant to a federal courtorder, administrative consent order, state courtorder, consent decree or similar mandate. Theamount of the credit is 40% of the cost, up to$15,000, for design and construction expenses forrepair or replacement of a failed cesspool or sep-tic system. The maximum aggregate amount ofthe credit is $6,000. A five-year carryover of anyunused credit is allowed. See TIRs 97-12, 98-8,

99-5, 99-20 and DOR Directive 01-6 for more in-formation. If you qualify for this credit, completeMassachusetts Schedule SC, Septic Credit, andenter the amount of credit in line 4.

Line 5. BrownfieldsRecent legislation extends the Brownfields creditto nonprofit organizations, extends the time framefor eligibility for the credit, and permits the credit tobe transferred, sold, or assigned. Under prior law,net response and removal costs incurred by a tax-payer between August 1, 1998 and August 5,2005, were eligible for the credit provided that theenvironmental response action before August 5,2005. As a result of the recent legislation, the envi-ronmental response action commencement cut-offdate is changed from August 5, 2005 to August 5,2011, and the time for incurring eligible costs thatqualify for the credit is extended to January 1, 2012.See TIR 06-16 for more information. If you qualifyfor this credit, complete Massachusetts ScheduleBC, Brownfields Credit, and enter the amount ofcredit in line 5. Also, be sure to enter the DOR-issued certificate number in the space provided online 5. Certificate application forms and additionalinformation are available at www.mass.gov/dor.

Line 6. Low-Income HousingA low-income housing credit is available to indi-vidual taxpayers. The Department of Housing andCommunity Development will allocate the low-in-come housing credit from a pool of availablecredits granted under section 42 of the InternalRevenue Code among qualified low-income hous-ing projects. A taxpayer allocated a federal low-in-come housing credit may also be eligible for a statecredit based on the credit amount allocated to alow-income housing project that the taxpayer owns.A five-year carryforward of unused credit is al-lowed. See TIR 99-19 for more information. If youqualify for the credit, enter the amount in line 6.

Line 7. Historic RehabilitationEffective for tax years beginning on January 1,2005 and ending on or before December 31, 2011,taxpayers may be eligible for the Historic Rehabili-tation Credit (HRC). To claim this credit, a historicrehabilitation project must be complete and havebeen certified by the Massachusetts HistoricalCommission. Unused portions of the credit may becarried forward for 5 years. The credit may betransferred or sold to another taxpayer. The HRC isnot subject to the 50% limitation rule for corporatetaxpayers. If the taxpayer disposes of the propertygenerating the HRC, a portion of the credit may besubject to recapture. For further information, seeTIR 06-16 and 830 CMR 63.38R.1, MassachusettsHistoric Rehabilitation Credit. If you qualify forthis credit, enter the amount in line 7.

Line 8. Home Energy EfficiencyFor tax year 2007, the home energy efficiencycredit is limited only to the amount of the creditthat exceeded your 2006 tax. If you did not take thecredit in 2006 or you have an excess amount ofcredit remaining from 2005 that you did not takein 2006, you are not eligible for any home energyefficiency credit. Fill out the following worksheetto calculate the amount of home energy efficiencycredit available in 2007.

Schedule Z, Line 8 Worksheet —Home Energy Efficiency Credit

1. Enter the amount from 2006 Schedule HEEC, line 17 . . . . . . . . . . 2. Enter the amount from 2006 Schedule HEEC, line 19 . . . . . . . . . . 3. If line 1 is less than or equal to line 2, youdo not qualify for this credit. Omit remainderof worksheet. Otherwise, subtract line 2 fromline 1. This is the amount of home energyefficiency credit available for 2007. Enter theresult here and in Schedule Z, line 8

Line 9. Film IncentiveFor tax years beginning on or after January 1,2006 and before January 1, 2023, motion pictureproduction companies may claim (1) a credit equalto 25% of the total qualifying aggregate payroll foremploying persons within the Commonwealth inconnection with the filming and production of amotion picture and (2) a credit equal to 25% of theirMassachusetts production expenses. Each credithas its own qualification requirements and a tax-payer is allowed to qualify for and claim bothcredits. The credits are also transferable. For moreinformation, see TIR 06-1. If you qualify for thiscredit, enter the amount of credit in line 9. Also, besure to enter the DOR-issued certificate numberin the space provided on line 9. Certificate applica-tion forms and additional information are availableat www.mass.gov/dor.

Note: Motion picture production companies qual-ify to elect a refundable film credit if they have nottransferred or carried forward a portion of the filmcredit for the production/certificate number to berefunded. If you qualify this election, enter theamount from line 5 of Schedule RFC, RefundableFilm Credit, in line 41 of Form 1.

Line 10. Medical DeviceMedical device companies that develop or manu-facture medical devices in Massachusetts canclaim a credit equal to 100% of the user fees paidby them when submitting certain medical deviceapplications and supplements to the United StatesFood and Drug Administration. The credit is also


transferable. For more information, see TIR 06-22.If you qualify for this credit, enter the amount ofcredit in line 10. Also, be sure to enter the DOR-issued certificate number in the space provided online 10. Certificate application forms and additionalinformation are available at www.mass.gov/dor.

Line 11. Total Part 1 CreditsAdd lines 1 through 10 and enter the result in line11. Also, complete lines 12 through 15.

Part 2 Credits for Residents andPart-Year Residents OnlyLine 12. Income Tax Paid toAnother StateIf any of the income reported on this return is sub-ject to taxation in another state or jurisdiction andyou have filed a return and paid taxes in the otherstate or jurisdiction, complete the Schedule Z, Part2, line 12 worksheet and enter the amount of creditline 12. Do not include taxes paid to the U.S. gov-ernment. (This credit does not apply to city or localtaxes.) You are allowed to claim a credit for taxespaid to the following jurisdictions: (a) other states inthe U.S.; (b) any territory or dependency of the U.S.(including Puerto Rico, the Virgin Islands, Guam,the District of Columbia); or (c) the Dominion ofCanada or any of its provinces (less any U.S. creditamount allowable from U.S. Form 1116).

The total credit which you calculate on thisworksheet is the smaller of the amount of taxesdue to other jurisdictions (net of certain adjust-ments) or the portion of your Massachusetts taxdue on your gross income that is taxed in suchother jurisdictions.

Credit is not given for a property tax due to an-other jurisdiction on account of capital stock orproperty. This does not refer to a tax on gain orincome from the sale of capital stock or property,as included on Schedule B or D. Credit is also notgiven for any interest and penalties paid on a taxdue to another jurisdiction.

You must complete separate worksheets if you had5.3% and interest income (other than interest fromMassachusetts banks), dividends or capital gain in-come taxed by another jurisdiction. If you use thisworksheet to calculate a credit for interest income(other than interest from Massachusetts banks),dividends or capital gain income, substitute inter-est income (other than interest from Massachu-setts banks), dividends or capital gain income for5.3% income in line 1. You must also substituteSchedule B, line 7 (interest and dividend income)and Schedule B, line 13 (taxable 12% capital gains)or Schedule D, line 12, (gross long-term capitalgains and losses), but not less than “0,” for Form1, line 10 in line 2 of the worksheet, and the total of

Form 1, line 20 multiplied by .053 (tax on interestand dividend income) and Form 1, line 23 (12%tax) or line 24 (tax on long-term capital gains) forForm 1, line 19 in line 4 of the worksheet.

◗ When using this worksheet to calculate creditfor interest income (other than interest fromMassachusetts banks), dividends or capital gainincome, enter in line 1 such income taxed in an-other jurisdiction calculated as if it was earned inMassachusetts.

◗ If you choose to pay the optional 5.85% taxrate, substitute .0585 for .053 in line 4 of theworksheet.

Note: Be sure to enter the two-letter state or ju-risdictional postal code for each state or juris-diction for which you are taking the credit. Visitthe United States Postal Service’s website atwww.usps.com and click on “Service Guides”for a list of these codes.

Schedule Z, Part 2, Line 12 Worksheet —Income Tax Paid to Another Jurisdiction

Note: If you have income other than fromForm 1, line 10 taxed by other jurisdictions,see instructions.

1. Enter the total 5.3% income included inForm 1, line 10 on which you paid taxesto another jurisdiction . . . . . . . . . . . 2. Enter the total of Form 1, line 10 and the totalMassachusetts bank interest or the interestexemption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . . 3. Divide line 1 by line 2 . . . . . . . . . 4. Multiply Form 1, line 19 by .0535. Enter any Limited Income Credit fromForm 1, line 28 . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 4. . . . . . 7. Multiply line 6 by line 3 . . . . . . . . 8. Enter the total tax paid to other jurisdictionson income also reported on this return unlessthe tax was paid to Canada. If the tax was paid toCanada, the amount reported in this line must bereduced by the amount claimed as a foreign taxcredit on U.S. Form 1040, line 51. Credit is onlyallowable for amount of tax paid . . . 9. Enter the smaller of lines 7 or 8 here and onSchedule Z, line 12 . . . . . . . . . . . . .

Line 13. EnergyIf you had expenditures for certain renewable en-ergy source items, such as equipment which usesor transmits solar or wind energy to heat, cool, orprovide hot water for your principal residence inMassachusetts, you may qualify for a credit. If youqualify for the credit, complete Schedule EC, Res-idential Energy Credit, and enter the amount ofcredit in line 13.

Line 14. TotalsAdd lines 12 and 13.

Line 15. Total CreditsAdd lines 11 and 14. Enter the result here and inForm 1, line 29.

Schedule DIDependent InformationBe sure to enclose with Form 1.

You must complete this schedule if you are claim-ing a dependent exemption(s) on Form 1, line 2b ortaking a deduction/credit(s) on Form 1, lines 12, 13or 39 (if applicable). Failure to provide this informa-tion will delay the processing of your return. Youmust complete the information for each dependent.

