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What is it?
For tax years beginning on of after January 1, 2001, senior citizens in Massachusetts may be eligible to claim a refundable credit on their state income taxes for the real estate taxes they paid on the Massachusetts residential property they own or rent and which they occupy as their principal residence. The maximum credit allowed is $385 for the tax year beginning January 1, 2001.

Eligible taxpayers who own their property may claim a credit equal to the amount by which their property tax payments in tax year 2001 (excluding any exceptions and/or abatements), including water and sewer debt charges, exceed 10% of their "total income" for the same current tax year. Taxpayers residing in communities that do not include water and sewer debt service in their property tax assessments may claim, in addition to their property tax payments, 50% of the water and sewer use charges actually paid during the tax year when figuring their credit.

Renters may claim a credit in the amount by which 25% of their annual rental payment is more than 10% of their total income.

For purposes of the tax credit, a taxpayer's "total income" includes taxable income as well as exempt income such as social security, treasury bills and public pensions. For a complete list of what constitutes "total income", see TIR 01-19.

Who is Eligible for the Credit?
To be eligible for the credit for the 2001 tax year, a taxpayer must be 65 years of age or older before January 1, 2002 (for joint filers, it is sufficient if one taxpayer is 65 years of age or older), must own or rent residential property in Massachusetts and occupy the property as his or her principal residence, and must not be the dependent of another taxpayer. The taxpayer's total income cannot exceed $41,000 for a single filer who is not the head of a household, $51,000 for a head of household, or $61,000 for taxpayers filing jointly. No credit is allowed for a married taxpayer unless a joint return is filed. Moreover, the assessed valuation of the real estate cannot exceed $412,000. No credit is allowed if the taxpayer claims the "married filing separate" status, receives a federal or state rent subsidy, rents from a tax-exempt entity, or is the dependent of another taxpayer.

Is the Tax Credit Considered Income?
Tax credits received by eligible taxpayers are not considered income for the purpose of obtaining eligibility or benefits under other means-tested assistance programs including food, medical, housing, energy and educational assistance programs.

How does a Taxpayer Claim the Credit?
Taxpayers who are eligible for the tax credit in the 2001 tax year can claim the credit by submitting a completed Schedule CB, Circuit Breaker Credit, with their 2001 state income tax return. Eligible taxpayers that do not normally file a state income tax return may obtain a refund by filing a return with Schedule CB. As with all claimed tax credits and deductions, the taxpayer must keep all pertinent records, receipts and other documentation supporting his or her claim for the credit.

Intent
A tax credit program to assist low and moderate income, elders in paying property taxes and utility charges relative to their residences. Eligible homeowners and renters receive a refundable credit on state income tax.

Enabling Statute
Enacted in the FY2000 budget. Chapter 127 §§80, 81 of 99.

Effective Date
Effective for the tax year beginning 1/1/2001. Department of Revenue will develop Work Sheets for tax returns to be filed 4/15/2002.

Administered by the Dept. of Revenue as part of income tax law, not locally as are other property tax exemptions under MGL Ch 41, etc.

Eligibility

• 65 years of age
• Occupy property as principal residence
• Income ceiling for the relevant calendar year.
  Initial year:
  $40,000 single, not head of household
  $50,000 head of household
  $60,000 husband wife filing join return
• Assessed Valuation of residence cannot exceed $400,000.