Department of Revenue Commonwealth of Massachusetts

Mass.gov/eFile

Before using paper, consider

Form 1 2016Massachusetts

Resident Income Tax

Fast — Filing electronically, rather than on paper, can mean muchfaster processing of your refund and money in your account sooner.

Accurate — Generally, there are fewer errors on electronicfilings than paper forms. Online programs make it easy to ensureyou don’t miss anything important.

Ecofriendly — A great majority of Mass achu setts taxpayers fileelectronically. Help us to continue reducing our carbon footprint.

Affordable — About 70% of Massachusetts taxpayers qualifyfor free filing. See if you’re eligible.

Give E-file a try this year!C’mon, admit it — filing paper tax returns is no fun!

So forget about paper, mistakes, stress, and longer refund wait times. E-file this year!

There are three easy and convenient ways to do it:

Paid PreparersThe majority of tax preparers recognize that their clients don’t want mistakes, delays, or longer refund timesso they offer e-filing for their customers. Moreover, Massachusetts law requires any preparer who completesmore than 10 Massachusetts income tax returns to E-file (TIR 11-13 has a specific taxpayer opt-out provisionto this law). Preparers who do file paper returns for their clients have specific requirements they must meetto avoid paying penalties and fines.

You’ll find a list of DOR-approved tax preparers on the DOR website.

Commercial Tax Preparation SoftwareYou can also E-file using DOR-approved commercial tax filing products or websites. Visit our website for acomplete listing of approved websites and products. Although some of these products offer a paper filing op-tion, you may only use that option if it incorporates a 2D barcode into the right-hand corner of all pages. Ifyou have a 2D printing issue, be sure to contact the software manufacturer for instructions before filing toavoid having your return rejected. Also, be sure to use the correct 2D barcode mailing address: PO Box7001 for refunds/no payments or PO Box 7002 for payments. See DOR’s online tax form instructions formore information.

File for Free ElectronicallyAbout 70 percent of Bay State taxpayers likely qualify to file both federal and state returns for free, enhancingfraud protection and cutting down on identity theft. Massachusetts joined the Free File Alliance, a nonprofitpartnership between tax software companies, the IRS and the states to increase opportunities for taxpayers toe-file their tax returns for free. Check out the free filing options available to taxpayers at mass.gov/efile.

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Major 2016Tax ChangesFiling Due DatesForm 1 is due on or before Tuesday, April 18, 2017.Because April 15, 2017 is a Saturday and the ob-servance of Patriot’s Day, a legal holiday in Mass-achusetts is on Monday, April 17, 2017, Mass-achusetts returns and payments otherwise dueon April 15, 2017 will be treated as timely filed ifthey are filed on or before Tuesday April 18, 2017.

2016 Personal Income Tax RatesEffective for tax years beginning on or after Janu-ary 1, 2016, the tax rate on most classes of tax-able income is 5.1% (decreased from 5.15% fortax year 2015). However, the tax rate on short-term gains from the sale or exchange of capitalassets and on long-term gains from the sale orexchange of collectibles (after a 50% deduction)remains at 12%.

Penalty for Failure to Obtain HealthInsuranceMassachusetts requires most adults 18 and overwith access to affordable health insurance to ob-tain it. In 2016, individuals must be enrolled inhealth insurance policies that meet minimum cred-itable coverage standards defined in regulationsadopted by the Commonwealth Health InsuranceConnector Authority (“Health Connector”). Individ-uals who are deemed able to afford health insur-ance but fail to obtain it are subject to penaltiesfor each month of non-compliance in the tax year(provided that there is no penalty in the case of alapse in coverage of 63 consecutive days or less).The monthly penalties, which will be imposedthrough the individual’s personal income tax re-turn, are set out in TIR 16-2 and are based on halfof the minimum monthly insurance premium forwhich an individual would have qualified throughthe Health Connector.

Schedule HC, Health Care Information, must becompleted by all full-year and certain part-yearresidents age 18 and over to notify the Depart-ment of Revenue whether or not they had healthinsurance for each month of 2016. Taxpayerswho did not have coverage for all of 2016, or hada gap in coverage of four or more consecutivemonths will need to determine if they had accessto affordable health insurance (through an em-ployer, the government, or on their own) usingworksheets and tables available for this purpose.If it is determined that a taxpayer could have af-

forded health insurance, the taxpayer has the rightto appeal the application of the penalty due tohardship by requesting an appeal to the Connec-tor on the Schedule HC.

For more information about the health care reformlaw, including the Department’s regulation at 830CMR 111M.2.1, Health Insurance Individual Man-date; Personal Income Tax Return Requirements,or the Health Connector’s regulation at 956 CMR6.00, Determining Affordability for the IndividualMandate, see the Health Connector’s website atmahealthconnector.org or the Department’s web-site at mass.gov/dor.

Annual Update of Circuit Breaker Tax CreditTaxpayers age 65 or older who own or rent resi-dential property located in Massachusetts are al-lowed a credit equal to the amount by which theirreal estate tax payments, or 25% of the rent consti-tuting a real estate tax payment, exceeds 10% ofthe taxpayer’s total income, not to exceed $1,070.The amount of the credit is subject to limitationsbased on the taxpayer’s total income and the as-sessed value of the real estate, which for tax year2016 must not exceed $720,000.

For purposes of calculating the credit, total incomeand maximum credit thresholds are adjusted an-nually. For tax year 2016, an eligible taxpayer’s totalincome cannot exceed $57,000 in the case of asingle filer who is not a head of household filer;$71,000 for a head of household filer; and $86,000for joint filers. In order to qualify for the credit, ataxpayer must be age 65 or older and must oc-cupy the property as his or her principal residence.See TIR 16-8.

Employer Provided Parking, Transit Pass,and Commuter Highway Vehicle BenefitsExclusion AmountsMassachusetts adopts Internal Revenue Code(“Code” or “IRC”) § 132(f) as amended and in ef-fect on January 1, 2005, which excludes from anemployee’s gross income (subject to a monthlymaximum) employer-provided parking, transitpass, and commuter highway vehicle transporta-tion benefits. For tax year 2016, the Internal Rev-enue Service has calculated, based on inflationadjustments contained in IRC § 132(f) as set forthin the January 1, 2005 Code, the 2016 monthlyexclusion amounts of $255 for employer-providedparking and $130 for combined transit pass andcommuter highway vehicle transportation bene-fits. Massachusetts adopts these 2016 monthlyexclusion amounts as they are based on the Jan-uary 1, 2005 Code. See TIR 15-16.

Change in Standard for DeterminingSubsequent Community Investment TaxCredit AllocationsThe standard for determining whether a recipientof a prior credit allocation is eligible for a subse-quent community investment tax credit allocationunder G.L. c. 62, § 6M(c)(4) has changed. EffectiveAugust 10, 2016, a community partner is eligibleto receive a subsequent community investmenttax credit allocation if the Department of Housingand Community Development determines that thecommunity partner has made satisfactory prog -ress towards utilizing any prior allocation it hasreceived. Prior to this change, a community part-ner was required to have utilized at least 95% ofits prior allocation to be eligible for a subsequentallocation.

Simplified Rules for Automatic Extensionsof TimeBeginning with personal income tax returns due onor after December 5, 2016, all taxpayers filing suchreturns will be automatically granted a six-monthextension of time to file their tax return as long asat least 80% of the total amount of tax ultimatelydue on or before the date prescribed for paymentof the tax has been paid. Prior to this change, tax-payers were required to submit a formal requestelectronically or on paper or otherwise meet cer-tain criteria to receive an extension of time to file apersonal income tax return. See TIR 16-10.

Increase of the Massachusetts EarnedIncome Tax CreditA Massachusetts refundable earned income creditis available to certain low-income individuals whohave earned income. To claim the Massachusettscredit, taxpayers must qualify for and claim thefederal earned income credit allowed under I.R.C.§ 32, as amended and in effect for the taxable year.Taxpayers may claim the Massachusetts crediteven if they do not have a filing requirement. Toreceive the credit, taxpayers must file a tax returnand claim the credit. For tax years beginning on orafter January 1, 2016, the Massachusetts refund-able credit is increased to 23% of the computedfederal credit (up from 15% in previous years). SeeTIR 15-12.

Before You Begin 3

Current Code ProvisionsMassachusetts AdoptsAs a general rule, Massachusetts does not adoptany federal personal income tax law changes in-corporated into the Code after January 1, 2005.However, certain specific Massachusetts personalincome tax provisions, as set forth in G.L. c. 62 §1(c), automatically conform to the current Code.Provisions of the Code Massachusetts adopts ona current Code basis are (i) Roth IRAs, (ii) IRAs,(iii) the exclusion for gain on the sale of a princi-pal residence, (iv) trade or business expenses, (v)travel expenses, (vi) meals and entertainment ex-penses, (vii) the maximum deferral amount of gov-ernment employees’ deferred compensation plans,(viii) the deduction for health insurance costs ofself-employed taxpayers, (ix) medical and dentalexpenses, (x) annuities, (xi) health savings ac-counts, (xii) employer-provided health insurancecoverage, and (xiii) amounts received by an em-ployee under a health and accident plan. See TIRs98-8, 02-11, 07-4, and 09-21 for further details.

Qualified Charitable Distribution from anIRA — IRC § 408(d)(8)Under IRC § 408(d)(8), taxpayers age 701⁄2 orgreater are allowed to make tax-free distributionsfrom traditional and Roth IRAs to qualified chari-ties not to exceed $100,000 per tax year. Mass-achusetts adopts this federal exclusion, as IRC §408(d)(8) is adopted by Massachusetts on a cur-rent Code basis.

IRC § 179 Election to Expense CertainDepreciable Business AssetsUnder IRC § 179, a taxpayer may elect to treat thecost of certain types of depreciable business prop-erty (i.e., tangible depreciable business assets ac-quired by purchase for use in the active conduct ofa trade or business and certain qualified real prop-erty) as an expense rather than a capital expendi-ture, and deduct it in the year the property is placedin service, instead of depreciating it over severalyears. The maximum IRC § 179 expensing limita-tion is $500,000, subject to an overall investmentphase-out threshold of $2,000,000. As a trade orbusiness deduction under G.L. c. 62, § 1(c), IRC§ 179 is adopted by Massachusetts on a currentCode basis.

Code Provisions Not Adopted byMassachusetts:Federal Bonus Depreciation Deduction —IRC § 168(k)Under G.L. c. 62 § 2(d)(1)(N), Massachusettsspecifically disallows the bonus depreciation de-

duction allowed under IRC § 168(k), as amendedand in effect for the current taxable year. Therefore,Massachusetts does not adopt the five-year exten-sion through tax year 2019 of the federal bonusdepreciation deduction pursuant to the Consoli-dated Appropriations Act of 2016 (P.L. 114-113).See TIRs 02-11 and 03-25 for further details.

Domestic Production Activity Deduction —IRC § 199 For federal income tax purposes, under IRC § 199,a business entity that pays wages to employeesand conducts qualified production activities is al-lowed a deduction for domestic production activ-ities. Generally, in the case of a non-corporatetaxpayer, the deduction allows a business withqualified production activities to deduct 9% of itsU.S. adjusted gross income. Under G.L. c. 62 §2(d)(1)(O), Massachusetts specifically disallowsthe domestic production activity deduction allowedunder IRC § 199, as amended and in effect for thecurrent taxable year. Therefore, Massachusettsdoes not adopt the two-year extension through taxyear 2016 of the deduction allowable for incomeattributable to domestic production activities inPuerto Rico pursuant to the Consolidated Appro-priations Act of 2016 (P.L. 114-113). See TIR 05-5.

Qualified Principal ResidenceIndebtedness Exclusion — IRC § 108(a)Massachusetts does not adopt the federal exclu-sion for qualified principal residence indebted-ness under IRC § 108(a) set to expire at the endof 2016, nor will Massachusetts adopt any federalextension of the exclusion enacted after the publi-cation of these form instructions, as IRC § 108(a)was enacted after January 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.

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.

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 and othercompensation;◗ 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;◗ forgiveness of debt;◗ mortgage forgiveness;◗ taxable portion of scholarships and fellowships;and◗ any other income not specifically exempt.

4 2016 Form 1 — Before You Begin

Massachusetts gross income also includesthe following, which are not subject to U.S. in-come tax:◗ interest from obligations of states and their po-litical subdivisions, other than Massachusetts andits political subdivisions; and◗ income earned by a resident from foreign employment.

Massachusetts gross income does not include:◗ interest on obligations of the U.S. and U.S. territories;◗ Pension income received from a contributoryannuity, pension, endowment or retirement fundof the U.S. Government or the Commonwealth ofMassachusetts and its political subdivisions.◗ amounts received as U.S. Social Security, pub-lic welfare assistance, Veterans Administrationdisability payments, G.I. Bill education payments,certain worker’s compensation, gifts, accident orlife insur ance payments, or certain payments re-ceived by Holocaust 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). You mustreport 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 mass.gov/dor or call (617) 887-6367 or toll-freein Massachusetts 1-800-392-6089.

Are Military Personnel Requiredto File?If you enlisted in the service as a Massachusettsresident and have not established a new domicile(legal residence) elsewhere (refer to military guide-lines), and if your gross income is more than$8,000, you are required to file a Massachusettsresident income tax return. This applies eventhough you may be stationed outside of Mass-achusetts. The terms “legal residence” and “domi-cile” are used to denote that place where you haveyour permanent home and to which, whenever youare absent, you have the intention of returning.Nonresident military personnel stationed in Mass-achusetts may be subject to Massachusetts taxesand should file Form 1-NR/PY if they earn incomefrom outside military sources.