In the spaces provided, enter the name, Social Se-curity number, date of birth and the relationshipof the dependent to you (son, daughter, mother,father, etc.). Also, if the dependent is a qualifyingchild for the Earned Income credit, fill in the “Yes”oval. If you are claiming more than four depen-dents, attach a statement listing the name, SocialSecurity number, date of birth and the relationshipof the dependent to you and if the dependent is aqualifying child for the Earned Income credit.

Schedule BNote: If showing a loss, be sure to mark over the“X” in the box to the left.

Interest, Dividends and CertainCapital Gains and LossesYou must file Massachusetts Schedule B if you had:◗ dividend income in excess of $1,500;◗ any interest income other than from Mass-achusetts banks taxed at 5.3%;◗ short-term capital gains or losses;◗ carryover short-term losses from prior years;◗ long-term gains on collectibles and pre-1996installment sales classified as capital gain incomefor Massachusetts purposes;◗ gains or losses from the sale, exchange or in-voluntary conversion of property used in a tradeor business;◗ net long-term capital gains and losses; or◗ excess exemptions.

Collectibles are defined as any capital asset that is acollectible within the meaning of Internal RevenueCode section 408(m), as amended and in effect forthe taxable year, including works of art, rugs, an-tiques, metals, gems, stamps, alcoholic beverages,certain coins, and any other items treated as col-lectibles for federal tax purposes.


◗ You need not file Massachusetts Schedule B if allinterest income you had was from Massachusettsbanks (reportable in Form 1, line 5a), and yourgross dividend income was $1,500 or less (divi-dend income of $1,500 or less is reportable onForm 1, line 20), and you have no short-term cap-ital gains or losses, long-term gains on collectiblesand pre-1996 installment sales, gains or lossesfrom the sale, exchange or involuntary conversionof property used in a trade or business, allowabledeductions from your trade or business, carryovershort-term losses from prior years, net long-termcapital gains or losses, or excess exemptions.◗ You must complete Massachusetts Schedule Bif your interest or dividend income includes: divi-dends taxed directly to trusts or estates on a Mass-achusetts Fiduciary Return, Form 2; distributionsthat are returns of capital; or exempt portions ofany interest or dividends from a mutual fund ordividends from current earnings of a corporatetrust that are taxed directly on a MassachusettsCorporate Trust Return, Form 3F.

Part 1. Interest and Dividend IncomeLine 1. Total Interest IncomeEnter your total interest income from your U.S.Form 1040 or 1040A, lines 8a and 8b, or U.S.Form 1040EZ, line 2.

Line 2. Total Ordinary DividendsEnter your total ordinary dividends from your U.S.Schedule B, Part II, line 6 (Form 1040) or U.S.Schedule 1, Part II, line 6 (Form 1040A). If you didnot file U.S. Schedule B or U.S. Schedule 1, enterthe amount from U.S. Form 1040 or 1040A, line 9a.

Line 3. Other Interest andDividendsEnter the following amounts and their sources(enclose additional statement if more space isnecessary):

◗ Interest from obligations of other states and theirpolitical subdivisions (including your share, if any,from a partnership, an S corporation and a grantor-type trust or non-Massachusetts trust). Do not in-clude exempt interest already included in line 1;

◗ Taxable distributions from Massachusetts S cor-porations not reported in Schedule B, line 2. Dis-tributions in excess of the Massachusetts accu-mulated adjustments account are dividends to theextent of the corporation’s Massachusetts accumu-lated earnings and profits. For more information,see Regulation 830 CMR 62.17A.1;

◗ Interest and dividends from a partnership, Scorporation, grantor-type trust, or non-Massachu-setts estate or trust from Massachusetts Schedule

E. Generally, portfolio interest and dividend incomefrom partnerships and S corporations should al-ready be included in the Schedule B, line 1 and line2 amounts;

◗ Interest from a trade or business that is reportedon Massachusetts Schedule C, line 32; or

◗ Interest or dividends from a mutual fund, if suchdistributions are not included in line 1 or line 2.See line 6.

Lines 5 and 6Enter only amounts related to income that youhave already included in lines 1, 2, and 3.

Line 5. Total Interest fromMassachusetts BanksEnter the total interest included in Form 1, line 5a(prior to the exemption amount being subtracted)only if it has been included in lines 1 or 3 of thisschedule.

Line 6. Other Interest andDividends to Be ExcludedEnter the total interest and dividends from the fol-lowing sources (enclose an additional statement,if necessary):

◗ Interest on U.S. debt obligations. Enter interestreceived on U.S. Treasury bills, notes and bonds,savings bonds or other obligations of the UnitedStates, including its territories or dependencies.Such interest is tax-exempt in Massachusetts. Forfurther information concerning exempt obliga-tions of the United States, see TIR 89-8;

◗ Interest and dividends taxed directly to Mass-achusetts estates and trusts. Enter the interest anddividends that are taxed directly to a Massachu-setts estate or trust (reportable on a Massachu-setts Fiduciary Return, Form 2);

◗ Any distribution which is a return of capital in-cluded in total gross dividends, line 2;

◗ Any interest or dividends from obligations of theCommonwealth of Massachusetts or its politicalsubdivisions held by you;

◗ Any exempt portion of interest or dividendsfrom a mutual fund included in lines 1, 2 or 3 ofthis schedule. Enter only the exempt portion of in-terest or dividends derived from obligations of theU.S. government or the Commonwealth of Mass-achusetts or its political subdivisions;

◗ Any dividends from current earnings of a corpo-rate trust only if such entity is taxed directly on aMassachusetts Corporate Trust Return, Massachu-setts Form 3F; or

◗ Any interest on pre-retirement distributions fromstate and municipal contributory pension plans.

Do not enter in line 6 either of the following:

◗ Dividends from the earnings and profits accu-mulated prior to January 1, 1971 by any corporatetrust which was not taxed directly by Massachu-setts in prior years, even though such an entity istaxed directly now (obtain from the entity the tax-able status of dividends paid to you); or

◗ Dividends from any corporate trust which is nottaxed directly by Massachusetts. Such entities in-clude: those not doing business in Massachusetts;regulated investment companies or real estate in-vestment trusts (both as defined under the U.S.Internal Revenue Code, Sections 851 and 856); orholding companies (as defined in MassachusettsGeneral Laws, Chapter 62, section 8).

Line 8. Allowable Deductionsfrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 9. Subtotal Interest andDividend IncomeSubtract line 8 from line 7. If you have no short-term capital gains or losses, net long-term capitalgains or losses, carryover short-term losses fromprior years, long-term gains on collectibles andpre-1996 installment sales classified as capital gainincome for Massachusetts purposes, gains orlosses from the sale, exchange or involuntary con-version of property used in a trade or businessand held for one year or less, allowable deductionsfrom your trade or business, or excess exemp-tions, omit lines 10 through 37. Enter the amountfrom line 9 in line 38 of Schedule B and on Form1, line 20, and omit lines 39 and 40 of Sched-ule B. Otherwise, complete Parts 2, 3 and 4.


Part 2. Short-Term Capital Gainsand Losses and Long-Term Gainson Collectibles and Pre-1996Installment SalesIf there are any differences between U.S. andMassachusetts amounts reported in lines 10, 11,12, 16 and 17, be sure to enter the Massachu-setts amount. Possible differences include:

◗ Short-term capital gains taxed directly toMassachusetts estates and trusts (reportable on aMassachusetts Fiduciary Return, Form 2);

◗ Upon the sale of stock of an S corporation, thefederal basis must be modified according toMassachusetts Income Tax Regulation, 830 CMR62.17A.1; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences between Mass-achusetts and federal tax laws. For more informa-tion regarding basis adjustment rules, see TIR 88-7.

Line 10. Short-Term Capital GainsEnter the gross short-term capital gains includedin U.S. Schedule D, lines 1, 2, 4 and 5, column (f).

Line 11. Long-Term Capital Gainson Collectibles and Pre-1996Installment SalesEnter the amount of long-term capital gains on col-lectibles and pre-1996 installment sales classifiedas capital gain income for Massachusetts pur-poses, from Massachusetts Schedule D, line 11.

Line 12. Gain on Sale of BusinessPropertyEnter from U.S. Form 4797 the amount of gainfrom the sale, exchange or involuntary conversionof property used in a trade or business and heldfor one year or less.

Line 14. Allowable Deductionsfrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 16. Short-Term Capital LossesEnter the gross short-term capital losses includedin U.S. Schedule D, lines 1, 2, 4 and 5, column (f).

Line 17. Loss on Sale of BusinessPropertyEnter from U.S. Form 4797 the amount of lossfrom the sale, exchange or involuntary conversionof property used in a trade or business and heldfor one year or less.

Line 18. Prior Years Short-TermUnused LossesYou may use short-term losses accumulated in theprevious taxable years beginning after 1981 in thecomputation of short-term gain or loss for the cur-rent year. Enter here the amount from your 2006Massachusetts Schedule B, line 40.

Line 19. Subtotal Interest andDividends and Certain CapitalGains and LossesCombine lines 15 through 18. If “0” or greater, omitlines 20 through 23 and enter the amount from line19 in line 24. If less than “0,” complete line 20.

Line 20. Short-Term Losses AppliedAgainst Interest and DividendsEnter the smaller of line 9 or line 19 (consideredas a positive amount). Not more than $2,000.

Line 21. Available Short-Term LossesCombine lines 19 and 20. This amount should be“0” or less. If line 21 is less than “0,” go to line 22.If line 21 is “0,” omit lines 22 through 28 and goto Part 3.

