Senior Circuit Breaker Tax Credit increases to $980 for 2011

Posted by:

Robert Bliss, Director of Communication, Department of Revenue

 

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

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

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

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

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

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

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

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

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

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

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

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

 

 

Comments

[Robert Bliss]

Liz, you perhaps could qualify as a renter, but not as a homeowner.

[Robert Bliss]

Paul, yes, taxable amounts shown on Form 1, lines 4 and 9, must be entered on line 5 of Schedule CB.

[Paul G. LeBrun]

If a couple qualifies for No Tax Status on their return, must taxable amounts shown on Form 1, lines 4 and 9 be entered on line 5 of Schedule CB?

[Liz Fuller]

I live in an adult community where we own our homes but rent the land. Do we qualify for the tax credit?

[Robert Bliss]

Alan, the short answer is "yes," the refund you received from the Senior Circuit Breaker Tax Credit should be noted on your 2011 federal tax return as a state income tax refund.

[Alan Ross]

Is the money that was refunded via the Senior Circuit Tax Breaker to me by Massachusetts in 2011 -- on my 2010 Mass Tax return -- considered a "tax refund," when I file my 2011 Federal Taxes and Itemize deductions?

[Robert Bliss]

Charles, you need to file a tax return to receive the Senior Circuit Breaker Tax Credit.

[Charles J. Dell]

I AM NOT REQUIRED TO SUBMIT TAX INFORMATION, I'M A DISABLED MASS EMPLOYEE. I NEED INFORMATION AS TO WHAT IS REQUIRED FOR CIRCUIT BREAKER INFORMATION AS OPPOSED TO FILING ALL THAT IS ON THE FORM!

[Robert Bliss]

Pat, thanks for the heads up on the broken links. DOR -- indeed, all of state government -- has just migrated web content to new site, and a by-product of that migration is broken links. We will fix them.

[Pat]

links are broken