Military Spouses: On November 11, 2009, the Mil-itary Spouses Residency Relief Act (P.L. 111-97)was enacted. For tax years beginning on or afterJanuary 1, 2009, the Act prohibits a service -member’s spouse from either losing or acquiringa residence or domicile for purposes of taxationbecause of being absent or present in any U.S.tax jurisdiction solely to be with the servicemem-ber in compliance with the servicemember’s military orders. In general, for Massachusetts taxpurposes, the new law will affect only service-members and their spouses who are domiciled ina state other than Massachusetts. For more infor-mation see TIR 09-23.

The following example illustrates circumstancesunder which military pay is or is not taxable inMassachusetts. No guidance is intended on thetax treatment of such pay under the laws of otherstates. Generally, when income is taxable in twojurisdictions, a credit for taxes paid to the otherjurisdiction is allowed on the taxpayer’s return inthe state 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 2016.

If your spouse died during 2016, you may stillchoose to file a joint return.

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, 2016 (not you or your spouse)or a disabled dependent;

◗ No Tax Status if joint Massachusetts AGI was$16,400 or less plus $1,000 for each dependent;

◗ Limited Income Credit if joint MassachusettsAGI is between $16,400 and $28,700 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 $1,070. The credit isrefundable to the extent the credit exceeds thetaxpayer’s tax liability.

52016 Form 1 — Before You Begin

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 Form M-1310, Statement of Claimant toRefund Due on Behalf of Deceased Taxpayer, withthe refund claimant’s name and Social Securitynumber 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 of $100 or more received for the dece-dent for the taxable year after the decedent’s death,and for succeeding taxable years until the estateis completed, must be reported each year onMassachusetts Form 2, Massachusetts FiduciaryIncome Tax Return. Form 2 is available online atmass.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 must be enclosed with thereturn so the refund check may be made payableto the proper person.

Should I Make Estimated TaxPayments in 2017?Every resident or nonresident who expects to paymore than $400 in Massachusetts income tax onin come which is not covered by Massachusettswith holding must pay Massachusetts estimatedtaxes. Estimated tax payments can be made onlineby using MassTaxConnect by visiting mass.gov/dor or by filing Massachusetts Form 1-ES.See line 39 instructions and TIR 04-25 for moreinformation.

When to FileYour ReturnYour 2016 Massachusetts Form 1 is due on or be-fore April 18, 2017.

Automatic Extension Granted if100% of the Tax Due is Paid bythe Tax Return Due DateIf line 3 of the following Form 1 Extension Work-sheet is “0” and 100% of the tax due for 2016 hasbeen paid through:

◗ withholding;

◗ timely estimated payments of tax;

◗ credits from your 2016 return; and

◗ an overpayment from the prior tax year appliedto the next year’s estimated tax,

you are no longer required to file Form M-4868,Application for Automatic Extension of Time to FileMassachusetts Income Tax Return. However, if youdo choose to file Form M-4868 in this instance,you must do so electronically, via DOR’s website.See TIR 16-10 for 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 electronically, either through E-Fileor via the web. Failure to do so will result in apen alty. If you are making a payment of less than$5,000, you also have the option of filing your ex-tension electronically. If there is a tax due with yourextension, payment can be made through Elec-tronic Funds Withdrawal.

Visit mass. gov/dor to file via the Web.

Form 1 Extension Worksheet

1. Enter amount from Form 1, line 322. Enter the total of Form 1, lines 37 through 39 and 41 through 43 . . . . . . 3. Amount due. Subtract line 2 from line 1, not less than “0” . . . . . . . . . . .

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 mass. gov/dor or by calling (617) 887-6367 or toll-free inMassachusetts 1-800-392-6089.

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 yearbasis, you must file on or before the fifteenth dayof the fourth month after the end of your fiscalyear. Taxpayers filing on a fiscal year basis mustcomplete and file Form 13, Notice of Designationof Fiscal Year, available at mass.gov/dor or by call-ing (617) 887-6367 or toll-free in Massachusetts1-800-392-6089.

Fiscal Year Filers and Short YearFilersFile the 2016 return for calendar year 2016 andfiscal years that began in 2016 and ended in 2017.For a fiscal year return, fill in the tax year space atthe top of page 1. Short year filers should file usingthe tax form for the calendar year within which the

short year falls. If the short year spans more thanone calendar year, the filer should file using the taxform for the calendar year in which the short yearbegan. If the current form is not available at thetime the short year filer must file, the filer shouldfollow the rules explained in TIR 11-12.

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 liabil-ity as possible with this return. You will receive a billfrom the Department for the remaining amount oftax due plus accrued interest and pen alty charges.If the amount of that bill is less than $5,000 andyou still cannot pay it in full, you must apply for-mally to the Department for a small payment agree -ment in order to avoid collection activity. You canapply for a small payment agree ment by visitingMassTaxConnect at mass.gov/dor.

Note: Do not mail your request for a paymentagreement with your tax return. Requests can bemade once a bill is issued through DOR’s Mass -TaxConnect application at mass. gov/ dor or by call-ing the Department at (617) 887-6367 or toll-freein Massachusetts 1-800-392-6089 using the De-partment’s Interactive Voice Response (IVR) sys-tem. Setting up a small payment agreement willallow you to make monthly payments within a settime period to satisfy 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 pages 2 and 3 of Form 1 and on page 2 ofSchedules B or C, if filed. Failure to show the cor-rect Social Security number in the space providedwill delay the processing of your return. If filingjointly, list your numbers in the order they appearon your federal return. Taxpayers filing their U.S.return using an Individual Taxpayer Identificationnumber (ITIN) should enter that ITIN as their So-cial Security number in the appropriate space. Also,be sure your employer has listed the correct SocialSecurity number on your Form W-2. If you are mar-ried, you must list your spouse’s Social Securitynumber even if you are filing a separate return.

6 Line by Line Instructions

To apply for an SSN, you must complete FormSS-5. Form SS-5 is available online at socialsecurity.gov, from your local Social Security Adminis-tration (SSA) office, or by calling the SSA at1-800-772-1213. It usually takes about two weeksto receive an SSN. If you are a nonresident or res-ident alien and you do not have and are not eligibleto get an SSN, you must apply for an ITIN. For de-tails on how to do so, see Form W-7 and its in-structions. Form W-7 is available online at irs.govor by calling the IRS at 1-800-829-1040. It usuallytakes about four to six weeks to receive an ITIN.

Filing an Original Return orAmended ReturnOriginal ReturnIf this is the original filing of your 2016 tax return,fill in the “Original return” oval.

Filing an Amended ReturnIf you need to change a line item on your return,complete a new return with the corrected infor-mation and fill in the “Amended return” oval. Youramended return must include all schedules filedwith the original return, even if there are nochanges to the schedules. Do not file Form ABTwith your amended return. An amended return canbe filed to either increase or decrease your tax. Anamended return should also be filed to correct acredit amount (such as withholding) or to disputea health care penalty. Generally, an amended re-turn must be filed within three years of the datethat your original return was filed. Visit mass.gov/dor/ amend for more information about filing anamended return.

Federal ChangesIf your amended return includes changes you havereported on an amended federal return filed withthe IRS for the same tax year, check the “Amendedreturn due to federal change” oval.

If your amended return does not report changesthat result from the filing of a federal amended re-turn or from a federal audit (for example, if theamended Massachusetts return is reporting arental deduction not claimed on the original return)fill in only the “Amended return” oval.

Consent to Extend the Time to Act on anAmended Return treated as AbatementApplicationIn certain instances, an amended return showinga reduction of tax may be treated by DOR as anabatement application. Under such circumstances,by filing an amended return, you are giving yourconsent for the Commissioner of Revenue to actupon the abatement application after six months

from the date of filing. See TIR 16-11. You maywithdraw such consent at any time by contactingthe DOR in writing. If consent is withdrawn, anyrequested reduction in tax will be deemed deniedeither at the expiration of six months from thedate of filing or the date consent is withdrawn,whichever is later.

Calculating the Overpayment or Amount Duefrom Your Amended Return

Unless otherwise stated, all amounts are fromyour amended return.

1. Tax after credits, contributions, use taxand HC penalty (from Form 1 line 36 or Form 1–NR/PY line 40). . . . . . . . 2. Total payments and refundable credits(from Form 1 line 44 or Form 1-NR/PY line 48) . . . . . . . . . . . . . . . . . . . . . . 3. Payments with or after original return. . . . . . . . . . . . . . . . . . . . . . . . 4. Total payments for amended return. Add lines 2 and 3. . . . . . . . . . . . . . . 5. Overpayment from original return(from Form 1 line 45 or Form 1-NR/PY line 49) . . . . . . . . . . . . . . . . . . . . . . 6. Net payments for amended return.Subtract line 5 from line 4. . . . . . . . 7. Amount you owe. If line 1 is greater than line 6, enter difference. . . . . . . 8. Overpayment to be refunded. If line 1 is less than line 6, enter difference

Filing an Application for AbatementFile an Application for Abatement only to disputeone of the following:

• Penalties

• Audit assessments

• Responsible person determinations

For the fastest response time, file your dispute on-line at mass.gov/masstaxconnect. If you cannotfile online, use Form ABT.

Visit mass.gov/dor/amend for additional informa-tion about filing an amended return, or filing anapplication for abatement.

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.

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

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?”

Under Age 18If you are under age 18 as of January 1, 2017, besure to fill in the oval(s).

Name/Address ChangeIf you legally changed your name or address in2016, fill in the oval. If you changed your name,enclose a copy of your Social Security card or driver’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 mass.gov/dor, orby calling (617) 887-6367 or toll-free in Massachu -setts 1-800-392-6089.

a. Total Federal IncomeEnter your total federal income (from U.S. Form1040, line 22; Form 1040A, line 15; or 1040EZ,line 4). If married filing a separately and living inthe same household, each spouse must combinetheir income figures from their separate U.S. re-turns when completing this section. If you did nothave a requirement to file a U.S. return, you mustenter “0” in this section.

Note: Failure to enter this information will delay theprocessing of your return.

72016 Form 1 — Line by Line Instructions

b. Federal Adjusted Gross IncomeEnter your federal adjusted gross income (fromU.S. Form 1040, line 37; Form 1040A, line 21; orForm 1040EZ, line 4). If married filing separatelyand living in the same household, each spousemust combine their income figures from their sep-arate U.S. returns when completing this section.If you did not have a requirement to file a U.S. re-turn, you must enter “0” in this section.

Note: Failure to enter this information will delay theprocessing of your return.

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 — InconsistentFiling Position PenaltyFill in the oval and attach Schedule TDS, TaxpayerDisclosure Statement, if you are disclosing anyinconsistent filing positions. Schedule TDS isavailable on our website at mass.gov/dor. The in-consistent filing position penalty (see TIR 06-5,section IV) applies to taxpayers that take an incon-sistent position in reporting income. These taxpay -ers must “disclose the inconsistency” when filingtheir Massachusetts return. If such inconsistencyis not disclosed, the taxpayer will be subject to apenalty equal to the amount of tax attributable tothe inconsistency. This penalty is in addition to anyother 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.

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 ofDecember 31, 2016. This status applies to you ifat the close of the taxable year you fit into any ofthe following categories:

◗ you were unmarried;

◗ you were a widow or widower whose spousedied before 2016; 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, 2016.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 during2016. For further information, refer to the section“What Are the Rules for Filing a Joint Return?”

Married Filing Separate ReturnFill in the “Married filing separate return” oval ifyou were legally married as of December 31, 2016,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.

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, suchas a child who lived with you or your dependentparent. Be sure to include such qualifying personon Schedule DI, Dependent Information. Certainmarried people who lived apart from their spousefor the last six months of 2016 and who meet all ofthe other federal requirements may also be able touse this status. See IRS Publication 501, Exemp-tions, Standard Deduction, and Fil ing Information,for more information.

Custodial ParentFill in the Custodial parent who has released claimto exemption for child(ren) oval if you are claimingthe head of household filing status and you havereleased your claim to one or more dependent ex-emptions on IRS Form 8332, or participated in adecree or agreement to allow the noncustodialparent to claim a dependency exemption.

Whole Dollar Method RequiredThe Department of Revenue 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 in line 1.

◗ If you are single or married filing a separate re-turn, enter $4,400 in line 2a.

◗ If filing as head of household, enter $6,800 inline 2a.

◗ If married filing a joint return, enter $8,800 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 exemption(s).Failure to do so will delay the processing of yourreturn.

Note: Only one person (or married couple filingjointly) may claim the dependent exemption forany one child or other dependent.

In a few cases, the number of dependents claimedfor Massachusetts purposes and for U.S. pur-poses may differ. Massachusetts allows a depen-dent exemption for each individual who qualifiesfor exemption as a dependent under sec. 151(c)of the Code. For purposes of sec. 151(c), the def-inition of dependent in sec. 152 is adopted. Underfederal law, there are additional restrictions on thedependent exemption beyond the rules of sec.152 that are not adopted by Massachusetts. ForMassachusetts tax purposes, if an individual qual-ifies as a dependent under the rules of sec. 152,

8 2016 Form 1 — Line by Line Instructions

you can claim a dependent exemption for such aperson. If you claim such a dependent in Mass-achusetts, increase the number reported in item bfrom your U.S. return by the number of such ad-ditional dependents.