If Schedule B, line 21 is a loss and Schedule D, line12 is a loss, omit line 22, enter the amount fromline 21 in line 23 and line 40, omit lines 24 through28 and complete Parts 3 and 4.

Line 22. Short-Term Losses AppliedAgainst Long-Term GainsIf Schedule B, line 21 is a loss and Schedule D, line12 is greater than “0,” enter the smaller of Sched-ule B, line 21 (considered as a positive amount)or Schedule D, line 12 in Schedule B, line 22 andin Schedule D, line 13.

Line 23. Short-Term Losses forCarryover in 2008Combine line 21 and line 22 and enter the resultin line 23 and in line 40, omit lines 24 through 28and complete Part 3 and Part 4.

Line 24. Short-Term Gains andLong-Term Gains on CollectiblesEnter the amount from Schedule B, line 19. IfSchedule D, line 12 is “0” or greater, omit line 25and enter the amount from line 24 in line 26. IfSchedule D, line 12 is a loss, go to Schedule B,line 25.

Line 25. Long-Term Losses AppliedAgainst Short-Term GainsIf Schedule B, line 24 is greater than “0,” andSchedule D, line 12 is a loss, enter the smaller ofSchedule B, line 24 or Schedule D, line 12 (con-sidered as a positive amount) in Schedule B, line25 and in Schedule D, line 13.

Line 27. Long-Term Gains DeductionComplete only if lines 11 and 26 are greater than“0.” If there is no entry in line 11, enter “0.” If line11 shows a gain, enter 50% of line 11 minus50% of losses in lines 16, 17, 18 and 25, but notless than “0.”

Example: Jack has a long-term capital gain oncollectibles of $1,000 entered in line 11 and line15. He does not have any other interest income(other than interest from Massachusetts banks)and dividend income. Jack also has a short-termcapital loss of $100 entered in line 16 and a prioryear short-term unused loss of $200 entered inline 18. Jack enters $350 in line 27: $500 (50% of$1,000) minus $150 (50% of $300) = $350.

Part 3. Adjusted Gross Interest,Dividends Short-Term Capital Gainsand Long-Term Gains on CollectiblesLine 31. Subtotal Interest andDividendsIf Schedule D, line 14 is “0” or greater, omit Sched-ule B, line 32 and enter the amount from Sched-ule B, line 31 in Schedule B, line 33. If ScheduleD, line 14 is a loss, go to Schedule B, line 32.

Line 32. Long-Term Losses AppliedAgainst Interest and DividendsIf Schedule B, line 31 is a positive amount andSchedule D, line 14 is a loss, complete the Long-Term Capital Losses Applied Against Interest andDividends Worksheet for Schedule B, Line 32and Schedule D, Line 15. When completing theworksheet, be sure to enter all losses as a posi-tive amount.


Part 4. Taxable Interest, Dividendsand Certain Capital GainsLine 36. Excess ExemptionsEnter the amount from line 5 of the Excess Ex-emption Worksheet (only if single, head of house-hold or married filing a joint return and Form 1,line 18 is greater than Form 1, line 17).

Long-Term Capital Losses Applied AgainstInterest and Dividends Worksheet for Sched-ule B, Line 32 and Schedule D, Line 15. Com-plete only if Schedule B, line 31 is a positiveamount and Schedule D, line 14 is a loss.Enter all losses as positive amounts.

1. Enter amount from Schedule B, line 29 . . . . . . . . . . . . . . . . . . . . . . . 2. Enter the lesser of line 1 or $2,0003. Enter the amount from Schedule B, line 30 . . . . . . . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If “0” or lessomit the remainder of worksheet. Otherwise,complete lines 5 and 6 . . . . . . . . . . 5. Enter any loss from Schedule D, line 14as a positive amount. Otherwise, enter “0” . . . . . . . . . . . . . . . . . . . . . 6. If line 4 is less than or equal to line 5, enterline 4 here and in Schedule B, line 32 and inSchedule D, line 15. If line 4 is larger than line 5,enter line 5 here and in Schedule B, line 32 andin Schedule D, line 15 . . . . . . . . . . .

Schedule DNote: If showing a loss, be sure to mark over the“X” in the box to the left.

Long-Term Capital Gains andLosses Excluding CollectiblesYou must complete Massachusetts Schedule D ifyou had long-term gains or losses from the sale orexchange of capital assets or from similar transac-tions which are granted capital gain or loss treat-ment on your U.S. return, or if you had capitalgain distributions. If you did not file U.S. Sched-ule D but are reporting capital gain distributionson U.S. Form 1040, line 13 or 1040A, line 10, youmust complete Massachusetts Schedule D (seeline 5 instructions). Include gains from all prop-erty, wherever located. Long-term capital gains aregains on the sale or exchange of capital assetsthat have been held for more than one year on thedate of the sale or exchange. Long-term capitallosses are losses on the sale or exchange of cap-ital assets that have been held for more than oneyear on the date of the sale or exchange.

The law defines “capital gain income” as gain fromthe sale or exchange of a capital asset. The defini-tion of “capital asset” includes: (1) an asset whichis a capital asset under IRC sec. 1221, or (2) prop-erty that is used in a trade or business within themeaning of IRC sec. 1231(b) without regard to theholding period as defined in said sec. 1231(b).

DifferencesSignificant differences between the U.S. and Mass-achusetts capital gain provisions are:

◗ IRC sec. 1244 losses reported as ordinary losseson your U.S. return must be reported on Mass-achusetts Schedule D;

◗ If you made a federal election under sec. 311of the Tax Relief Act of 1997 to recognize gain onthe deemed sale of a capital asset held on Janu-ary 1, 2001, Massachusetts does not follow thefederal rules at sec. 311 for determining the basisof the asset. See TIR 02-3. If you sold a capitalasset in 2007 for which you made a federal sec.311 election, the Massachusetts initial basis willnot be the federal basis. The Massachusetts initialbasis will be determined as of the date the assetwas first acquired;

◗ Upon the sale of stock of an S corporation, thefederal basis must be modified according toMassachusetts Income Tax Regulation, 830 CMR62.17A.1; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences between Mass-achusetts and federal tax laws. For more informa-tion regarding basis adjustment rules, see TIR 88-7.

Net ordinary losses that are itemized deductionson U.S. Schedule A are not allowable.

Installment SalesIf a sale was treated as an installment sale for U.S.income tax purposes, it may be treated the sameway on your Massachusetts income tax return.Gains from pre-1996 installment sales are classi-fied as either capital gains or ordinary income underthe Massachusetts law in effect on the date the saleor exchange took place.

Gains from pre-1996 installment sales that are clas-sified as capital gains should be reported as 12%income on Massachusetts Schedule B. If the assetwas held for more than one year when it was sold,the gain will be eligible for a 50% long-term deduc-tion. Gains from pre-1996 installment sales thatare classified as capital gains included on Mass-achusetts Schedule D, line 3 should be reported onMassachusetts Schedule D, line 11 (“Long-termgains on collectibles and pre-1996 installmentsales”). The amount of such gain is then reportedon Massachusetts Schedule B, Part 2, line 11.

Gains from pre-1996 installment sales classifiedas ordinary income and that are included onMassachusetts Schedule D, line 3 should be re-ported on Massachusetts Schedule D, line 9 (“Dif-ferences”). The amount of such gain classified asordinary income should then be reported on Form1, line 9 (“Other income”) and included on Sched-ule X, line 4 and identified as “2007 gain from pre-1996 installment sale.”

Note: If you are reporting capital gains on install-ment sales that occurred during January 1, 1996through December 31, 2002, do not file ScheduleD. Instead, you must file Schedule D-IS, Install-ment Sales. If you are reporting an installment saleoccurring on or after January 1, 2003, report thosegains on Schedule D. Schedule D-IS can be ob-tained on DOR’s website at www.mass.gov/dor.

Effective for sales on or after January 1, 2005, ifyou wish to report a sale on your Massachusettsreturn as an installment sale and the Massachusettsgain is $1 million or greater, you must apply in writ-ing to the Department of Revenue’s InstallmentSales Unit. See TIR 04-28. The Commissioner ofRevenue must approve your application to reportthe sale on the installment basis in Massachusettsbefore you file your return, and appropriate secu-rity must be posted. An explanatory statementmust be enclosed with each return for the life ofthe installment sale. For further information con-tact the Installment Sales Unit at (617) 887-6950.

Long-Term Capital Gains andLosses, Excluding CollectiblesLine 1. Long-Term Capital Gainsand LossesEnter the gain or loss included in U.S. Schedule D,line 8, column f.

Line 2. Additional Long-TermCapital Gains and LossesEnter the gain or loss included in U.S. Schedule D,line 9, column f.

Line 3. Gain from Sales of BusinessProperty and Other Long-TermGains and LossesEnter the gain or loss included in U.S. Schedule D,line 11, column f.

Line 4. Net Long-Term Gain or Lossfrom Partnerships, S Corporations,Estates and TrustsEnter the gain or loss included in U.S. Schedule D,line 12, column f.


Line 5. Capital Gain DistributionsIf you did not file U.S. Schedule D, enter the capi-tal gain distributions reported to you by a mutualfund or real estate investment trust included in theamount from U.S. Form 1040, line 13 or 1040A,line 10.

If you did file a U.S. Schedule D, enter the capitalgain distributions reported to you by a mutual fundor real estate investment trust included in U.S.Schedule D, line 13, column f.

Line 6. Massachusetts Long-TermCapital Gains and Losses Includedin U.S. Form 4797, Part IIEnter amounts included in U.S. Form 4797, Part IItreated as capital gains or losses for Massachu-setts purposes (not included in lines 1 through 5).These include ordinary gains from the sale of Sec-tion 1231 property, recapture amounts under Sec-tions 1245, 1250 and 1255, Section 1244 lossesand the loss on the sale, exchange or involuntaryconversion of property used in a trade or business.

Line 7. Carryover Losses fromPrevious YearsIf you have a carryover loss from a prior year, enterin line 7 the total amount of carryover losses fromyour 2006 Schedule D, line 22.

Line 9. DifferencesEnter any differences between the gains or lossesreportable for Massachusetts tax purposes and theU.S. gains or losses reported in MassachusettsSchedule D, lines 1 through 7. Differences include:

◗ Pre-1996 installment sales classified as ordi-nary income for Massachusetts purposes;

◗ Long-term capital gains or losses from transac-tions reported as installment sales for U.S. incometax purposes but not for Massachusetts; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences betweenMassachusetts and federal tax laws.

Line 10. Adjusted Capital Gains andLossesExclude/subtract line 9 from line 8 and enter theresult in line 10.

◗ If line 9 is a loss, add loss as a positive numberto the amount recorded in line 8. See the follow-ing examples:

Schedule D

Line ex. A ex. B ex. C ex. D18 $1,000 $1,000 *$0,700**$700*19 $1,500 *$1,300* $0,500 *$500*10 $1,500 $1,300 *$1,200**$200*

*denotes loss

◗ If in line 9 you entered amounts which increasethe amounts reported from U.S. to Massachusetts,for example, a long-term gain reported as install-ment sales for U.S. tax purposes but not for Mass-achusetts, add the amount in line 9 to the amountin line 8.

Line 11. Long-Term Gains onCollectibles and Pre-1996Installment SalesEnter in line 11 the amount of long-term gains oncollectibles and pre-1996 installment sales classi-fied as capital gain income for Massachusettspurposes that are included in line 10.

Long-term gains on collectibles and pre-1996 in-stallment sales classified as capital gain incomefor Massachusetts purposes are taxed at the 12%rate and should be entered on Schedule B, line 11.

Collectibles are defined as any capital asset that isa collectible within the meaning of Internal Rev-enue Code section 408(m), as amended and ineffect for the taxable year, including works of art,rugs, antiques, metals, gems, stamps, alcoholicbeverages, certain coins, and any other itemstreated as collectibles for federal tax purposes.

Line 12. SubtotalSubtract line 11 from line 10 and enter the resultin line 12.

If Schedule D, line 12 is a loss and Schedule B,line 21 is less than “0,” omit Schedule D, lines 13through 15, enter the amount from Schedule D,line 12 in Schedule D, line 16, omit Schedule D,lines 17 through 21 and enter the amount fromSchedule D, line 16 in Schedule D, line 22, andenter “0” on Form 1, line 24.

If Schedule D, line 12 is a gain and Schedule B,line 21 is a loss, go to Schedule D, line 13.

If Schedule D, line 12 is a loss and Schedule B,line 24 is “0” or greater, go to Schedule D, line 13.

If Schedule D, line 12 is a gain, and Schedule B,line 24 is “0” or greater, omit Schedule D, lines 13through 15 and enter the amount from ScheduleD, line 12 in Schedule D, line 16.

Line 13. Capital Losses AppliedAgainst Capital GainsIf Schedule D, line 12 is a positive amount andSchedule B, line 21 is a loss, enter the smaller ofSchedule D, line 12 or Schedule B, line 21 (con-sidered as a positive amount) in Schedule D, line13 and in Schedule B, line 22.

If Schedule D, line 12 is a loss and Schedule B, line24 is a positive amount, enter the smaller of Sched-ule D, line 12 (considered as a positive amount) orSchedule B, line 24 in Schedule D, line 13 and inSchedule B, line 25.

Line 14. SubtotalIf line 12 is greater than “0,” subtract line 13 fromline 12. If line 12 is less than “0,” combine lines 12and 13.

If Schedule D, line 14 is a loss and Schedule B,line 24 is “0” or greater and Schedule B, line 31 isa positive amount, go to Schedule D, line 15.

If Schedule D, line 14 is a loss, and Schedule B, line21 is “0” or less, omit Schedule D, line 15, enter theamount from Schedule D, line 14 in Schedule D, line16, omit Schedule D, lines 17 through 21 and enterthe amount from Schedule D, line 16 in ScheduleD, line 22, and enter “0” on Form 1, line 24.

Line 15. Long-Term Capital LossesApplied Against Interest andDividendsIf Schedule D, line 14 is a loss, and Schedule B,line 24 is “0” or greater and Schedule B, line 31 isa positive amount, complete the Long-Term Capi-tal Losses Applied Against Interest and DividendsWorksheet for Schedule B, Line 32 and ScheduleD, Line 15.

Line 16. SubtotalCombine line 14 and line 15. If Schedule D, line 16is “0,” enter “0” in lines 17 through 20 and omitlines 21 and 22. If Schedule D, line 16 is a loss,omit lines 17 through 21 and enter the amountfrom line 16 in line 22.

Line 17. Allowable DeductionsFrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 19. Excess ExemptionsEnter in line 19 the amount from line 8 of the Ex-cess Exemption Worksheet (only if single, head ofhousehold or married filing joint return).

Line 21. Tax On Long-Term CapitalGainsMultiply line 20 by .053 (5.3%) and enter the resulthere and in Form 1, line 24.


Note: If choosing the optional 5.85% tax rate,multiply line 20 by .0585 and enter the result hereand in Form 1, line 24.

Line 22. Available Losses forCarryoverEnter the amount from Schedule D, line 16, only ifit is a loss.

Schedule E, Part INote: If showing a loss, be sure to mark over the“X” in the box to the left.

Rental, Royalty and REMIC Incomeor LossLine 1a. Rental and Royalty Incomeor LossEnter total rental and royalty income or loss in-cluded in U.S. Form 1040, Schedule E, Part I, line26 and U.S. Schedule E, Part V, line 40.

Line 1b. Real Estate MortgageInvestment Conduit (REMIC)Income or LossEnter total Real Estate Mortgage Investment Con-duit (REMIC) residual income or loss from U.S.Schedule E, Part IV, line 39.

Line 2. Massachusetts DifferencesEnter and explain any differences between totalrental, royalty and REMIC income on the U.S. re-turn and the same type of income on your Mass-achusetts return. Possible differences include trustprovisions, deductible royalties from approvedU.S. energy conservation patents and passivelosses, as described below. Explain the differencesin the space provided or enclose an additionalsheet if necessary.

Trust ProvisionsEnter any rental, royalty or REMIC income or lossshown on your U.S. return that is taxed on a Mass-achusetts Fiduciary Return, Form 2.

Deductible Royalties from U.S. EnergyConservation PatentsEnter any income you received from certain U.S.patents that are approved by the MassachusettsDivision of Energy Resources as being useful forenergy conservation or for alternative energydevelopment. For more information, contact theDivision of Energy Resources by calling(617) 727-4732. If such approved patent incomeis other than royalty income, use the applicableschedule and explain.

Passive LossesAs a result of differences in U.S. and Massachu-setts rules in 1987, the calculations you made forpassive losses on your 1987 U.S. and Massachu-setts returns may have differed. Differences inamounts reported in 1987 for U.S. and Massachu-setts tax purposes should be adjusted when theproperty is disposed of or the deduction is used up.In addition, passive losses allowed for Massachu-setts tax purposes in 1987, but carried over for U.S.tax purposes, cannot be used again for Massachu-setts tax purposes when such carryover lossesare eventually allowed for U.S. tax purposes.

To the extent there are applicable adjustments forMassachusetts differences, taxpayers must cal-culate allowable losses on a pro forma U.S. Form8582, Passive Activity Loss Limitations.

Note: Same-sex joint filers should use FederalForm 8582 to recalculate their loss limitations asthough they were filing a joint federal return. SeeTIR 04-17 for more information.

Line 4. Abandoned BuildingRenovation DeductionIn line 4 enter 10% of the costs of renovating aqualifying abandoned building in an EconomicOpportunity Area. For further information, contactthe Massachusetts Office of Business Develop-ment by calling (617) 973-8600.

Line 5. Total Rental, Royalty andREMIC Income or Loss forMassachusettsSubtract line 4 from line 3. Remember to subtractlosses when calculating the total. This figureshould be added to any amount(s) in Schedule E,Part II, line 8 and/or Part III, line 11 and the totalentered on Form 1, line 7.

Schedule E, Part IINote: If showing a loss, be sure to mark over the“X” in the box to the left.

Income or Loss From Partnershipsand S CorporationsLine 1. Partnership andS Corporation Income or LossEnter your total partnership and S corporation in-come or loss from your U.S. Form 1040, Sched-ule E, Part II, line 32.

Line 2. Massachusetts DifferencesEnter and explain any differences between totalpartnership and S corporation income on the U.S.return and the same type of income on your Mass-achusetts return. Explain the differences in thespace provided or enclose an additional sheet if

necessary. Refer back to Schedule E, Part I, line 2instructions for further guidance. If you use infor-mation from Massachusetts Schedule 3K-1 and/orSK-1, take care not to duplicate adjustments alreadymade for differences in U.S. and Massachusettstax treatments.

Line 4. Abandoned BuildingRenovation DeductionEnter 10% of the costs of renovating a qualifyingabandoned building in an Economic OpportunityArea. For further information, refer to the instruc-tions for Schedule E, Part I, line 4.

Line 6. Interest (other than fromMassachusetts banks) and DividendsEnter interest (other than from Massachusettsbanks) and dividends from trade or business ac-tivity(ies) if included in line 5 from partnershipsand S corporations. This income must be reportedin Massachusetts Schedule B, line 3. This informa-tion should be provided by the S corporation orpartnership.