Line 2c: Age 65 or Over Before 2017You are allowed an additional $700 exemption ifyou were age 65 or over before January 1, 2017.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 2016 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.

If you paid adoption fees to a licensed adoptionagency during 2016, you are eligible for an ex-emption of the total amount of the fees paid dur-ing the year. Fees paid during 2016 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 2016 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.

5.1% 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.

Note: Following are instances that require an ad-justment to 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 lines 11a and/or 11b.

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.

92016 Form 1 — Line by Line Instructions

How do I report lump-sum distributions?If you were an employee of the U.S., Massachu-setts or one of its political subdivisions and leftpublic em ployment prior to retirement, you arenot required to report as income the lump-sumdistribution of your previously-taxed pension contributions.

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,“Other Income (from Schedule X).”

Rollover from a traditional IRA to a Roth IRA.Taxpayers are allowed to make partial or completerollovers from existing IRAs to Roth IRAs. Anytaxable portion of these rollovers included in fed-eral 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 de posits, 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.

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.

Note: U.S. Schedules C or C-EZ are no longer al-lowed as a substitute for Mass. Schedule C.

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 34. 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 LossTaxpayers with income or loss reported on aSchedule E must file his or her tax return usingcomputer-generated forms produced by third-party software. The tax return may be generatedby the taxpayer or by a tax professional. The tax-payer is encouraged, but not required, to submitthe return electronically. Paper forms producedusing the third-party software product will containa two-dimensional (2D) bar code and will also beaccepted. If the taxpayer hires an income tax pre-parer to complete the taxpayer’s taxes, the preparermust follow the Commissioner’s electronic filingrules. See TIR 08-22 for more information.

If you do not have access to a software packagewhen filing your 2016 income tax return, you mayfile your Schedule(s) E on paper. Visit our websiteat mass.gov/dor to download a paper copy of the2016 Schedule(s) E, E-1, E-2, E-3 (and instruc-tions) to file with your income tax return.

Line 8a. UnemploymentCompensationIf you received unemployment compensation, en -ter in line 8a the amount from U.S. Form 1040,line 19; 1040A, line 13; or 1040EZ, line 3. If youelected vol untary withholding of Massachusettsstate income taxes on your unemployment com-pensation, be sure to include the amount of Mass -achusetts state income tax withheld, as reportedon Form 1099-G, on Form 1, line 37 and attachwith a single staple, where indicated on the return,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.

Line 9. Other Income(from Schedule X)Alimony Received, Taxable IRA/Keoghand Roth IRA Conversion Distributions,Other Gambling Winnings, Fees andOther 5.1% Income“Other 5.1% 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 2016, 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 during2016 as shown on your Form W-2, but not morethan $2,000 each. Payment amounts may not becombined or transferred from one spouse to theother. 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.

10 2016 Form 1 — Line by Line Instructions

112016 Form 1 — Line by Line Instructions

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 allows taxpayers to exceed thefederal limit on employment-related expenses forthe care of a qualified child under the age of 13, adisabled dependent or a disabled spouse. Themaximum deduction is $4,800 for one qualifyingindividual, and $9,600 for two or more qualifyingindividuals. Complete the following Form 1, Line12 Worksheet to calculate your Massachusettschild or dis abled de pendent/spouse care expensededuction.

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 butare married filing separately for Massachusettspurposes, either spouse may claim the deductionfor expenses he or she incurred, but their com-bined deduction cannot exceed $4,800 for onequalifying individual or $9,600 for two or morequalifying individuals.

Taxpayers who received dependent care benefitsshould complete a pro forma U.S. Form 2441.When completing this pro forma form, taxpayersshould enter $4,800 (or $9,600 for two or morequalifying persons) in line 27 of U.S. Form 2441.The amount from this pro forma Form 2441, line31 should then be entered in line 1 of the follow-ing worksheet.

Form 1, Line 12 Worksheet. Child Under 13 orDisabled Dependent/Spouse Care Deduction

1. Enter the amount of qualified expenses youincurred and paid in 2016 for a qualifying per -son(s). This amount may exceed the federallimit of $3,000 for one qualifying person or$6,000 for two or more persons. However, donot enter more than $4,800 for one qualifyingperson or $9,600 for two or more persons . . . . . . . . . . . . . . . . . . . . . . 2. Enter the amount from U.S. Form 2441, line 4 . . . . . . . . . . . . . . . . . . . 3. Enter the amount from U.S. Form 2441, line 5 . . . . . . . . . . . . . . . . . . . 4. Enter the smallest of line 1, 2 or 35. If you paid 2015 expenses in 2016, enter the amount of the allowed 2015expenses used to compute the credit on U.S. Form 2441, line 9. Otherwise, enter “0” . . . . . . . . . . . . . . . . . . . . .

6. Add lines 4 and 5. Not to exceed more than$4,800 for one qualifying person or $9,600 fortwo or more persons. Enter here and in Form 1, line 12 . . . . . . . . . . . . . .

Note: If you choose to take a deduction in Form1, line 12, you cannot take the deduction inForm 1, 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, 2016, 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, 2016, 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 2016(up to a maximum of $3,000 per return) for yourprincipal residence in Massachusetts. Enter thetotal amount of qualified rent paid by you during2016 in line 14a. Divide line 14a by 2 and enter theresult, 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 married taxpayers 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 18. Be sure toenclose Schedule Y with your return. Failure to doso will delay the processing of your return.

Line 17. 5.1% 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. 5.1% 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 Schedule B, Line 36 and Schedule D,Line 20 Worksheet, if applicable. All others pro-ceed to line 20.

12 2016 Form 1 — Line by Line Instructions

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 5.1%IncomeLine 22. 5.1% Tax (from Tax Table)If line 21 is less than $24,000, find the proper taxby using the tax tables found in the back of thisbooklet. If line 21 is greater than $24,000 multiplyby .051 and enter the result in line 22.

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 5.1%. The election to pay tax at therate of 5.85% does not apply to items of incometaxed at 12% (short-term capital gains and gainson collectibles). If choosing the optional 5.85% taxrate, multiply line 21 and Schedule D, line 21 by.0585 and fill in the oval.

12% Income & TaxLine 23. 12% Income from CertainCapital GainsEnter in line 23a the amount from Schedule B, line39. Multiply this amount by .12 (12%) and enterthe tax in line 23.

Be sure to enclose Massachusetts Schedule B. Todetermine if you need to file Schedule B, refer tothe Schedule B instructions in this booklet.

Tax on Long-TermCapital GainsLine 24. Schedule D (Long-TermCapital Gains and Losses ExcludingCollectibles)Enter in line 24 the amount from Schedule D, line22, 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 20Worksheet. Excess Exemptions from Interestand Dividend Income, 12% Income and Long-Term Capital Gain Income (Only if Single,Head of Household, or Married Filing Jointly)

If your total exemptions in Form 1, line 18 aremore than the amount of your 5.1% incomeafter deductions in Form 1, line 17, the excessmay be applied against any interest and divi -dend income and income taxed at 12%. Anyremaining excess amount may then be appliedagainst any long-term capital gain income.Complete this worksheet only if Form 1, line 17is less than Form 1, line 18 and you receivedinterest income (other than interest from Mass -achu setts banks), dividends or capital gainincome 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 in Schedule B, line 36. Complete lines 6 through 8 . . . . . . . . . . . . . . . . . . .

6. Subtract line 5 from line 4. If “0,”omit remainder of worksheet . . . . . 7. Enter Schedule D, line 19. 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 20.If line 6 is equal to or larger than line 7,enter line 7 here and in Schedule D, line 20 . . . . . . . . . . . . . . . . . . . . . . .

Excess ExemptionsIf excess exemptions were used in calculating lines20, 23 or 24 (see Schedule B, line 36 and/or Sched -ule D, line 20), 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 CRS,Credit Recapture Schedule.

Line 26. Additional Tax onInstallment SaleAn addition to tax applies for taxpayers who havedeferred the gain, and the tax associated with thatgain, on certain installment sales. This addition totax is measured by an interest charge on the taxthat has been deferred.

Include in line 26 an additional tax amount repre-senting an interest charge on the deferred tax ongain from certain installment sales with a salesprice over $150,000 if you are not a dealer and theaggregate face amount of installment obligationsarising during the tax year and outstanding as ofthe close of the tax year exceeds $5 million. Formore information see G.L. c. 62C, sec. 32A (a) andI.R.C. sec. 453A (a)–(c).

Also include in line 26 an additional tax amountrepresenting an interest charge on the deferredgain from the installment sale of timeshares andresidential lots, if the sale meets one of the follow-ing criteria: 1) the sale is of a timeshare right for 6weeks or less; 2) the sale is for the recreationaluse of specified campgrounds; or 3) the sale is fora residential lot and neither the dealer nor some-one related to the dealer is obligated to make anyimprovements on the lot. For more informationsee G.L. c. 62C, sec. 32A (b) and I.R.C. sec.453(l)(2)(B).

If you are a partner in a partnership or a share-holder in an S corporation, the entity is required tosend you the information you need to calculate theaddition to tax under this provision.

To the extent practicable, Massachusetts followsfederal income tax rules in determining the de-ferred gain from installment sales subject to theinterest-charge addition to tax. For more informa-tion visit DOR’s website at mass.gov/dor and In-ternal Revenue Service Publication 537.

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, $14,400 or less plus $1,000 per depen-dent if head of household, or $16,400 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 $14,400 and $25,200 plus $1,750 per de-pendent, or if you are married filing a joint returnand your Massachusetts AGI is between $16,400and $28,700 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 5.1% income;◗ interest from Massachusetts banks before ex-emptions; and◗ other interest, dividends, and capital gains.

Complete the Form 1, Line 27 Massachusetts AGIWorksheet to see if you may qualify for the CollegeTuition Deduction (Schedule Y, line 11), No TaxStatus or the Limited Income Credit.

Form 1, Line 27 Massachusetts AGIWorksheet. No Tax Status (Only If Single,Head of Household or Married Filing Jointly)

1. Enter your total 5.1% income from Form 1,line 10. Not less than “0”. (Add back any Aban -doned Building Renovation deduction claimedon Schedule(s) C and/or E before entering an amount in line 1.) . . . . . 2. Add Schedule Y, lines 1 to 10 . . . 3. Subtract line 2 from line 1. Not less than “0” . . . . . . . . . . . . . . . . . . 4. Enter total Mass. bank interest or the interestexemption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . .

Note: If Form 1, line 10 is a loss, combine Form1, line 10 with the smaller amount of totalMassachusetts bank interest or the interestexemption amount. Enter the result in line 4,unless the result is 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 if notfiling Schedule B, enter the amount from Form 1, line 20 . . . . . . . . . . . . 6. Enter the amount from Schedule D, line 19.Not less than “0”. (If filing Schedule D-IS, Install -ment Sales, see the Schedule D-IS instructions,available at mass.gov/dor, for the amount to enter in line 6.). . . . . . . . 7. Add lines 3 through 6 . . . . . . . . .

If you are single and the total in line 7 is $8,000or less, you qualify for No Tax Status. Fill in theoval in line 27, enter “0” in line 28 and omit lines29 through 31. Also, enter “0” in line 32 andcom plete Form 1. However, if there is an amountentered in line 25, Credit Recapture Amountand/or line 26, Additional Tax on InstallmentSales, enter that amount in line 28 and completeline 31. If you are single but do not qualify forNo Tax Status, and your total in line 7 is $14,000or less, complete Form 1, line 28 and see Form1, line 29 instructions for the Limited IncomeCredit. If you are filing as head of household ormarried filing a joint return, compare line 7 withthe No Tax Status/Limited Income Credit Chartto see if you may qualify for No Tax Status orthe Limited Income Credit.

Line 27. No Tax StatusIf you qualify for No Tax Status, fill in the oval inline 27, enter “0” in line 28 and omit lines 29through 31. Also, enter “0” in line 32 and com-plete Form 1. However, if there is an amount en-tered in line 25, Credit Recapture Amount and/orline 26, Additional Tax on Installment Sale, enterthat amount in line 28 and complete line 31.

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

Line 29. Limited Income CreditComplete the Form 1, Line 29 Worksheet to see ifyou may qualify for the Limited Income Credit.

132016 Form 1 — Line by Line Instructions

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

$14,40015,40016,40017,40018,40019,40020,400

you qualify forNo Tax Status

$25,20026,95028,70030,45032,20033,95035,700

you may qualifyfor the LimitedIncome Credit

$16,40017,40018,40019,40020,40021,40022,400

you qualify forNo Tax Status

$28,70030,45032,20033,95035,70037,45039,200

you may qualifyfor the LimitedIncome Credit

If the number of dependents is more than 6, add $1,000 per depen dent to the No Tax Status column, or$1,750 per dependent to the Limited Income Credit column.

If you qualify for No Tax Status, fill in the oval in line 27, enter “0” in line 28 and omit lines 29 through 31.Also, enter “0” in line 32 and complete Form 1. However, if there is an amount entered in line 25, CreditRecapture Amount and/or line 26, Additional Tax on Installment Sales, enter that amount in line 28 andcomplete line 31. If you may qualify for the Limited Income Credit, go to line 28 and complete theworksheet for line 29.