Line 7. Interest from MassachusettsBanksEnter interest from Massachusetts banks fromtrade or business activity(ies) if included in line 5.This income must be reported on Form 1, line 5a.This information should be provided by the S cor-poration or partnership.

Line 8. Total Income or Loss fromPartnerships and S CorporationsSubtract the total of lines 6 and 7 from line 5. Re-member to subtract losses when calculating thetotal. This figure should be added to any amount(s)in Schedule E, Part I, line 5 and/or Part III, line 11and the total entered on Form 1, line 7.

Schedule E, Part IIINote: If showing a loss, be sure to mark over the“X” in the box to the left.

Income or Loss From Grantor-TypeTrusts and Non-MassachusettsEstates and TrustsLine 1. Estate and Trust Incomeor LossEnter your total estate and trust income or lossfrom your U.S. Schedule E, Part III, line 37.

Line 2. Massachusetts DifferencesEnter and explain any differences between estateand trust income or loss on the U.S. return and thesame type of income on your Massachusetts re-turn. Explain the differences in the space provided


or enclose an additional sheet if necessary. Seeexplanation in Schedule E, Part I, line 2.

Line 4. Abandoned BuildingRenovation DeductionEnter 10% of the costs of renovating a qualifyingabandoned building in an Economic OpportunityArea. For further information, refer to the instruc-tions for Schedule E, Part I, line 4.

Line 6. Estate or Nongrantor-TypeTrust IncomeEnter estate or nongrantor-type trust income taxeddirectly on your Massachusetts Fiduciary Return,Form 2, if included in line 5. If you do not know thisamount, check either your U.S. Schedule K-1 orcontact your trustee or other fiduciary.

Line 8. Interest (other than fromMassachusetts banks) and DividendsEnter interest (other than from Massachusettsbanks) and dividends if included in line 7 and enteron Massachusetts Schedule B, line 3.

Line 9. Adjustment of 5.3% IncomeEnter the total of interest from Massachusettsbanks if included in line 7. This income must be re-ported on Form 1, line 5a. Enter the total of pen-sion and annuity income if included in line 7. Thisincome must be reported on Form 1, line 4.

Line 11. Income or Loss fromGrantor-Type and Non-MassachusettsEstates and TrustsSubtract line 10 from line 7. Remember to subtractlosses when calculating the total. This figure shouldbe added to any amount(s) in Schedule E, Part I,line 5 and/or Part II, line 8 and the total entered onForm 1, line 7.

Schedule CNote: If showing a loss, be sure to mark over the“X” in the box to the left.

Substituting U.S. Schedules Cor C-EZIf you are substituting U.S. Schedule C or ScheduleC-EZ for Massachusetts Schedule C and there areno differences between the amounts reported onU.S. Schedule C or Schedule C-EZ and amountsthat would be reported on Massachusetts Sched-ule C, write “No Massachusetts Differences” onthe top of U.S. Schedule C or Schedule C-EZ.

Profit or Loss from Business orProfessionMassachusetts Schedule C is provided to report in-come and deductions from each business or pro-fession operated as a sole proprietorship.

If your business deductions, excluding the Aban-doned Building Renovation Deduction, exceedSchedule C income and any other income taxableat the 5.3% rate, such excess deductions may besubtracted from the other income that is effec-tively connected with the active conduct of yourtrade or business and any other income allowedunder IRC Section 469(d)(1)(B) to offset lossesfrom passive activities. To compute the excesstrade or business deductions use MassachusettsSchedule C-2. This form is available by visitingwww.mass.gov/dor, or you may have one mailedto you by calling (617) 887-MDOR.

Registration InformationIn the space provided, describe the business or pro-fessional activity that provided your principal sourceof income reported on line 1. If you owned morethan one business, you must complete a separateSchedule C for each business. Give the general fieldor activity and the type of product or service.

Employer Identification NumberYou need an Employer Identification number (EIN)only if you had a Keogh plan, were required to filean employment, excise, estate, trust, or alcohol, to-bacco and firearms tax return or employ contractlabor. If you do not have an EIN, leave the lineblank. Do not enter your Social Security number.

Small Business Energy ExemptionIf you are claiming the small business energy ex-emption from the sales tax on purchases of tax-able energy or heating fuel during 2007, you musthave five or fewer employees. You must enter thenumber of your employees in the space provided.

Accounting MethodIf you filed a return on the accrual basis last year,your return for this year must be on the same basis.If a taxpayer requesting permission to change anaccounting method for Massachusetts purposes iseligible for an automatic change of accountingmethod federally, and has correctly followed themost recently issued federal revenue procedure forrequesting an automatic change, then the taxpayershould file his/her annual return using the newmethod and write at the top, “Automatic Changeof Accounting Method — filed in compliance withDOR Directive 02-13.” The taxpayer should en-close a copy of federal Form 3115, together withany required statements. See DOR Directive 02-13 for further information.

Material ParticipationIndicate if you materially participated in the oper-ation of this business during 2007. If you did notmaterially participate and have a loss from thisbusiness, see line 33 for further instructions.

Line 1a. Gross Receipts or SalesIn the boxes provided, enter gross receipts or salesfrom your business. Be sure to include on this lineamounts you received in your trade or businessas shown on Form 1099-MISC, Miscellaneous In-come. If the nature of your business is such thatyou have gross or other income that is interest(other than from Massachusetts banks) and divi-dend income, exclude this income from lines 1 and4 on Massachusetts Schedule C and include it inline 32 and in Schedule B, line 3. Examples of in-terest (other than from Massachusetts banks) anddividend income are interest received on loans,notes receivable or charge accounts that you ac-cept in the ordinary course of business, and divi-dends on stocks received in payment for goodsand services. Capital gains from the sale or ex-change of assets used in your business are notreported on Schedule C. Use U.S. Form 4797 andreport the amount in Form 1, Schedule B and/orSchedule D. You must also exclude from Sched-ule C any income and expenses that pertain to ac-tivities for yourself as distinguished from thoseperformed for your customers. Such income mustbe reported by class of income in Schedules B andD. Personal expenses are not deductible.

If you received Form W-2 and the “Statutory em-ployee” box in item 13 of that form was checked,report your income and expenses related to thatincome on Schedule C. Enter your statutory em-ployee income from box 1 of Form W-2 on line 1of Schedule C and fill in the oval. Statutory em-ployees include full-time life insurance agents,certain agent or commission drivers and travelingsalespersons and certain homeworkers. If you hadboth self-employment income and statutory em-ployee income, do not combine these amountson a single Schedule C. In this case, you must filetwo Schedules C.

Line 4. Other IncomeIf you received bartering income, you must reportthe fair market value of goods or services receivedin payment for your goods and services in line 4. Donot include interest income (other than from Mass-achusetts banks) and dividends here (see line 32).

Line 7. Bad Debts From Sales orServicesInclude debts and partial debts from sales or serv-ices that were included in income and are definitelyknown to be worthless. If you later collect a debtthat you deducted as a bad debt, include it as in-come in the year collected.


Note: Cash method taxpayers cannot take a baddebt deduction unless the amount was previouslyincluded in income.

Line 11. Depreciation andSection 179 DeductionMassachusetts adopts the current federal rules atsection 179 for expensing certain depreciablebusiness assets. For property placed in service intax years beginning on or after January 1, 2007,the maximum section 179 expensing allowanceis $125,000.

Line 17. Pension and Profit-SharingPlansEnter your deduction for contributions to a pen-sion, profit-sharing or annuity plan, or plans for thebenefit of your employees. If the plan includes youas a self-employed person, do not include contri-butions made as an employer on your behalf. SeeTIR 02-18 for more information.

Line 23. Meals and EntertainmentLine 23a. Enter your total business meal and en-tertainment expenses. Include meals while travel-ing away from home for business. Instead of theactual cost of your meals while traveling away fromhome, you may use the standard meal allowance.Business meal expenses are deductible only if theyare (a) directly related to or associated with theconduct of your trade or business, (b) not lavish orextravagant and (c) incurred while you or your em-ployee is present at the meal. Club dues are notallowed as a business deduction.

Line 23b. Generally, you may deduct only 50% ofyour business meal and entertainment expenses,including meals incurred while traveling away fromhome on business. However, you may fully deductmeals and entertainment furnished or reimbursedto an employee if you properly treat the expenseas wages subject to withholding. You may alsofully deduct meals and entertainment provided toa nonemployee to the extent the expenses are in-cludible in the gross income of that person and re-ported on Form 1099-MISC. Figure how much ofthe amount on line 23a is subject to the 50% limit.Then, enter 50% of that amount on line 23b. Thisamount should be subtracted from the amount inline 23a. Enter the result in line 23 of Massachu-setts Schedule C.

Line 30. Abandoned BuildingRenovation DeductionMassachusetts allows businesses to deduct 10%of the costs incurred in renovating certain build-ings located in an Economic Opportunity Area(EOA). The buildings must be designated as aban-doned by the Economic Assistance Coordinating

Council. The renovation deduction may be takenin addition to any other deduction for which therenovation costs may qualify. For more informa-tion, contact the Massachusetts Office of BusinessDevelopment.

In line 30 enter 10% of the costs of renovating aqualifying abandoned building.

Line 33. If You Have a LossFill in the oval in line 33a if all of your investmentis at risk. Enter your loss from line 31 on Form 1,line 6 unless you answered “no” to the questionon material participation on the front of ScheduleC. If you answered “no” to this question, completea pro forma copy of U.S. Form 8582 that reflectsonly income being reported on your Massachusettsreturn. Enter in Massachusetts Schedule C, line 31your allowable loss calculated on Form 8582.

Fill in the oval in line 33b if only some of your in-vestment is at risk. To determine the amount ofyour allowable loss, complete a pro forma copy ofU.S. Form 6198 that reflects only income beingreported on your Massachusetts return. Enter theamount calculated on U.S. Form 6198 in line 31 un-less you answered “no” to the question on mater-ial participation on the front of Schedule C. In thiscase, your loss is further limited. Use the amountscalculated on your pro forma U.S. Form 6198 tocomplete a pro forma U.S. Form 8582. If your at-risk amount is “0” or less, enter “0” in line 31.

Senior CircuitBreaker Tax CreditWhat Is It?For tax years beginning on or after January 1,2001, senior citizens in Massachusetts may be el-igible to claim a refundable credit on their stateincome taxes for the real estate taxes they paid onthe Massachusetts residential property they ownor rent and which they occupy as their principalresidence. The maximum credit allowed is $900 forthe tax year beginning January 1, 2007. See TIR07-14 for more information.

Eligible taxpayers who own their property mayclaim a credit equal to the amount by which theirproperty tax payments in tax year 2007 (exclud-ing any exemptions and/or abatements), includ-ing water and sewer debt charges, exceed 10% oftheir “total income” for the same current tax year.Taxpayers residing in communities that do not in-clude water and sewer debt service in their prop-erty tax assessments may claim, in addition totheir property tax payments, 50% of the waterand sewer use charges actually paid during thetax year when figuring their credit.

Renters may claim a credit in the amount by which25% of their annual rental payment is more than10% of their total income.

For purposes of the tax credit, a taxpayer’s “totalincome” includes taxable income as well as ex-empt income such as Social Security, Treasurybills and public pensions. For a complete list ofwhat constitutes “total income,” see TIR 01-19.

Who Is Eligible for the Credit?To be eligible for the credit for the 2007 tax year, ataxpayer must be 65 years of age or older beforeJanuary 1, 2008 (for joint filers, it is sufficient ifone taxpayer is 65 years of age or older), mustown or rent residential property in Massachusettsand occupy the property as his or her principal res-idence, and must not be the dependent of anothertaxpayer. The taxpayer’s total income cannot ex-ceed $48,000 for a single filer who is not the headof a household, $60,000 for a head of household,or $72,000 for taxpayers filing jointly. No credit isallowed for a married taxpayer unless a joint re-turn is filed. Moreover, the assessed valuation ofthe real estate cannot exceed $772,000.

No credit is allowed if the taxpayer claims the“married filing separate” status, receives a federalor state rent subsidy, rents from a tax-exempt en-tity, or is the dependent of another taxpayer.

Is the Tax Credit Considered Income?Tax credits received by eligible taxpayers are notconsidered income for the purpose of obtainingeligibility or benefits under other means-tested as-sistance programs including food, medical, hous-ing, energy and educational assistance programs.

How Does a Taxpayer Claimthe Credit?Taxpayers who are eligible for the tax credit in the2007 tax year can claim the credit by submitting acompleted Schedule CB, Circuit Breaker Credit,with their 2007 state income tax return. Eligibletaxpayers who do not normally file a state incometax return may obtain a refund by filing a returnwith Schedule CB. As with all claimed tax creditsand deductions, the taxpayer must keep all perti-nent records, receipts and other documentationsupporting his or her claim for the credit.

Line 1. Living Quarters StatusDuring 2007Be sure to fill in the appropriate oval. If you were arenter in 2007 and you received any federal and/orstate subsidy, or you rent from a tax-exempt entity,you do not qualify for the Circuit Breaker Credit.


Line 2. Assessed Value of PrincipalResidence as of January 1, 2007Enter the amount of the assessed value of yourprincipal residence as of January 1, 2007. If youown a multi-family home, mixed-use property, ormore than one acre of land, only the assessed valueof the principal residence, together with the landthat immediately surrounds and is associated withthat residence, not to exceed one acre, should beused. If the assessed value is over $772,000, youdo not qualify for the credit. Contact your localcity or town’s assessors’ office if you have anyquestions in determining the amount of the as-sessed value of your principal residence as ofJanuary 1, 2007.

Income CalculationQualifying income for the Circuit Breaker Credit(Schedule CB, lines 3 through 12) is the taxpayer’sMassachusetts AGI as defined in MGL Ch. 62,sec. 2 increased by various amounts that may havebeen excluded or subtracted when originally calcu-lating the taxpayer’s Massachusetts AGI, less cer-tain exemptions claimed by the taxpayer. Amountsadded back to Massachusetts AGI in computingqualifying income include income from Social Se-curity, retirement, pension or annuities, cash pub-lic assistance, tax-exempt interest and dividends,net capital losses, long-term capital losses, certaincapital gains, income from a partnership or trustnot otherwise included in the taxpayer’s Massachu-setts AGI, and gross receipts (for example, the re-turn of capital or gifts) from any other sourceexcept the tax credit itself. The exemptions allowedwhich decrease the total income amount are thoseallowed for blindness, dependents and taxpayerswho are at least age 65 by the end of the tax year.

Line 4. Total Social SecurityBenefits ReceivedEnter in line 4 the amount of Social Security benefitsreceived in 2007. Social Security benefits includeretirement, disability, dependent and survivorship.

Line 5. Pension, Annuities,IRA/Keogh Distributions Not Taxedon Your Massachusetts Tax ReturnEnter in line 5 the amount of pension, annuities,IRA/Keogh distributions not taxed on your Mass-achusetts Form 1. See Form 1, line 4 instructions,Pension and Annuities, for a list of exempt itemsthat must be included in Schedule CB, line 5 as partof total income for the purposes of calculating theCircuit Breaker Credit.

Line 6. Misellaneous IncomeIncluding Cash Public AssistanceEnter the amount of miscellaneous income, includ-ing cash public assistance, received during 2007.This includes but is not limited to food stamps andwelfare payments, disability income, gifts, sick payand worker’s compensation.

Line 12. Qualifying IncomeSubtract line 11 from line 7. You do not qualify forthe Circuit Breaker Credit if you are filing as “Single”and line 12 is greater than $48,000; or if you arefiling as “Head of household” and line 12 is greaterthan $60,000; or if you are filing as “Married filingjointly” and line 12 is greater than $72,000.

Credit CalculationIf you filled in the “Homeowner” oval in line 1,complete lines 13 through 20, if you filled in the“Renter” oval in line 1, go to line 21.

Line 13. Real Estate Taxes Paidin Calendar Year 2007 for YourPrincipal ResidenceEnter the amount of real estate taxes paid in calen-dar year 2007. Be sure to include real estate taxpayments made pursuant to the Community Pres-ervation Act, the Cape Cod Open Space Land Acqui-sition Program and/or paid to a tax-levying district.

Note: Real estate taxes paid in a calendar or tax-able year generally reflect taxes assessed for twodifferent fiscal years. If a community collects taxesquarterly, a taxpayer may have made four paymentsduring a calendar year. These payments are billedas due on the following dates: February 1, May 1,August 1, and November 1. If a community col-lects taxes semi-annually, a taxpayer may havemade two payments during the calendar year. Thefirst payment is billed as due on May 1 and thesecond as due on November 1, or thirty days afterit is mailed, if the bill is mailed after October 1. Ifyou own a multi-family home, mixed-use property,or your principle residence has a land area in ex-cess of one acre, contact your local city or town’scollector’s office if you have any questions in de-termining the amount of real estate taxes paid incalendar year 2007 for your principal residence.

Line 14. Adjustments to Real EstateTaxes PaidEnter the amount from line 4 of the Adjustments toReal Estate Taxes Paid Worksheet for Schedule CB,line 14, on page 2 of Schedule CB. Adjustments toreal estate taxes paid include:

◗ Abatements granted by local assessors orearned through the Senior Work Program*;

◗ Exemptions granted by cities or towns to qual-ifying veterans, surviving spouses, blind personsand the elderly*;

◗ Interest charges assessed due to delinquentpayments; and

◗ Betterments or special assessments levied uponthe property.

*Do not exclude this amount if it was already re-flected on your tax bill and you did not pay it.

Line 16. Water and Sewer UseCharges Paid in 2007Contact your town official to determine if yourcommunity has elected to include water and sewerdebt charges in the property tax assessment. Tax-payers residing in communities that do not includewater and sewer debt charges in the property taxassessments may include 50% of the actual waterand sewer use charges paid during the taxable year.If they have elected to include those charges in theproperty tax assessment, enter “0” in line 16. If theyhave not elected to include those charges, enter50% of your actual water and sewer use chargespaid in 2007 in line 16.

If you own a multi-family home, mixed-use prop-erty, or your principal residence has a land area inexcess of one acre, see TIR 01-19 for informationon how to prorate water and sewer use charges.

Line 20. CreditEnter the lesser of line 19 or $900 here and onForm 1, line 40.

Line 21. Rent Paid for YourPrincipal Residence in 2007Enter in line 21a the total amount of rent paid foryour principal residence in 2007. Divide thatamount by 4 (25%) and enter the result in line 21.In the space provided, be sure to enter your land-lord’s name and address. If you received any fed-eral and/or state rent subsidy, or you rent from atax-exempt entity, you do not qualify for the CircuitBreaker Credit.

Line 24. CreditEnter the lesser of line 23 or $900 here and onForm 1, line 40.


TTHHIISS PPAAGGEELLEEFFTT BBLLAANNKK

IINNTTEENNTTIIOONNAALLLLYY

32 2007 Massachusetts Income Tax Table at the 5.3% RateUse this table to calculate tax for taxable 5.3% income (line 21) of not more than $24,000.

Line 22 instructions: To find your tax on 5.3% Income (line 22), read down the tax table income column to the line containing the amount you en-tered in line 21. Then read across to the TAX column and enter this amount in line 22. If your taxable 5.3% income in line 21 is greater than $24,000,multiply the amount by .053. Enter the result in line 22.