No Tax Status/Limited Income Credit Chart

Form 1, Line 29 Worksheet. Limited IncomeCredit (Only if Single, Head of Household, orMarried Filing Jointly)

1. Enter amount from line 7 of Massachusetts AGI Worksheet . . . . 2. Enter $8,000 if single. If married filing ajoint return or head of household, enter theamount from the No Tax Status column ofthe 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 28 less any Credit Recapture Amount en -tered in line 25 and/or Additional Taxon Installment Sales on line 26 . . . . 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 result here and on Form 1, line 29 . . . . . . . . . . . . . . . . . . . . . . .

Line 30. 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 following work -sheet and enter the amount of credit in line 30.Do not include taxes paid to the U.S. government.(This credit does not apply to city or local taxes.)You are allowed to claim a credit for taxes paid tothe following jurisdictions: (a) other states in theU.S., including payments made under theRhode Island Temporary Disability In suranceAct (see DOR Directive 12-1); (b) any territory ordependency of the U.S. (including Puerto Rico,the Virgin Islands, Guam, the District of Colum-bia); or (c) the Dominion of Canada or any of itsprov inces (less any U.S. credit amount allowablefrom U.S. Form 1116).

The total credit which you calculate on the worksheet 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 youhad 5.1% and interest income (other than interestfrom Massachusetts banks), dividends or capitalgain in come taxed by another jurisdiction. If youuse this worksheet to calculate a credit for interestincome (other than interest from Massachusettsbanks), dividends or capital gain income, substi-tute interest income (other than interest fromMassachusetts banks), dividends or capital gain in-come for 5.1% income in line 1 of the worksheet.You must also substitute Schedule B, line 7 (in-terest and dividend income) and Schedule B, line13 (taxable 12% capital gains) or Schedule D, line13, (gross long-term capital gains and losses), butnot less than “0,” for Form 1, line 10 in line 2 ofthe worksheet, and the total of Form 1, line 20multiplied by .051 (tax on interest and dividendincome) and Form 1, line 23 (12% tax) or line 24(tax on long-term capital gains) for Form 1, line 19in line 4 of the worksheet.

◗ When using the worksheet to calculate creditfor interest income (other than interest fromMassachu setts 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 .051 in line 4 of theworksheet.

Note: Be sure to complete and enclose ScheduleOJC, Income Tax Paid to Other Jurisdictions, andenter the two-letter state or jurisdictional postalcode for each state or jurisdiction for which youare taking the credit. Taxpayers from a territoryor dependency of the U.S., or the Dominion ofCanada or any of its provinces, must enter “FC”as the postal code.

Income Tax Paid to Another JurisdictionWorksheet

1. Enter the total 5.1% income includedin Form 1, line 10 on which you paidtaxes to another jurisdiction . . . . . . 2. Enter the total of Form 1, line 10 and the totalMassachusetts bank interest or the interest ex -emption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . . 3. Divide line 1 by line 2. Not greater than “1” . . . . . . . . . . . . . . . . . . . . . . 4. Multiply Form 1, line 19 by .0515. Enter any Limited Income Credit from Form 1, line 29 . . . . . . . . . . . . 6. Subtract line 5 from line 4. . . . . . 7. Multiply line 6 by line 3 . . . . . . . .

8. Enter the total tax liability before credits, W-2withholding and payments to other jurisdictionson income also reported on this return, in clud ingpayments made under the Rhode Island Tem po -rary Disability Insurance Act, unless the tax waspaid to Canada. If the tax was paid to Canada,the amount reported in this line must be re -duced by the amount claimed as a foreign taxcredit on U.S. Form 1040, line 48. Credit is onlyallowable for amount of tax paid . . . 9. Enter the smaller of lines 7 or 8 here and on Form 1, line 30 . . . . . .

Line 31. Other Credits(from Schedule CMS)Enter the total from Schedule CMS, Credit Man-ager Schedule. Be sure to enclose Sched ule CMSwith your return. Failure to do so will delay theprocessing of your return.

Line 33. 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 costs ofmedications without which they might lose theirtransplanted organs. For information on how to be -come an organ donor, visit the Registry of MotorVehicle’s website at mass.gov/rmv.

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.

14 2016 Form 1 — Line by Line Instructions

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.

f. Homeless Animal Prevention and Care Fund:The Homeless Animal Prevention and Care Fundis administered by the Department of AgriculturalResources. Contributions will help animals by re-ducing the number of homeless cats and dogs byspaying, neutering and vaccinating animals inshelters and animal control facilities and assistingfamilies who would not otherwise be able to af-ford these services for their pets. The Fund alsoprovides training to municipal animal control offi-cers so that they can safely and effectively protectanimals and people in their communities.

Line 34. Massachusetts Use TaxDue On Internet, Mail Order andOther Out-of-State Purchases Madein 2016If you purchased taxable tangible personal prop-erty out of state, over the Internet or from a cata-log and did not pay Massachusetts sales tax atpurchase, a Massachusetts use tax is due. If anitem is exempt from sales tax (such as food, orclothing that costs $175 or less), it would be ex-empt from use tax.

If you paid a sales or use tax to another state orterritory of the United States when purchasingthis item, you are generally entitled to a creditagainst the Massachusetts use tax, up to 6.25%.See TIR 03-01 for more information. No credit isallowed for a value-added tax (VAT) paid to an-other country.

The following are some items that are often pur-chased without paying sales tax. Residents wouldthen owe use tax based on the purchase price.

◗ Electronics ◗ Software◗ Appliances ◗ Computers◗ Furniture ◗ CDs and DVDs◗ Jewelry ◗ Video games◗ Books ◗ Carpet◗ Artwork ◗ Antiques

For example:

◗ You purchased several DVDs on the Internet for$100 and paid no sales tax. Your use tax liability toMassachusetts on these items is $6.25 ($100 x.0625 = $6.25).

◗ You purchased a computer for $1,550 from aseller located outside of Massachusetts and paid nosales tax. Your use tax liability to Massachusettson this item is $96.88 ($1,550 x .0625 = $96.88).

Taxpayers may choose the “safe harbor” optionfor purchases of individual items each having atotal sales price of less than $1,000. The “safeharbor” provision makes it easier to comply withthe use tax law by allowing taxpayers to self- report an estimated amount of use tax based on theaverage amount of online and/or out of state pur-chases a taxpayer in their income bracket wouldlikely make during the year. Taxpayers do not needto keep receipts with “safe harbor” reporting andwill not be assessed additional use tax if audited,even if the actual amount of use tax due is greaterthan the “safe-harbor” amount reported.

Mass. AGI per return* Use tax liability$25,010 – $025,000 $20$25,001 – $040,000 $20$40,001 – $060,000 $31$60,001 – $080,000 $44$80,001 – $100,000 $56

If the Massachusetts AGI per return* is more than$100,000, multiply by .000625.

*From line 7 of Massachusetts AGI worksheet.

If you did not purchase any items with a totalsales price of $1,000 or more, you may enter the“safe harbor” amount from the table above di-rectly on Form 1, line 34.

Complete the following Form 1, line 34 Worksheetto calculate your use tax if you are not reporting a“safe harbor” amount or if you purchased any in-dividual items with a sales price of $1,000 ormore. If you did purchase items with a sales priceover $1,000 and you are reporting a “safe harbor”amount, add the amount from the worksheet line 4to the “safe harbor” amount.

Form 1, Line 34 Worksheet. Use Tax Due onInternet, Mail Order and Other Out-of-StatePurchases

1. Total of purchases in 2016 subjectto Massachusetts use tax . . . . . . . . 2. Use tax. Multiply line 1 by .0625 (6.25%) . . . . . . . . . . . . . . . . . . . . . . 3. Credit for sales/use tax paid to other statesor jurisdictions. Add the amount of anysales/use tax paid to another state orjurisdiction, or 6.25% of the sales price,whichever is less, on each purchase reported in line 1 . . . . . . . . . . . . . . . 4. Total amount due. Subtract line 3 from line 2.Not less than “0”. Enter here and on Form 1, line 34 . . . . . . . . . . . . . . . .

Line 35. Health Care PenaltyIf you are subject to the Health Care Penalty for2016 and are not appealing the application of thepenalty, enter the penalty amount from line 8 ofthe Health Care Penalty Worksheet in line 35a foryou and/or line 35b for your spouse.

If married filing a joint return and both you andyour spouse are subject to the penalty, separateHealth Care Penalty Worksheets must be filled outto calculate the separate penalty amounts for youand your spouse, using your married filing jointlyincome.

Note: For tax years beginning on or after January1, 2014, a taxpayer who does not have health in-surance meeting both the Massachusetts standardof creditable coverage and the federal standard ofminimum essential coverage may be subject toboth the Massachusetts penalty and the federalshared responsibility payment. However, if a tax-payer is subject to both the Massachusetts penaltyand the federal shared responsibility payment, theamount of the taxpayer’s Massachusetts penaltyis reduced to account for payment of a federalshared responsibility payment. If the federal sharedresponsibility payment is greater than the amountthat the taxpayer would owe as the Massachu-setts penalty, the Massachusetts penalty is re-duced to “0”.

Enter in line 35c the amount of the federal sharedresponsibility payment (federal healthcare penalty)from U.S. Form 1040, line 61; U.S. Form 1040A,line 38; or U.S. Form 1040EZ, line 11.

Note: If you filed married filing jointly on yourU.S. return and are filing married filing separatelyon your Massachusetts return, you must dividethe amount of your federal shared responsibilitypayment by 2.

152016 Form 1 — Line by Line Instructions

Subtract line 35c from the total of lines 35a and35b and enter the result in line 35, but not lessthan “0.”

Be sure to enclose Schedule HC with your return.Failure to do so will delay the processing of yourreturn.

Line 37. 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), LOA (Loan Out Affidavit), 2G,K-1, 2K-1, 3K-1 and certain 1099s, if applicable.Enter the total of all Massachusetts withholdingsin line 37. Attach, with a single staple, state copiesto your return; otherwise your claim of amountswithheld will not be allowed. If you have lost yourstate copy, ask the payer for a duplicate. Copies of1099s need only be attached if they show anamount for Massachusetts tax withheld.

Line 38. 2015 Overpayment Appliedto Your 2016 Estimated TaxInclude the exact amount of any 2015 overpay-ment you applied to your 2016 estimated taxesfrom your 2015 Massachusetts Form 1, line 45 orForm 1-NR/PY, line 50. Do not include any 2015refund in this line.

Line 39. 2016 MassachusettsEstimated Tax PaymentsIf you paid Massachusetts estimated income taxfor 2016, enter in line 39 the total of all Massachu-setts estimated tax payments. Be sure to includeany last quarter (of 2016) payment made on or be-fore January 15, 2017. Do not include any 2015overpayment applied to your 2016 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 MassTax-Connect by visiting mass.gov/dor or by filingMassachusetts 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 orpro fession;◗ income from any estate or trust not taxed directly;◗ certain pensions;◗ taxable Keogh or IRA distributions (only if youelected not to have federal withholding);

◗ rental, royalty or REMIC income;◗ unemployment compensation (from which noMassachusetts income tax was withheld);◗ alimony received;◗ distributions from 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 mass.gov/dor.You will need to know the PIN that appeared onthe back of your Form 1 booklet or the amount oflast year’s refund or balance due to access youraccount.

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 40. Payments Made withExtensionIf you filed Massachusetts Form M-4868, Applica-tion for Automatic Six-Month Extension of Time toFile Massachusetts Income Tax Return, for 2016 onor before April 18, 2017, enter in line 40 the amountyou paid with Massachusetts Form M-4868.

Line 41. Earned Income CreditThe earned income credit is a tax credit for certaintaxpayers who work and have earned incomeunder $53,505. Taxpayers who qualify for andclaim the federal earned income credit are alloweda refundable credit equal to 23% 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 41a. Then, enter the federal earnedincome credit amount from your U.S. Form 1040,line 66a, 1040A, line 42a; or 1040EZ, line 8a. Mul-tiply this amount by .23 (23%) and enter the re-sult in line 41. 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 line41. If you have not received your earned incomecredit amount as computed by the IRS by April 18,2017, you may file Massachusetts Form M-4868,Application for Automatic Six-Month Extension ofTime to File Massachusetts Income Tax Return.See the Form 1 Extension Worksheet for informa-tion about filing your exten sion via the Web. Formore infor mation about the federal earned incometax credit, see IRS publication 596, available atirs.gov.

Line 42. 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 res-idence. The maximum credit allowed is $1,070for the tax year beginning January 1, 2016. If thecredit due the taxpayer exceeds the amount of thetotal income tax payable for the year by the taxpayer,the excess amount of the credit will be refundedto the taxpayer without interest. To determine ifyou qualify for this credit, refer to the Senior Cir-cuit Breaker 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 17; if you are a renter, enterthe amount from line 21. Be sure to complete andenclose Schedule CB with your return.

Line 43. Other Refundable CreditsEnter in line 43 the amount from Schedule CMS,Credit Manager Schedule.

Be sure to enclose Schedule CMS with your re-turn. Failure to do so will delay the processing ofyour return.

Refund AmountLine 46. Amount of OverpaymentYou Want Applied to Your 2017Massachusetts Estimated TaxEnter the amount of your 2016 overpayment thatyou wish to apply to your 2017 Massachusettsestimated tax. Once an election is made to applyyour overpayment to your 2017 estimated tax, itcannot be refunded after the due date of the re-turn or applied to any additional tax you may owefor 2016. The amount entered in this line can onlybe claimed as a credit on your 2017 Massachu-setts return.