Note: If choosing the optional 5.85% tax rate, multiply line 21 and the amount in Schedule D, line 20 by .0585.

INCOMEMore But notthan more than TAX






$ 1 – $ 50 $ 150 – 100 4

100 – 150 7150 – 200 9200 – 250 12250 – 300 15300 – 350 17350 – 400 20400 – 450 23450 – 500 25500 – 550 28550 – 600 30600 – 650 33650 – 700 36700 – 750 38750 – 800 41800 – 850 44850 – 900 46900 – 950 49950 – 1,000 52

1,000 – 1,050 541,050 – 1,100 571,100 – 1,150 601,150 – 1,200 621,200 – 1,250 651,250 – 1,300 681,300 – 1,350 701,350 – 1,400 731,400 – 1,450 761,450 – 1,500 781,500 – 1,550 811,550 – 1,600 831,600 – 1,650 861,650 – 1,700 891,700 – 1,750 911,750 – 1,800 941,800 – 1,850 971,850 – 1,900 991,900 – 1,950 1021,950 – 2,000 1052,000 – 2,050 1072,050 – 2,100 1102,100 – 2,150 1132,150 – 2,200 1152,200 – 2,250 1182,250 – 2,300 1212,300 – 2,350 1232,350 – 2,400 1262,400 – 2,450 1292,450 – 2,500 1312,500 – 2,550 1342,550 – 2,600 1362,600 – 2,650 1392,650 – 2,700 1422,700 – 2,750 1442,750 – 2,800 1472,800 – 2,850 1502,850 – 2,900 1522,900 – 2,950 1552,950 – 3,000 1583,000 – 3,050 1603,050 – 3,100 1633,100 – 3,150 1663,150 – 3,200 1683,200 – 3,250 1713,250 – 3,300 1743,300 – 3,350 1763,350 – 3,400 1793,400 – 3,450 1823,450 – 3,500 1843,500 – 3,550 1873,550 – 3,600 1893,600 – 3,650 1923,650 – 3,700 1953,700 – 3,750 1973,750 – 3,800 2003,800 – 3,850 2033,850 – 3,900 2053,900 – 3,950 2083,950 – 4,000 211

$ 4,000 – $ 4,050 $ 2134,050 – 4,100 2164,100 – 4,150 2194,150 – 4,200 2214,200 – 4,250 2244,250 – 4,300 2274,300 – 4,350 2294,350 – 4,400 2324,400 – 4,450 2354,450 – 4,500 2374,500 – 4,550 2404,550 – 4,600 2424,600 – 4,650 2454,650 – 4,700 2484,700 – 4,750 2504,750 – 4,800 2534,800 – 4,850 2564,850 – 4,900 2584,900 – 4,950 2614,950 – 5,000 2645,000 – 5,050 2665,050 – 5,100 2695,100 – 5,150 2725,150 – 5,200 2745,200 – 5,250 2775,250 – 5,300 2805,300 – 5,350 2825,350 – 5,400 2855,400 – 5,450 2885,450 – 5,500 2905,500 – 5,550 2935,550 – 5,600 2955,600 – 5,650 2985,650 – 5,700 3015,700 – 5,750 3035,750 – 5,800 3065,800 – 5,850 3095,850 – 5,900 3115,900 – 5,950 3145,950 – 6,000 3176,000 – 6,050 3196,050 – 6,100 3226,100 – 6,150 3256,150 – 6,200 3276,200 – 6,250 3306,250 – 6,300 3336,300 – 6,350 3356,350 – 6,400 3386,400 – 6,450 3416,450 – 6,500 3436,500 – 6,550 3466,550 – 6,600 3486,600 – 6,650 3516,650 – 6,700 3546,700 – 6,750 3566,750 – 6,800 3596,800 – 6,850 3626,850 – 6,900 3646,900 – 6,950 3676,950 – 7,000 3707,000 – 7,050 3727,050 – 7,100 3757,100 – 7,150 3787,150 – 7,200 3807,200 – 7,250 3837,250 – 7,300 3867,300 – 7,350 3887,350 – 7,400 3917,400 – 7,450 3947,450 – 7,500 3967,500 – 7,550 3997,550 – 7,600 4017,600 – 7,650 4047,650 – 7,700 4077,700 – 7,750 4097,750 – 7,800 4127,800 – 7,850 4157,850 – 7,900 4177,900 – 7,950 4207,950 – 8,000 423

$ 8,000 – $ 8,050 $ 4258,050 – 8,100 4288,100 – 8,150 4318,150 – 8,200 4338,200 – 8,250 4368,250 – 8,300 4398,300 – 8,350 4418,350 – 8,400 4448,400 – 8,450 4478,450 – 8,500 4498,500 – 8,550 4528,550 – 8,600 4548,600 – 8,650 4578,650 – 8,700 4608,700 – 8,750 4628,750 – 8,800 4658,800 – 8,850 4688,850 – 8,900 4708,900 – 8,950 4738,950 – 9,000 4769,000 – 9,050 4789,050 – 9,100 4819,100 – 9,150 4849,150 – 9,200 4869,200 – 9,250 4899,250 – 9,300 4929,300 – 9,350 4949,350 – 9,400 4979,400 – 9,450 5009,450 – 9,500 5029,500 – 9,550 5059,550 – 9,600 5079,600 – 9,650 5109,650 – 9,700 5139,700 – 9,750 5159,750 – 9,800 5189,800 – 9,850 5219,850 – 9,900 5239,900 – 9,950 5269,950 – 10,000 529

10,000 – 10,050 53110,050 – 10,100 53410,100 – 10,150 53710,150 – 10,200 53910,200 – 10,250 54210,250 – 10,300 54510,300 – 10,350 54710,350 – 10,400 55010,400 – 10,450 55310,450 – 10,500 55510,500 – 10,550 55810,550 – 10,600 56010,600 – 10,650 56310,650 – 10,700 56610,700 – 10,750 56810,750 – 10,800 57110,800 – 10,850 57410,850 – 10,900 57610,900 – 10,950 57910,950 – 11,000 58211,000 – 11,050 58411,050 – 11,100 58711,100 – 11,150 59011,150 – 11,200 59211,200 – 11,250 59511,250 – 11,300 59811,300 – 11,350 60011,350 – 11,400 60311,400 – 11,450 60611,450 – 11,500 60811,500 – 11,550 61111,550 – 11,600 61311,600 – 11,650 61611,650 – 11,700 61911,700 – 11,750 62111,750 – 11,800 62411,800 – 11,850 62711,850 – 11,900 62911,900 – 11,950 63211,950 – 12,000 635

$12,000 – $12,050 $ 63712,050 – 12,100 64012,100 – 12,150 64312,150 – 12,200 64512,200 – 12,250 64812,250 – 12,300 65112,300 – 12,350 65312,350 – 12,400 65612,400 – 12,450 65912,450 – 12,500 66112,500 – 12,550 66412,550 – 12,600 66612,600 – 12,650 66912,650 – 12,700 67212,700 – 12,750 67412,750 – 12,800 67712,800 – 12,850 68012,850 – 12,900 68212,900 – 12,950 68512,950 – 13,000 68813,000 – 13,050 69013,050 – 13,100 69313,100 – 13,150 69613,150 – 13,200 69813,200 – 13,250 70113,250 – 13,300 70413,300 – 13,350 70613,350 – 13,400 70913,400 – 13,450 71213,450 – 13,500 71413,500 – 13,550 71713,550 – 13,600 71913,600 – 13,650 72213,650 – 13,700 72513,700 – 13,750 72713,750 – 13,800 73013,800 – 13,850 73313,850 – 13,900 73513,900 – 13,950 73813,950 – 14,000 74114,000 – 14,050 74314,050 – 14,100 74614,100 – 14,150 74914,150 – 14,200 75114,200 – 14,250 75414,250 – 14,300 75714,300 – 14,350 75914,350 – 14,400 76214,400 – 14,450 76514,450 – 14,500 76714,500 – 14,550 77014,550 – 14,600 77214,600 – 14,650 77514,650 – 14,700 77814,700 – 14,750 78014,750 – 14,800 78314,800 – 14,850 78614,850 – 14,900 78814,900 – 14,950 79114,950 – 15,000 79415,000 – 15,050 79615,050 – 15,100 79915,100 – 15,150 80215,150 – 15,200 80415,200 – 15,250 80715,250 – 15,300 81015,300 – 15,350 81215,350 – 15,400 81515,400 – 15,450 81815,450 – 15,500 82015,500 – 15,550 82315,550 – 15,600 82515,600 – 15,650 82815,650 – 15,700 83115,700 – 15,750 83315,750 – 15,800 83615,800 – 15,850 83915,850 – 15,900 84115,900 – 15,950 84415,950 – 16,000 847

$16,000 – $16,050 $ 84916,050 – 16,100 85216,100 – 16,150 85516,150 – 16,200 85716,200 – 16,250 86016,250 – 16,300 86316,300 – 16,350 86516,350 – 16,400 86816,400 – 16,450 87116,450 – 16,500 87316,500 – 16,550 87616,550 – 16,600 87816,600 – 16,650 88116,650 – 16,700 88416,700 – 16,750 88616,750 – 16,800 88916,800 – 16,850 89216,850 – 16,900 89416,900 – 16,950 89716,950 – 17,000 90017,000 – 17,050 90217,050 – 17,100 90517,100 – 17,150 90817,150 – 17,200 91017,200 – 17,250 91317,250 – 17,300 91617,300 – 17,350 91817,350 – 17,400 92117,400 – 17,450 92417,450 – 17,500 92617,500 – 17,550 92917,550 – 17,600 93117,600 – 17,650 93417,650 – 17,700 93717,700 – 17,750 93917,750 – 17,800 94217,800 – 17,850 94517,850 – 17,900 94717,900 – 17,950 95017,950 – 18,000 95318,000 – 18,050 95518,050 – 18,100 95818,100 – 18,150 96118,150 – 18,200 96318,200 – 18,250 96618,250 – 18,300 96918,300 – 18,350 97118,350 – 18,400 97418,400 – 18,450 97718,450 – 18,500 97918,500 – 18,550 98218,550 – 18,600 98418,600 – 18,650 98718,650 – 18,700 99018,700 – 18,750 99218,750 – 18,800 99518,800 – 18,850 99818,850 – 18,900 1,00018,900 – 18,950 1,00318,950 – 19,000 1,00619,000 – 19,050 1,00819,050 – 19,100 1,01119,100 – 19,150 1,01419,150 – 19,200 1,01619,200 – 19,250 1,01919,250 – 19,300 1,02219,300 – 19,350 1,02419,350 – 19,400 1,02719,400 – 19,450 1,03019,450 – 19,500 1,03219,500 – 19,550 1,03519,550 – 19,600 1,03719,600 – 19,650 1,04019,650 – 19,700 1,04319,700 – 19,750 1,04519,750 – 19,800 1,04819,800 – 19,850 1,05119,850 – 19,900 1,05319,900 – 19,950 1,05619,950 – 20,000 1,059

$20,000 – $20,050 $1,06120,050 – 20,100 1,06420,100 – 20,150 1,06720,150 – 20,200 1,06920,200 – 20,250 1,07220,250 – 20,300 1,07520,300 – 20,350 1,07720,350 – 20,400 1,08020,400 – 20,450 1,08320,450 – 20,500 1,08520,500 – 20,550 1,08820,550 – 20,600 1,09020,600 – 20,650 1,09320,650 – 20,700 1,09620,700 – 20,750 1,09820,750 – 20,800 1,10120,800 – 20,850 1,10420,850 – 20,900 1,10620,900 – 20,950 1,10920,950 – 21,000 1,11221,000 – 21,050 1,11421,050 – 21,100 1,11721,100 – 21,150 1,12021,150 – 21,200 1,12221,200 – 21,250 1,12521,250 – 21,300 1,12821,300 – 21,350 1,13021,350 – 21,400 1,13321,400 – 21,450 1,13621,450 – 21,500 1,13821,500 – 21,550 1,14121,550 – 21,600 1,14321,600 – 21,650 1,14621,650 – 21,700 1,14921,700 – 21,750 1,15121,750 – 21,800 1,15421,800 – 21,850 1,15721,850 – 21,900 1,15921,900 – 21,950 1,16221,950 – 22,000 1,16522,000 – 22,050 1,16722,050 – 22,100 1,17022,100 – 22,150 1,17322,150 – 22,200 1,17522,200 – 22,250 1,17822,250 – 22,300 1,18122,300 – 22,350 1,18322,350 – 22,400 1,18622,400 – 22,450 1,18922,450 – 22,500 1,19122,500 – 22,550 1,19422,550 – 22,600 1,19622,600 – 22,650 1,19922,650 – 22,700 1,20222,700 – 22,750 1,20422,750 – 22,800 1,20722,800 – 22,850 1,21022,850 – 22,900 1,21222,900 – 22,950 1,21522,950 – 23,000 1,21823,000 – 23,050 1,22023,050 – 23,100 1,22323,100 – 23,150 1,22623,150 – 23,200 1,22823,200 – 23,250 1,23123,250 – 23,300 1,23423,300 – 23,350 1,23623,350 – 23,400 1,23923,400 – 23,450 1,24223,450 – 23,500 1,24423,500 – 23,550 1,24723,550 – 23,600 1,24923,600 – 23,650 1,25223,650 – 23,700 1,25523,700 – 23,750 1,25723,750 – 23,800 1,26023,800 – 23,850 1,26323,850 – 23,900 1,26523,900 – 23,950 1,26823,950 – 24,000 1,271

If your 5.3% income for the tax table is less than $9, your tax is “0.”

TTHHIISS PPAAGGEELLEEFFTT BBLLAANNKK

IINNTTEENNTTIIOONNAALLLLYY

Department of Revenue Resources

What kind of help is availableThe instructions in the Department of Revenue’s tax forms should provide answers to most taxpayer questions.If you have questions about completing your Massachusetts tax form, you can call us at (617) 887-MDOR ortoll-free in Massachusetts at 1-800-392-6089 Monday through Friday, between 8:45 a.m. and 5:00 p.m. DOR’swebsite at www.mass.gov/dor is also a valuable resource for tax information 24 hours a day. Thousands oftapayers use DOR’s website to e-mail and receive prompt answers to their general tax inquiries. Taxpayerscan also check the status of their refunds, make estimated tax payments and review their estimated tax pay-ment histories through the Web Services for Income section of our website.

Public libraries and DOR district offices (listed on this page) also offer access to DOR’s website for thosetaxpayers who don’t otherwise have computer access.

Where to get forms and publicationsMost Massachusetts tax forms and publications are available via the DOR website. The address for theDepartment’s website is www.mass.gov/dor.

To obtain Massachusetts forms and publications by phone, call the Department’s main information linesat (617) 887-MDOR or toll-free in Massachusetts at 1-800-392-6089. Please note that many forms and

publications are available 24 hours a day by calling the Department’s automated forms request system at thenumbers listed above.

During the income tax filing season, you can pick up Massachusetts personal income tax forms atyour local library or at IRS district offices across the state.

Note: To obtain federal tax information and forms via the Internet, go to www.irs.gov or call the IRS toll-freeat 1-800-829-1040.

For help in one of the following specific areas◗ Certificates of Good Standing (617) 887-6550 ◗ Installment Sales (617) 887-6950◗ Teletype (TTY) (617) 887-6140 ◗ Small Business Workshop (617) 887-5660◗ Vision-impaired taxpayers can contact DOR by calling one of the phone numbers listed above to receiveassistance.◗ Upon request, this publication is available in an alternative format. Please send your request to: Office ofDiversity and Equal Opportunity, PO Box 9550, Boston, MA 02114-9550 or call (617) 626-3410.

To report allegations of suspected misconduct or impropriety involving Department of Revenue employees,call the Inspectional Services Division’s Integrity Hot Line at 1-800-568-0085 or write to PO Box 9568, Boston,MA 02114-9568.

Volunteer in Your CommunityBe sure to visit the Commonwealth’s new Connect and Serve website to learn about the wide variety of volunteeringopportunities available to Massachusetts residents. The site may be found at www.mass.gov/connectandserve.

DOR Locationsin MassachusettsBoston19 Staniford St.Boston, MA 02114(617) 887-MDOR

Fall River218 South Main St.Fall River, MA 02721(508) 678-2844

Hyannis60 Perseverance WayHyannis, MA 02601(508) 771-2414

Pittsfield333 East St.Pittsfield, MA 01201(413) 499-2206

Springfield436 Dwight St.Springfield, MA 01103(413) 784-1000

Worcester40 Southbridge St.Worcester, MA 01608(508) 792-7300

500M 12/07 2007JMBPRINTOFF150102 partially printed on recycled paper

Dear Taxpayer,The 2007 filing season brings a number of exciting new initiatives for Massachusetts taxpayers includingnew information on the Commonwealth’s Welcome Home Veteran’s Benefit. New tax law changes include arefundable film credit available to qualified motion picture production companies, and the introduction ofSchedule HC, Health Care Information.

The largest initiative this year is the new health care reform law, enacted in April 2006, which aims to makequality, affordable health care available to every resident. The new law includes an “individual mandate”requiring Massachusetts residents age 18 and older to have health insurance if they can afford it. With fewexceptions, adults must demonstrate that they had health insurance as of December 31, 2007, by filingSchedule HC, Health Care Information.

To assist taxpayers with this new filing requirement, the Department of Revenue (DOR) created a separatehealth care section within this tax booklet, which provides all the information needed to successfully completeSchedule HC and accompanying worksheets. Additionally, the DOR website www.mass.gov/dor has an onlineaffordability calculator and a step-by-step video tutorial.

Penalties apply for taxpayers who, under state guidelines, are deemed able to afford health insurance andremain uninsured. For 2007, the penalty is the loss of the personal exemption, or approximately $219 perindividual. Beginning January 1, 2008, penalties for uninsured adults increase significantly to a monthly finefor each month an individual remains uninsured. Please see www.mahealthconnector.org or contact a healthcarrier directly for information about purchasing health insurance products.

Also, be certain to check to see if your income level qualifies you to claim the Earned Income Credit, a refund-able federal income tax credit for low-income working individuals and families. The Massachusetts credit is15% of the allowable federal credit, and may be claimed even if no tax is due. Certain taxpayers may alsoqualify for a refundable credit of real estate taxes paid during the tax year, under the Senior Circuit BreakerTax Credit.

Please see the enclosed instructions or visit our website www.mass.gov/dor for more information on allof these initiatives. Additionally, please feel free to contact our Customer Service Bureau either by phone(617) 887-MDOR or toll-free in Massachusetts at (800) 392-6089 or email [email protected] your questions, concerns or comments.

Sincerely,

Henry DormitzerCommissioner

Massachusetts

Department of

Revenue

PO Box 7011

Boston, MA 02204

PRSRT STDU.S. POSTAGEPAIDCOMMONWEALTH OFMASSACHUSETTS

Important Mailing Information!

When mailing a return generated from

a 2-D software product, be sure to

use one of the special 2-D PO

boxes listed on page 3.

department of revenue commonwealth of massachusetts 2007 ... · completing schedule hc:if you were...

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