16 2016 Form 1 — Line by Line Instructions

Line 47. Refund AmountSubtract line 46 from line 45. Enter the result inline 47. 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 47 if you are requesting direct deposit. Failureto do so will result in your request for direct de-posit being denied.

Tax DueLine 48. Tax DueIf line 36 is larger than line 44, subtract line 44from line 36, and enter the result in line 48. This isthe amount of tax you owe with your return. Pay infull with your return. Go to mass. gov/ dor/ masstaxconnect for online payment options. If you needto mail your payment, make your check or moneyorder payable to the Commonwealth of Massachu -setts and write your Social Security number on thefront of your check or money order in the lower leftcorner. Complete and remove Form PV, Massachu-setts Income Tax Payment Voucher, attached tothe back of the envelope included in this booklet.Enclose the check and Form PV with your return.Form PV must be included with your check to en-sure proper crediting of your account. Be sure touse the light blue mailing label when mailing yourForm 1 with the Form 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 48.

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, available at mass.gov/dor.

Penalty for Late Payment: The penalty for latepayment is 1% 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”) Payment: If yourpayment is not honored by your bank because ofinsufficient funds or any other reason, a penaltymay be added of $30 or the amount of the pay-ment, 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 2016 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 48. 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 pen altyif 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, 2017;

◗ you were a Massachusetts resident and werenot liable for 2015 taxes (where the taxable yearwas 12 months); or

◗ the sum of your estimated payments and with-holding equals or exceeds your 2015 tax (wherethe taxable year was 12 months and a return wasfiled).

If you qualify for one of these exceptions, please fillin the oval marked “EX” under line 48 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 2015 or 2016 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, goto mass.gov/dor and use DOR’s online applicationfor abatement return or enclose Form M-2210and an explanatory statement with your returnand fill in the oval marked “EX” under line 48. Ifyour waiver is not for all four installments, com-plete Form M-2210 to calculate the underpaymentpenalty for the installments which are not coveredby the waiver. Form M-2210 is available by visit-ing mass.gov/dor.

Penalty for Failure to Report Federal Change: Ifthe U.S. Internal Revenue Service changes yourfederal taxable income for a prior year (generallythrough audit), file an amended return within oneyear of the final federal determination to avoidthis penalty. This penalty is equal to 10% of theadditional tax due. If the change in dicates a re-fund, file an amended return within one year, in-cluding ac cept ance of an amended fed eral returnby the Internal Revenue Service.

Sign HereNow that you have completed Form 1, sign yourname at the bottom of page 1 of Form 1. Yourspouse must also sign if this is a joint return. Writethe date you signed the return.

Note: Be sure to include all three pages of Form 1,Schedule HC and all other applicable schedules.

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-

172016 Form 1 — Line by Line Instructions

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 2016 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, offsetsand 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 mass.gov/dor.

The authorization cannot be revoked. However, theauthorization will automatically end no later thanthe due date (without regard to extensions) forfiling your 2017 tax return. This is April 15, 2018for most people.

E-File Opt OutFor tax years beginning on or after January 1,2011, income tax return preparers who completedmore than 10 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 PaperFiling. Fill in oval if you do not want your preparerto file your return electronically. See TIR 11-13 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 the insidefront cover for this information.

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 the inside front cover for this information.

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 DIDependent InformationBe sure to enclose with Form 1.

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 10 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 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 from an Individual Retirement Account(IRA), Keogh, qualified charitable IRA distributionor Roth IRA conversion distribution. Since Mass-achusetts does not allow a deduction for amountsoriginally contributed to an IRA or Keogh, the dis-tributions are not taxable until the full amount ofyour contributions which were previously subjectto Massachusetts 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.

Note: Contributions from a deferred plan, such asa 401(k), that were rolled over into an IRA are notconsidered pre-taxed contributions.

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

1. Total IRA/Keogh plan distributions, qualifiedcharitable IRA distributions, Roth IRAconversion distributions received during 2016. . . . . . . . . . . . . . . . . . . 2. Total contributions previously taxed by Massachusetts . . . . . . . . . 3. Total distributions received in previous years . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If line 3 is larger than line 2, enter “0” . . . . . 5. Subtract line 4 from line 1 and enterthe result here. Not less than “0”. . . 6. Total qualified charitable IRA dis-tributions in 2016 included in line 17. Taxable IRA/Keogh distributions or Roth IRAconversion distributions. Subtract line 6 fromline 5. Enter the 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.

18 Schedule Instructions

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. Certain gambling losses are now deductibleunder Massachusetts law. See Schedule Y, line 17and TIR 15-14 for more information.

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

Line 4. Fees and Other 5.1%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.

◗ Forgiveness of debt and mortgage forgiveness.

◗ Other Massachusetts 5.1% income reported onU.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 10) are taxed as 5.1%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 Schedule Y, Line 1Worksheet in order to calculate your Massachu-setts employee business expense deduction. Theexpenses must relate to income reported in lines 3or 9 on Form 1. Note: All expense must be docu-mented upon request.

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 itemizeddeductions reported on U.S. Form 1040, Sched-ule A, lines 21, 22 and 23 exceed 2% of your fed-eral adjusted gross income reported on U.S. Form1040, Schedule A, line 26. See the Schedule Y,Line 1 Worksheet.

If you are a qualified performing artist or a fee-basis state or local government official, do notcomplete the worksheet. Enter on Schedule Y, line9 your federally deductible business expenses in-cluded on U.S. Form 1040, line 24 and fill in theappropriate oval in Schedule Y, line 9.

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 or 2106-EZ, line 4 . . . . . . . . . . . . . . 3. If you are an employee other than an outsidesalesperson, enter amount of unreimbursedmeals and entertainment expenses includedin U.S. Form 2106, line 9, col. B or 2106-EZ,line 5, except for meals incurred whileaway from home . . . . . . . . . . . . . . . 4. If you are an individual with a disability, enterthe amount of impairment-related expensesincluded in line 1 and claimed online 28 of U.S. Schedule A. . . . . . . . 5. Add lines 2 through 4 . . . . . . . . . 6. Subtract line 5 from line 1. . . . . . 7. Enter the amount from U.S. Schedule A, line 27 . . . . . . . . . . . . . 8. Enter the smaller amount of line 6 or line 7 here 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 income reported inline 5a or line 20 of this return or on a prior yearMassachusetts return, you may deduct the pen alty.This deduction is the same as the amount allow-able on U.S. Form 1040, line 30. Enter this amountin line 2 of Schedule Y.

Line 3. Alimony PaidEnter in Schedule Y, line 3 the total amount thatyou paid to your former spouse during 2016 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.

192016 Form 1 — Schedule Instructions

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 “MSA.”

Line 7. Self-Employed HealthInsuranceEnter 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 not add back the amount of the credit tothe amount 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 awrite-in adjustment, except amounts contributedto sec. 501(c)(18) pension plans. For Massachu-setts pur poses, contributions to sec. 501(c)(18)pension plans are not deductible. Also, the IRCsec. 404 deduction for contributions on behalf ofIRC sec. 401(c)(1) employees (sole proprietorsand partners) is disallowed. See TIR 02-18 (I)(D)and DOR Directive 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 jury duty pay

given to your employer as “Jury pay”; reforesta-tion amortization as “RFST”; repayment of supple -mental unemployment benefits under the TradeAct of 1974 as “Sub-Pay TRA”; attorney fees andcourt costs involving certain unlawful discrimina-tion claims as “UDC”; and deductible expenses re-lated to income reported on U.S. Form 1040, line21 and 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.

◗ 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.

Line 10. Student Loan InterestDeductionEnter the amount from U.S. Form 1040, line 33 or1040A, line 18, not to exceed $2,500. This deduc-tion is only allowed if not claiming the same ex-penses in line 12 of Schedule Y, UndergraduateStudent Loan Interest Deduction.

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. The amount of the college tuition deduction islimited to qualified tuition expenses paid during ataxable year in connection with an academic termbeginning during such taxable year or during thefirst three months of the next taxable year.

Qualified tuition expenses include only those ex-penses designated as tuition or mandatory feesrequired for the enrollment or attendance of the tax-payer or any dependent of the taxpayer at an eligi-ble educational institution. No deduction is allowedfor any amount paid for room and board, books,supplies, equipment, personal living expenses,meals, lodging, travel or research, athletic fees, in-surance expenses or other expenses unrelated toan individual’s academic course of instruction.Also, no deduction is allowed for reimbursementsor refunds of qualified tuition and related expensesmade by an insurer. Complete the MassachusettsAGI Worksheet and the Schedule Y, line 11 work-sheet to see if you may qualify for this deduction.See TIR 97-13 for more information.

Schedule Y, Line 11 Worksheet. College Tuition Deduction

1. Enter total tuition payments paid by you, foryourself or a dependent, to a qualify-ing two- or four-year college in 20162. Enter amount of scholarships, grants orfinancial aid received in 2016 for amounts shown in line 1 . . . . . . . . . 3. Enter amount of reimbursements or refundsreceived in 2016 of amounts shown in line 1reported by an insurer (from U.S.Form 8383, box 10) . . . . . . . . . . . . 4. Subtract lines 2 and 3 from line 1. If “0”or less, you do not qualify for this deduction. . . . . . . . . . . . . . . . . . . . . 5. Enter amount from line 7 of theMassachusetts AGI Worksheet . . . . 6. Multiply line 5 by .25. . . . . . . . . . 7. If line 4 is smaller than line 6, you are noteligible for this deduction. Enter “0.” If line 4is larger than line 6, subtract line 6 from line 4and enter the result here and on Schedule Y, line 11 . . . . . . . . . . . . .

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 subdivi sions. For guidelines to determine whichstate’s pen sions 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.

20 2016 Form 1 — Schedule Instructions

Line 14. Claim of Right DeductionTaxpayers 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 -with standing 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 an E-ZPassaccount or for weekly or monthly transit com-muter passes for MBTA transit, bus, commuter railor commuter boat, not including amounts reim-bursed or otherwise deductible.

In the case of a single person or a married personfiling a separate return or a head of household, thisdeduction applies only to the portion of such ex-pended amount that exceeds $150, and the totalamount deducted cannot exceed $750. In the caseof a married couple filing a joint return, this deduc-tion applies only to the portion of such amount ex -pended by each individual that exceeds $150, andthe total amount deducted cannot exceed $750 foreach individual. Also, one spouse cannot transferhis or her excess deduction to the other spouse;separate worksheets must be completed to calcu-

late the deduction. See TIR 06-14 for additionalinformation.

The deduction is allowed where an individual pur-chases an MBTA pass for a dependent who isclaimed on that individual’s tax return, providedthe dependent does not also claim the deduction.However, the total amount deducted cannot ex-ceed $750 for each individual taxpayer who is fil-ing a return. In the case of married taxpayers filinga joint return, the total amount deducted cannotexceed $750 per taxpayer; thus, the maximumdeduction for a joint return is $1,500.

Complete the Schedule Y, Line 15 Worksheet tocalculate the commuter deduction.

Schedule Y, Line 15 Worksheet.Commuter Deduction

1. Enter amount paid in 2016 for tolls through an E-ZPass account . . . . . . 2. Enter amount paid in 2016 for weekly ormonthly transit commuter passes for MBTAtransit or commuter rail. (Do not includeamounts reimbursed 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 4 through 6 . . . . . . . . . . . . . . . 4. Enter $150. . . . . . . . . . . . . . . . . . 5. Subtract line 4 from line 3. . . . . . 6. Enter the lesser of line 5 or $750 here and on Schedule Y, line 15 . . .

Line 16. Deduction for Expensesof Human Organ TransplantAn individual may deduct certain expenses andother costs incurred in the process of donating anorgan for a human organ transplant to another in-dividual. For purposes of this deduction, “humanorgan” shall mean all or part of human bone mar-row, liver, pancreas, kidney, intestine or lung. Inthe case of an individual who donates an organ toanother person for human organ transplantation,the individual may deduct the following expensesthat are incurred by the individual and related tothe individual’s organ donation: (i) travel expenses;(ii) lodging expenses; and (iii) lost wages not toexceed $10,000. An individual who is a nonresi-dent of Massachusetts for all or part of the taxableyear is not eligible to claim this deduction. If you areentitled to claim this deduction, enter the amountclaimed in Schedule Y, line 16. See TIR 11-6 forfurther information.

Line 17. Certain Gambling LossesMassachusetts has adopted a new deductionfrom 5.1% income, allowing a deduction for lossesfrom wagering transactions, that were incurred ata gaming establishment licensed in accordance

with chapter 23K or a racing meeting licensee orsimulcasting licensee, only to the extent of thegains from such transactions.

Under the new provision a taxpayer may claim adeduction for gambling losses incurred in a cal-endar year only if the losses were incurred at anygaming establishment licensed in accordancewith chapter 23K or a racing meeting licensee orsimulcasting licensee and only if the taxpayer hadwagering winnings from any such gaming estab-lishment licensed in accordance with chapter 23Kor a racing meeting licensee or simulcasting li-censee in the same calendar year. The deductionallowed for such losses may not exceed theamount of such winnings included in gross in-come for the calendar year.

Because Massachusetts does not adopt the deduc-tions under IRC § 165(d), the deduction for gam-bling losses set forth in G.L. c. 62, § 3(B)(a)(18)is the only deduction for gambling losses alloweda Massachusetts taxpayer, unless the gamblingactivities of the taxpayer constitute a trade orbusiness.

Example 1:

For calendar year 2016, taxpayer, a Massachusettsresident, has:

◗ gambling winnings of $500 from Massachu-setts state lottery,

◗ gambling winnings of $800 from a casino li-censed under chapter 23K,

◗ gambling winnings of $1200 from a Las Vegascasino,

◗ gambling losses of $1600 from a Las Vegascasino,

◗ gambling losses of $510 from MassachusettsLottery scratch tickets, and

◗ gambling losses of $1000 from a casino li-censed under chapter 23K.

For Massachusetts income tax purposes, the tax-payer must include $500 of their gambling win-nings on Form 1, line 8b (Massachusetts statelottery) and the remaining $2,000 of their gamblingwinnings on Schedule X, line 3. The taxpayer mayclaim a deduction for gambling losses from acasino licensed under chapter 23K but only to theextent of winnings from a casino licensed underchapter 23K. No deduction is available for the tax-payer’s gambling losses from other sources. Thetaxpayer had winnings of $800 and losses of$1,000 from a casino licensed under chapter 23K.Thus, the taxpayer may claim a deduction of $800.The remaining $200 of loss from the casino li-censed under chapter 23K may not be deducted.

If you are entitled to claim this deduction, enterthe qualified amount in Schedule Y, line 17.

212016 Form 1 — Schedule Instructions

Schedule CMSBe sure to enclose with Form 1.

Credit Manager ScheduleThe Credit Manager Schedule, which replacesSchedule Z/RF, reports in Part 1 the taxpayer’scredits available (including credits carried overfrom prior years) and the credits taken not receivedvia a lower tier entity or credit transfer. The ex-ceptions to this rule are Brownfields Credit, FilmIncentive Credit, and/or Medical Device Credit re-ceived via credit transfers/sales. Credits are shownin a table format and may be listed in any order.Taxpayers with more than one credit available maychoose how much of each credit to take in the cur-rent year. A taxpayer participating in a combinedreport and allowing other members of the com-bined group to use its credits as allowed in 830CMR 63.32B.2(9), also reports the amount or eachcredit shared on this schedule.

The following table identifies various credits thatmay be shown on the Credit Manager Schedule.

Credit name Credit type code

Brownfields . . . . . . . . . . . . . . . . . . BRWFLDCertified Housing . . . . . . . . . . . . . . CRTHOUCommunity Investment . . . . . . . . . CMMINVConservation Land. . . . . . . . . . . . . CNSLNDDairy Farm . . . . . . . . . . . . . . . . . . . DAIFRMEDIP. . . . . . . . . . . . . . . . . . . . . . . . EDIPCREmployer Wellness . . . . . . . . . . . . EMPWLLEOAC . . . . . . . . . . . . . . . . . . . . . . . EOACCRFarming & Fisheries. . . . . . . . . . . . FRMFSHFilm Incentive. . . . . . . . . . . . . . . . . FLMCRDHarbor Maintenance . . . . . . . . . . . HRBMNTHistoric Rehabilitation . . . . . . . . . . HISRHB

Investment Tax. . . . . . . . . . . . . . . . INVTAXLead Paint . . . . . . . . . . . . . . . . . . . LEDPNTLife Science (FDA) . . . . . . . . . . . . . LFSFDALife Science (ITC) . . . . . . . . . . . . . LFSITCLife Science (Jobs) . . . . . . . . . . . . LFSJOBLife Science (RD). . . . . . . . . . . . . . LFSRDCLow-Income Housing . . . . . . . . . . LOWINCMedical Device. . . . . . . . . . . . . . . . MEDDVCResearch . . . . . . . . . . . . . . . . . . . . REARCHSeptic. . . . . . . . . . . . . . . . . . . . . . . SEPTICSolar & Wind Energy . . . . . . . . . . . SLRWNDVanpool . . . . . . . . . . . . . . . . . . . . . VANPOL

Some credits are identified on the credit managerschedule by a certificate number. The certificatenumber for the credit is assigned by the issuingagency (which may be the Department of Rev-enue) and must always be reported to claim thecredit. A taxpayer with multiple certificates for thesame type of credit will enter each separately, withthe available (unused) balance associated with thatcertificate in column e and the amount of the creditused in the current year in column f. Taxpayersclaiming the EDIP Credit for a Certified Jobs Cre-ation Project must enter a certificate number butare only required to complete the header sectionof Schedule EDIP.

Some credits are identified by the period end datewhich refers to the period in which the credit orig-inated. This may be the current taxable year or aprior year if the credit is being carried forwardfrom a prior year. If the period of origin is the cur-rent year, a schedule detailing the calculation ofthe amount of credit must be enclosed with thereturn. If the period of origin is a prior year, onlythe amount carried over to and available in the cur-

rent year is shown in column e and no calculationschedule is required.

If, by operation of M.G.L. c. 63, s. 32C or anotherprovision of law, a credit normally identified by pe-riod of origin is eligible for indefinite carryover, thecredit should be reported as “non-expiring”; thetaxpayer is not required to identify the period of ori-gin on the Credit Manager Schedule. (Non-expiringcredits were formerly referred to as “unlimited.”)

The abbreviation in the “Credit type code” columnis used to identify the credit type on the CreditManager Schedule (Parts 1 and 2, column a andParts 3 and 4, column b).

Part 2 of the Credit Manager Schedule reports anyrefundable credits claimed in the current year thatwere not received via Massachusetts K-1s or viacredit transfer. Certain credits are refundable onlyif specifically authorized or, in the case of the FilmCredit, if the original recipient has not transferredthe credit to another. Other conditions may applydepending on the terms applicable to the specificcredit. Credits are identified separately. The amountin column f is the amount of the refund requested,which may be 100% or 90% of the amount re-ported in column e. In Example 1, the taxpayer ishas refundable film credit (allowed at 90% of theavailable balance) and a refundable ConservationLand Credit (allowed at 100%). Although notshown in the example, taxpayer reported bothcredits on Part 1 of the Credit Manager Scheduleand used part of the film credit to reduce its excisefor the year to “0”; the $10,000 amount shown incolumn d of Part 2 is the balance remaining afterdeducting the portion used in the current year andshown in column f of Part 1.

22 2016 Form 1 — Schedule Instructions

Schedule CMS, Example 1

The total of the amounts shown in column f are shown on the appropriate line of the taxpayer’s return.

Schedule CMS, Example 2

The Credit Manager Schedule will now also be used by individual taxpayers for certain credits. In Example 2, the taxpayer is an individual filing a return for thetaxable year ending 12/31/2016 and has an available Septic Credit of $8,000 in the current year. Since this is the first year the taxpayer is claiming the SepticCredit, the individual taxpayer must also enclose a Schedule SC. The individual should file Part 1 of the Schedule CMS to reflect a claimed credit of $1,500(Schedule SC, line 13).

2a. 2b. Period end date 2c. Certificate 2d. Credit available or 2e. Reduction in 2f. Refundable creditCredit type (mm/dd/yyyy) number certificate balance balance for refund taken (100% or 90%)

FLMCRD 0000000011 $10,000 $10,000 $9,000

CNSLND 1110000000 $ 1,000 $ 1,000 $1,000

2a. 2b. Period end date 2c. Certificate 2d. Credit available or 2e. Reduction in 2f. Refundable creditCredit type (mm/dd/yyyy) number certificate balance balance for refund taken (100% or 90%)

FLMCRD 0000000011 $10,000 $10,000 $9,000

CNSLND 1110000000 $ 1,000 $ 1,000 $1,000

Lead PaintIf you incurred expenses for covering or removinglead paint on residential premises in Massachu-setts, you may claim a credit for expenses up to$1,500 for each residential unit. The basic rules areexplained on Massachusetts Sched ule LP, Creditfor Removing or Covering Lead Paint on Residen-tial Premises. If you qualify for the credit, completeSchedule LP and enter the amount of credit onSchedule CMS. Be sure to enter in line 1a the totalnumber of units indicated in Schedule LP, line(s)1a and 3a.

Note: You must enclose Schedule LP with your re-turn. Failure to do so will result in this credit beingdisallowed on your tax return and an adjustmentof your reported tax.

Economic Opportunity Area/Economic Development IncentiveProgramMassachusetts 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 on ScheduleCMS. Note: You must enclose Schedule EOAC withyour return. Failure to do so will result in this creditbeing disallowed on your tax return and an adjust -ment of your reported tax.

The Economic Development Incentive ProgramCredit (EDIPC) is a tax credit under G.L. c. 62, sec.6(g) and G.L. c. 63, sec. 38N equal to a percent-age of the cost of property purchased for businessuse within a certified project as defined in G.L. c.23A, sec. 3A.

To be eligible for the EDIP credit, the project musthave been certified on or after January 1, 2010. Aspart of the project certification, the Economic As-sistance Coordinating Council (EACC) may (but isnot required to) award a credit under the programand, when a credit is awarded, the EACC will de-termine the percentage of the cost of property tobe used in determining the credit.

Taxpayers with ongoing projects that were certi-fied prior to January 1, 2010 may be eligible forcredits under the prior version of the Economic De -velopment Incentive Program; such taxpayers donot file schedule EDIP (see TIR 10-01 and Sched-ule EOAC).

The EACC may also, in consultation with the DOR,limit (but not expand) the credit to a specific dollaramount or time duration or in any other mannerdeemed appropriate by the EACC, St. 2009, c. 166,§18. For example, the EACC may limit the creditavailable with respect to a particular project to a

specific dollar maximum, even if the actual dollaramount of the qualifying purchases would other-wise generate a higher credit amount. Similarly,the EACC may limit the otherwise applicable creditcarry forward period provided by G.L. c. 62, sec.6(g) and G.L. c. 63, sec. 38N (d). See TIRs 10-15,10-1 and 14-3 for more information. If you qualifyfor the credit, complete Schedule EDIP and enterthe amount of the credit on Schedule CMS. Also,be sure to enter the EACC-issued certificate num-ber on Schedule CMS. Failure to do so will result inthis credit being disallowed on your tax return andan adjustment of your reported tax. Enter the num-ber from left to right.

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 on Schedule CMS. Note:You must enclose Schedule SC with your return.Failure to do so will result in this credit being dis-allowed on your tax return and an adjustment ofyour reported tax.

Note: Betterment assessments do not qualify forthis credit.

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 5,2013, were eligible for the credit provided that theen vironmental response action before August 5,2013. As a result of the recent legislation, the envi-ronmental response action commencement cut-offdate is changed from August 5, 2013 to August 5,2018, and the time for incurring eligible costs thatqualify for the credit is extended to January 1,

2019. See TIR 13-15 for more information. If youqualify for this credit, you must have completedSchedule BCA, Brownfields Credit Application,and received a certificate number from DOR. Besure to enter the DOR issued certificate number inthe space provided on Schedule CMS. Note: Youmust enter the certificate number on ScheduleCMS. Failure to do so will result in this creditbeing disallowed on your tax return and an adjust-ment of your reported tax. Enter the number fromleft to right. Certificate application forms and ad-ditional information are available at mass.gov/dor.

Low-Income HousingA low-income housing credit is available to indi-vidual taxpayers. The Department of Housing andCommunity Development will allocate the low- income housing credit from a pool of availablecred its granted under section 42 of the InternalRevenue Code among qualified low-income hous-ing projects. A taxpayer allocated a federal low- income housing credit may also be eligible for astate credit based on the credit amount allocatedto a low-income housing project that the taxpayerowns. A five-year carryforward of unused credit isallowed. See TIR 99-19 for more information. Ifyou qualify for the credit, enter the amount onSchedule CMS. Note: You must enter the buildingidentification number on Schedule CMS. Failureto do so will result in this credit being disallowedon your tax return and an adjust ment of your re-ported tax. Enter the number from left to right.

RehabilitationEffective for tax years beginning on January 1,2005 and ending on or before December 31, 2022,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, seeTIRs 10-11 and 14-3 and 830 CMR 63.38R.1,Massachusetts Historic Rehabilitation Credit. If youqualify for this credit, enter the amount on Sched-ule CMS. Note: You must enter the certificate num-ber on Schedule CMS. Failure to do so will result inthis credit being disallowed on your tax return andan adjustment of your reported tax. Be sure to omithyphens, spaces, decimals and other special sym-bols. Also, enter the number from left to right.

232016 Form 1 — Schedule Instructions

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 both cred-its. The credits are also transferable. For moreinformation, see TIR 07-15. If you qualify for thiscredit, enter the amount of credit on ScheduleCMS. Also, be sure to enter the DOR-issued cer-tificate number in the space provided on ScheduleCMS. Failure to do so will result in this credit beingdisallowed on your tax return and an adjustment ofyour reported tax. Enter the number from left toright. Certificate application forms and additionalinformation are available at 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, on Schedule CMS.

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 alsotransferable. For more information, see TIR 06-22.If you qualify for this credit, enter the amount ofcredit on Schedule CMS. Also, be sure to enter theDOR- issued certificate number in the space pro-vided on Schedule CMS. Failure to do so will resultin this credit being disallowed on your tax returnand an adjustment of your reported tax. Enter thenumber from left to right. Certificate applicationforms and additional information are available atmass.gov/dor.

Employer Wellness Program TaxCreditEffective for tax years beginning on or after Janu-ary 1, 2013, a Massachusetts business that em-ploys 200 or fewer workers may qualify for a taxcredit for up to 25% of the cost of implementing a“certified wellness program” for its employees. Ataxpayer seeking to claim the credit must apply tothe Department of Public Health (DPH) for certifi-cation of its wellness program. DPH will approvea dollar amount of credit for a qualifying taxpayer

and issue a certificate number to be provided inconnection with filing a tax return in order to claimthe credit. The amount of the credit that may beclaimed by a taxpayer cannot exceed $10,000 inany tax year. DPH has promulgated a regulation,105 CMR 216.000, entitled Massachusetts Well-ness Tax Credit Incentive, which sets forth criteriafor authorizing and certifying the credit. The creditis set to expire on December 31, 2017. Note: Youmust enter the certificate number on ScheduleCMS. Failure to do so will result in this creditbeing disallowed on your tax return and an adjust-ment on your reported tax. Enter the number fromleft to right.

Farming and FisheriesA new credit applies to personal income taxpayerswho are primarily engaged in agriculture, farmingor commercial fishing. The credit is 3% of the costor other basis for federal income tax purposes ofqualifying property acquired, constructed orerected during the tax year. Qualifying property isdefined as tangible personal property and othertangible property including buildings and structuralcomponents that are located in Massachusetts,used solely for farming, agriculture or fishing, andare depreciable with a useful life of at least fouryears. The credit applies to lessees calculated asfollows: 3% of a lessor’s adjusted basis in qualify-ing property for federal income tax purposes at thebeginning of the lease term, multiplied by a frac-tion, the numerator of which is the number of daysof the tax year during which the lessee leases thequalifying property and the denominator of whichis the number of days in the useful life of the prop-erty. Where the lessee is eligible for the credit, thelessor is generally not eligible, with the exceptionof “equine-based businesses where care andboarding of horses is a function of the agriculturalactivity. If you qualify for this credit, completeMassachusetts Schedule FAF, Farming and Fish-eries Credit, and enter the amount of the credit onSchedule CMS. Note: You must enclose ScheduleFAF with your return. Failure to do so will result inthis credit being disallowed on your tax return andan adjustment of your reported tax.

Solar and Wind 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 on Schedule CMS. Note: You must encloseSchedule EC with your return. Failure to do so willresult in this credit being disallowed on your taxreturn and an adjustment of your reported tax.

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 film creditfor the production/certificate number to be re-funded. Transferees of the film credit do not qualifyfor the refundable film credit.

If an election to refund the film credit for a produc-tion/certificate number is made, the entire filmcredit remaining after reducing tax liability and othercredits will be refunded at 90%. A motion pictureproduction company that elects to claim a refundof the film credit is not permitted to seek a partialrefund and a partial transfer or carryover of thecredit. However, the refund can be applied as anestimated payment for the subsequent tax year.

Enter on Schedule CMS any amount of refundablefilm credit from Schedule RFC, Refundable FilmCredit, line 5.

Note: You must enclose Schedule RFC with yourreturn. Failure to do so will result in this creditbeing disallowed on your tax return and an adjust-ment of your reported tax.

Refundable Dairy CreditThe Massachusetts dairy farmer tax credit was es-tablished to offset the cyclical downturns in milkprices paid to dairy farmers and is based on theU.S. Federal Milk Marketing Order for the applica-ble market. A taxpayer who holds a certificate ofregistration as a dairy farmer pursuant to G.L. c.94, s. 16A is allowed a refundable tax credit basedon the amount of milk produced and sold. Thedairy farmer tax credit as originally enacted was90% refundable. Under recent legislation, the dairyfarmer tax credit is now 100% refundable.

Enter the amount of refundable dairy credit fromthe Department of Agricultural Resources’ DairyFarmer Certified Tax Credit Statement on Sched-ule CMS.

Also, be sure to enter the Department of Agricul-tural Resources-issued certificate number in thespace provided on Schedule CMS. Failure to do sowill result in this credit being disallowed on yourtax return and an adjustment of your reported tax.Be sure to omit hyphens, spaces, decimals andother special symbols. Also, enter the numberfrom left to right.

24 2016 Form 1 — Schedule Instructions

Conservation Land Tax CreditEffective for tax years beginning on or after Janu-ary 1, 2011, a credit is allowed for qualified do -nations of certified land to a public or privateconservation agency. The credit is equal to 50% ofthe fair market value of the qualified donation. Theamount of the credit that may be claimed by a tax-payer for each qualified donation cannot exceed$75,000. The credit is refundable but not transfer -able. The certification process is conducted bythe Executive Office of Energy and EnvironmentalAffairs (EEA). EEA has promulgated a regulation,301 CMR 14.00, entitled Conservation Land TaxCredit, which sets forth criteria for authorizing andcertifying the credit. See also, 830 CMR 62.6.4,entitled Conservation Land Tax Credit, promul-gated by DOR to explain the calculation of the al-lowable credit.

Enter on Schedule CMS the amount of the refund-able conservation land tax credit. Also, be sure toenter the DOR-issued certificate number in thespace provided on Schedule CMS. Failure to do sowill result in this credit being disallowed on yourtax return and an adjustment of your reported tax.Enter the number from left to right.

Community Investment Tax CreditEffective for tax years beginning on or after Janu-ary 1, 2014, a credit is allowed for qualified in-vestments (certain cash contributions made to acommunity development corporation, communitysupport organization, or a community partnershipfund) made on or after January 1, 2014. The creditis equal to 50% of the total qualified investmentmade by the taxpayer for the taxable year. Nocredit is allowed to a taxpayer that makes a quali-fied investment of less than $1,000. In any onetaxable year, the total amount of the credit thatmay be claimed by a taxpayer that makes qualifiedinvestments cannot exceed $1,000,000. The creditis refundable, or, alternatively, may be carried for-ward 5 years. The credit is set to expire December31, 2019. See the Department’s regulation 830CMR 62.6M.1, Community Investment Tax Credit,for further guidance.

Enter on Schedule CMS the amount of the refund-able Community Investment Tax Credit. Also, besure to enter the DOR-issued certificate number inthe space provided on Schedule CMS. Failure todo so will result in this credit being disallowed onyour tax return and an adjustment of your reportedtax. Enter the number from left to right.

Schedule BNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

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 5.1%;◗ 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, if applicable, Schedule C, line32), and you have no short-term capital gains orlosses, long-term gains on collectibles and pre-1996 installment sales, gains or losses from thesale, exchange or involuntary conversion of prop-erty used in a trade or business, allowable deduc-tions 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 aMass achusetts Fiduciary Return, Form 2; or dis-tributions that are returns of capital.

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. If you did not file U.S.Schedule B, enter the amount from U.S. Form1040 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 andtheir political subdivisions (including your share,if any, from a partnership, an S corporation and agrantor-type trust or non-Massachusetts trust).Do not include exempt interest already included inSchedule B, 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 ScheduleE. Generally, portfolio interest and dividend incomefrom partnerships and S corporations should al-ready be included in Schedule B, line 1 and line 2amounts;

◗ 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 Schedule B, line1 or line 2. See Schedule B, 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.

252016 Form 1 — Schedule Instructions

Line 6. Other Interest andDividends to Be ExcludedEnter the total interest and dividends from the fol-lowing sources (enclose an additional statement,if necessary) only if it has been included in lines 1or 3 of this schedule:

◗ 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; 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 5.1% deductions to offset

other 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 5.1% 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 through 5, column h.

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 12.

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 5.1% 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 5.1% 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 through 5, column h.

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 2015Massachusetts Schedule B, line 40.

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.

26 2016 Form 1 — Schedule Instructions

If Schedule B, line 21 is a loss and Schedule D, line13 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, line13 is greater than “0,” enter the smaller of Sched-ule B, line 21 (considered as a positive amount)or Schedule D, line 13 in Schedule B, line 22 andin Schedule D, line 14.

Line 24. Short-Term Gains andLong-Term Gains on CollectiblesEnter the amount from Schedule B, line 19. IfSchedule D, line 13 is “0” or greater, omit line 25and enter the amount from line 24 in line 26. IfSchedule D, line 13 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 13 is a loss, enter the smaller ofSchedule B, line 24 or Schedule D, line 13 (con-sidered as a positive amount) in Schedule B, line25 and in Schedule D, line 14.

Line 27. Long-Term Gains DeductionComplete only if line 26 is greater than “0” andthere is an entry on line 11.

◗ If there are no losses reported on lines 16, 17,18 and 25, enter 50% of line 11.

◗ If the losses reported on lines 16, 17, 18 and 25do not exceed the total amount of gain on lines 10and 12, enter 50% of line 11.

◗ If the losses reported on lines 16, 17, 18 and 25exceed the the total amount of gain on lines 10 and12 enter 50% of line 11 minus 50% of the excessloss (total of lines 16, 17, 18 and 25 minus thetotal of lines 10 and 12).

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 15 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 15 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 15 is a loss, complete the Long-Term Capital Losses Applied Against Interest andDividends Worksheet for Schedule B, Line 32and Schedule D, Line 16. When completing theworksheet, be sure to enter all losses as a posi-tive amount.

Schedule B, Line 32 and Schedule D, Line 16Worksheet. Long-Term Capital Losses AppliedAgainst Interest and Dividends

Complete only if Schedule B, line 31 is apositive amount and Schedule D, line 15 is aloss. Enter all losses as positive amounts.

1. Enter amount from Schedule B, line 29 . . . . . . . . . . . . . . . . . . . . . . . 2. Enter the lesser of line 1 or $2,000 . . . . . . . . . . . . . . . . . . . . . . . 3. 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 65. Enter any loss from Schedule D, line 15as 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 16. If line 4 is larger than line 5,enter line 5 here and in Schedule B, line 32 and in Schedule D, line 16. . .

Part 4. Taxable Interest, Dividendsand Certain Capital GainsLine 36. Excess ExemptionsEnter the amount from line 5 of the Schedule B,Line 36 and Schedule D, Line 20 Work sheet (only ifsingle, head of household or married filing a jointreturn and Form 1, line 18 is greater than Form 1,line 17).

Schedule DNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

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 6 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 2016 for which you made a federal sec.311 election, the Massachusetts initial basis willnot be the federal basis. The Massachusetts initialbasis will be deter mined 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

272016 Form 1 — Schedule Instructions

◗ 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 4 should be reported onMassachusetts Schedule D, line 12 (“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 4 should be re-ported on Massachusetts Schedule D, line 10(“Differences”). The amount of such gain classi-fied as ordinary income should then be reportedon Form 1, line 9 (“Other income”) and includedon Sched ule X, line 4 and identified as “2016 gainfrom pre-1996 installment sale.”

Note: If you are reporting an installment sale occur-ring on or after January 1, 2003, report those gainson Schedule D. If you are reporting capital gainson installment sales that occurred during January1, 1996 through December 31, 2002, do not fileSchedule D. Instead, you must file Schedule D-IS,Installment Sales. Schedule D-IS can be obtainedon DOR’s website at 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.

Lower Capital Gains Tax Rate for Gainsfrom the Sale of Stock In Certain Mass -achusetts-Based Start-Up CorporationsGains derived from the sale of investments whichmeet certain requirements are taxed at a rate of 3%instead of 5.1%. In order to qualify for the 3%rate, investments must have been made within fiveyears of the corporation’s date of incorporationand must be in stock that generally satisfies thedefinition of “qualified small business stock”under IRC § 1202 (c), other than the requirementthat the stock be stock of a C corporation. In addi-tion, the stock must be held for three years ormore and the investments must be in a corpora-tion which (a) is domiciled in Massachusetts, (b)is incorporated on or after January 1, 2011, (c)has less than $50 million in assets at the time ofinvestment, and (d) complies with certain of the“active business” requirements of § 1202 of theInternal Revenue Code, i.e., § 1202 (e)(1), (e)(2),(e)(5), and (e)(6).

To be eligible as “qualified small business stock”under IRC § 1202(c), the stock must be acquiredby the taxpayer at its original issue (directly orthrough an underwriter) in exchange for money,property, or as compensation for services pro-vided to the corporation. During substantially all ofthe taxpayer’s holding period, at least 80 percentof the value of the corporation’s assets must beused in the active conduct of one or more quali-fied businesses.

If you are reporting a sale of stock in a certainMassachusetts-based start-up corporation(s), donot file Schedule D. Instead, you must report thatgain(s) on Schedule D-IS, Installment Sales.Schedule D-IS can be obtained on DOR’s websiteat mass.gov/dor.

Long-Term Capital Gains andLosses, Excluding CollectiblesLine 1. Long-Term Capital Gainsand LossesEnter the gain or loss included in U.S. Schedule D,lines 8a and 8b, column h.

Line 2. Long-Term Capital Gainsand LossesEnter the gain or loss included in U.S. Schedule D,line 9, column h.

Line 3. Long-Term Capital Gainsand LossesEnter the gain or loss included in U.S. Schedule D,line 10, column h.

Line 4. Gain from Sales of BusinessProperty and Other Long-TermGains and LossesEnter the gain or loss included in U.S. Schedule D,line 11, column h.

Line 5. 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 h.

Line 6. 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 h.

Line 7. 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 6).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 8. Carryover Losses fromPrevious YearsIf you have a carryover loss from a prior year, enterin line 8 the total amount of carryover losses fromyour 2015 Massachusetts Schedule D, line 23.

Line 10. 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 8. 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.

28 2016 Form 1 — Schedule Instructions

Line 11. Adjusted Capital Gains andLossesExclude/subtract line 10 from line 9 and enter theresult in line 11.

◗ If line 10 is a loss, add loss as a positive numberto the amount recorded in line 9. See the follow-ing examples:

Schedule D

Line ex. A ex. B ex. C ex. D19 $1,000 $1,000 *$0,700**$700*

110 $1,500 *$1,300* $0,500 *$500*11 $1,500 $1,300 *$1,200**$200*

*denotes loss

◗ If in line 10 you entered amounts which in-crease the amounts reported from U.S. to Mass-achusetts, for example, a long-term gain reportedas install ment sales for U.S. tax purposes but notfor Massachusetts, add the amount in line 10 tothe amount in line 9.

Line 12. Long-Term Gains onCollectibles and Pre-1996Installment SalesEnter in line 12 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 11.

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 13. SubtotalSubtract line 12 from line 11 and enter the resultin line 13.

If Schedule D, line 13 is a loss and Schedule B,line 21 is less than “0,” omit Schedule D, lines 14through 16, enter the amount from Schedule D,line 13 in Schedule D, line 17, omit Schedule D,lines 18 through 22 and enter the amount fromSchedule D, line 17 in Schedule D, line 23, andenter “0” on Form 1, line 24.

If Schedule D, line 13 is a gain and Schedule B,line 21 is a loss, go to Schedule D, line 14.

If Schedule D, line 13 is a loss and Schedule B,line 24 is “0” or greater, go to Schedule D, line 14.

If Schedule D, line 13 is a gain, and Schedule B,line 24 is “0” or greater, omit Schedule D, lines 14through 16 and enter the amount from ScheduleD, line 13 in Schedule D, line 17.

Line 14. Capital Losses AppliedAgainst Capital GainsIf Schedule D, line 13 is a positive amount andSchedule B, line 22 is a loss, enter the smaller ofSchedule D, line 13 or Schedule B, line 21 (con-sidered as a positive amount) in Schedule D, line14 and in Schedule B, line 22.

If Schedule D, line 13 is a loss and Schedule B, line24 is a positive amount, enter the smaller of Sched-ule D, line 13 (considered as a positive amount) orSchedule B, line 24 in Schedule D, line 14 and inSchedule B, line 25.

Line 15. SubtotalIf line 13 is greater than “0,” subtract line 14 fromline 13. If line 13 is less than “0,” combine lines 13and 14.

If Schedule D, line 15 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 16.

If Schedule D, line 15 is a loss, and Schedule B, line21 is “0” or less, omit Schedule D, line 16, enter theamount from Schedule D, line 15 in Schedule D, line17, omit Schedule D, lines 18 through 22 and enterthe amount from Schedule D, line 17 in ScheduleD, line 23, and enter “0” on Form 1, line 24.

Line 16. Long-Term Capital LossesApplied Against Interest andDividendsIf Schedule D, line 15 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 16.

Line 17. SubtotalCombine line 15 and line 16. If Schedule D, line 17is “0,” enter “0” in lines 18 through 21 and omitlines 22 and 23. If Schedule D, line 17 is a loss,omit lines 18 through 22 and enter the amountfrom line 17 in line 23.

Line 18. 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 5.1% 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 5.1% 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 20. Excess ExemptionsEnter in line 20 the amount from line 8 of theSchedule B, Line 36 and Schedule D, Line 20Worksheet (only if single, head of household ormarried filing joint return).

Line 22. Tax On Long-Term CapitalGainsMultiply line 21 by .051 and enter the result hereand in Form 1, line 24.

Note: If choosing the optional 5.85% tax rate,multiply line 21 by .0585 and enter the result hereand in Form 1, line 24.

Line 23. Available Losses forCarryoverEnter the amount from Schedule D, line 17, only ifit is a loss.

Schedule CNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

Substituting U.S. Schedules Cor C-EZU.S. Schedules C or C-EZ are no longer allowedas a substitute for Massachusetts Schedule C.

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 5.1% 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 visitingmass.gov/dor, or you may have one mailed to youby calling (617) 887-6367.

292016 Form 1 — Schedule Instructions

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 2016, 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 02-13for further information.

Material ParticipationIndicate if you materially participated in the oper-ation of this business during 2016. 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. Note: If not required to file Schedule B (see Schedule B in-structions), enter this income on Form 1, line 20.

Examples of interest (other than from Massa -chusetts banks) and dividend income are interestreceived on loans, notes receivable or charge ac-counts that you accept in the ordinary course ofbusiness, and dividends on stocks received inpayment for goods and services. Capital gainsfrom the sale or exchange of assets used in yourbusiness are not reported on Schedule C. Use U.S.Form 4797 and report the amount in Form 1,Schedule B and/or Schedule D. You must also ex-clude from Schedule C any income and expensesthat pertain to activities for yourself as distin-guished from those performed for your cus-tomers. Such income must be reported by class ofincome in Schedules B and D. Personal expensesare 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 Sched ule C. In this case, you must fileseparate Schedule Cs.

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 after December 31, 2013 andbefore January 1, 2015, the maximum section 179expensing allowance is $500,000.

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. SeeDOR Directive 08-3 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 reim bursedto an employee if you properly treat the ex penseas 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 CoordinatingCouncil. 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.

30 2016 Form 1 — Schedule Instructions

Line 32. Interest (other than fromMassachusetts banks) and DividendIncomeIf you have interest (other than from Massachu-setts banks) and dividend income reported onU.S. Schedule C, lines 1 and/or 6 or ScheduleC-EZ, line 1, enter that amount in line 32 and inMassachusetts Schedule B, line 3. If you are notrequired to file Schedule B (see Schedule B in-structions), enter that amount on Form 1, line 20.Do not include such amounts on MassachusettsSchedule C, lines 1 and/or 4.

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 $1,070for the tax year beginning January 1, 2016. SeeTIR 16-8 for more information.

Eligible taxpayers who own their property mayclaim a credit equal to the amount by which theirproperty tax payments in tax year 2016 (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 2016 tax year, ataxpayer must be 65 years of age or older beforeJanuary 1, 2017 (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 $57,000 for a single filer who is not the headof a household, $71,000 for a head of household,or $86,000 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 $720,000.

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 the2016 tax year can claim the credit by submitting acompleted Schedule CB, Circuit Breaker Credit,with their 2016 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 2016Be sure to fill in the appropriate oval. If you were arenter in 2016 and you received any federal and/or

state subsidy, or you rent from a tax-exempt entity,you do not qualify for the Circuit Breaker Credit.

Homeowners, fill in the appropriate “Yes” or “No”oval to indicate if you owned a multi-use or multi-family property. A taxpayer who owns a principalresidence with a land area in excess of one acre ora multi-use building or land area, for example, astorefront with an apartment above, may onlyclaim the taxpayer’s proportional share of the realestate tax payments (Schedule CB, line 10), in-cluding water and sewer use charges (ScheduleCB, line 13), which corresponds to the portion ofthe residence used and occupied as principal res-idence. A taxpayer who owns a multiple familydwelling (a multi-family residence that includes thetaxpayer’s personal residence), may only claimthe taxpayer’s proportional share of the taxes(Schedule CB, line 10) or sewer and water usecharges (Schedule CB, line13) paid. For example,where a condominium association pays one sewerand water bill for multiple owners, each ownermay only claim the proportional share of the usecharges attributable to the taxpayer’s condo-minium (for example, the condominium owner’spercentage interest in the undivided interest ofcommon areas and facilities).

Line 2. Assessed Value of PrincipalResidence as of January 1, 2016Enter the amount of the assessed value of yourprincipal residence as of January 1, 2016. If youown a multi-family home, mixed-use property, ormore than one acre of land, only the assessed valueof your 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 $720,000, 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 of Jan-uary 1, 2016.

Income CalculationQualifying income for the Circuit Breaker Credit(Schedule CB, lines 3 through 9) 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 di vidends,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-

312016 Form 1 — Schedule Instructions

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 Security BenefitsEnter in line 4 the amount of Social Security benefitsreceived in 2016. Social Security benefits includeretirement, disability, dependent, survivorship andinsurance. Medicare premiums withheld from So-cial Security payments should not be excluded.

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. Miscellaneous IncomeIncluding Cash Public AssistanceEnter the amount of miscellaneous income, includ-ing cash public assistance, received during 2016.This includes but is not limited to food stamps andwelfare payments, disability income, gifts, sickpay, worker’s compensation and return of capital.

Credit CalculationIf you filled in the “Homeowner” oval in line 1,complete lines 10 through 17, if you filled in the“Renter” oval in line 1, go to line 18.

Line 10. Real Estate Taxes Paidin Calendar Year 2016 for YourPrincipal ResidenceEnter the amount of real estate taxes paid in calen -dar year 2016. 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.

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 real estate taxes paid.

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 2016 for your principal residence.

Line 11. Adjustments to Real EstateTaxes PaidEnter the amount from line 4 of the Adjustments toReal Estate Taxes Paid Worksheet for Schedule CB,line 11, on page 2 of Schedule CB. Adjustments toreal estate taxes paid include:

◗ Abatements granted by local assessors orearned through the Senior Work Program (do notexclude this amount if it was already reflected onyour tax bill and you did not pay it);

◗ Exemptions granted by cities or towns to qual-ifying veterans, surviving spouses, blind personsand the elderly (do not exclude this amount if itwas already reflected on your tax bill and you didnot pay it);

◗ Interest charges assessed due to delinquentpay ments; and

◗ Betterments or special assessments levied uponthe property.

Line 13. Water and Sewer UseCharges Paid in 2016Contact 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 13. If theyhave not elected to include those charges, enter50% of your actual water and sewer use chargespaid in 2016 in line 13.

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 18. Rent Paid for YourPrincipal Residence in 2016Enter in line 18a the total amount of rent paid foryour principal Massachusetts residence in 2016.Divide that amount by 4 (25%) and enter the re-sult in line 18. In the space provided, be sure toenter your landlord’s name and address. If youreceived any federal and/or state rent subsidy, oryou rent from a tax-exempt entity, you do notqualify for the Circuit Breaker Credit.

32 2016 Form 1 — Schedule Instructions

2016 Massachusetts Income Tax Table at the 5.1% RateUse this table to calculate tax for taxable 5.1% income (line 21) of not more than $24,000.

Line 22 instructions: To find your tax on 5.1% 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 5.1% income in line 21 is greater than $24,000,multiply the amount by .051. 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 21 by .0585.

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

$ 1 – $ 50 $ 150 – 100 4

100 – 150 6150 – 200 9200 – 250 11250 – 300 14300 – 350 17350 – 400 19400 – 450 22450 – 500 24500 – 550 27550 – 600 29600 – 650 32650 – 700 34700 – 750 37750 – 800 40800 – 850 42850 – 900 45900 – 950 47950 – 1,000 50

1,000 – 1,050 521,050 – 1,100 551,100 – 1,150 571,150 – 1,200 601,200 – 1,250 621,250 – 1,300 651,300 – 1,350 681,350 – 1,400 701,400 – 1,450 731,450 – 1,500 751,500 – 1,550 781,550 – 1,600 801,600 – 1,650 831,650 – 1,700 851,700 – 1,750 881,750 – 1,800 911,800 – 1,850 931,850 – 1,900 961,900 – 1,950 981,950 – 2,000 1012,000 – 2,050 1032,050 – 2,100 1062,100 – 2,150 1082,150 – 2,200 1112,200 – 2,250 1132,250 – 2,300 1162,300 – 2,350 1192,350 – 2,400 1212,400 – 2,450 1242,450 – 2,500 1262,500 – 2,550 1292,550 – 2,600 1312,600 – 2,650 1342,650 – 2,700 1362,700 – 2,750 1392,750 – 2,800 1422,800 – 2,850 1442,850 – 2,900 1472,900 – 2,950 1492,950 – 3,000 1523,000 – 3,050 1543,050 – 3,100 1573,100 – 3,150 1593,150 – 3,200 1623,200 – 3,250 1643,250 – 3,300 1673,300 – 3,350 1703,350 – 3,400 1723,400 – 3,450 1753,450 – 3,500 1773,500 – 3,550 1803,550 – 3,600 1823,600 – 3,650 1853,650 – 3,700 1873,700 – 3,750 1903,750 – 3,800 1933,800 – 3,850 1953,850 – 3,900 1983,900 – 3,950 2003,950 – 4,000 203

$ 4,000 – $ 4,050 $ 2054,050 – 4,100 2084,100 – 4,150 2104,150 – 4,200 2134,200 – 4,250 2154,250 – 4,300 2184,300 – 4,350 2214,350 – 4,400 2234,400 – 4,450 2264,450 – 4,500 2284,500 – 4,550 2314,550 – 4,600 2334,600 – 4,650 2364,650 – 4,700 2384,700 – 4,750 2414,750 – 4,800 2444,800 – 4,850 2464,850 – 4,900 2494,900 – 4,950 2514,950 – 5,000 2545,000 – 5,050 2565,050 – 5,100 2595,100 – 5,150 2615,150 – 5,200 2645,200 – 5,250 2665,250 – 5,300 2695,300 – 5,350 2725,350 – 5,400 2745,400 – 5,450 2775,450 – 5,500 2795,500 – 5,550 2825,550 – 5,600 2845,600 – 5,650 2875,650 – 5,700 2895,700 – 5,750 2925,750 – 5,800 2955,800 – 5,850 2975,850 – 5,900 3005,900 – 5,950 3025,950 – 6,000 3056,000 – 6,050 3076,050 – 6,100 3106,100 – 6,150 3126,150 – 6,200 3156,200 – 6,250 3176,250 – 6,300 3206,300 – 6,350 3236,350 – 6,400 3256,400 – 6,450 3286,450 – 6,500 3306,500 – 6,550 3336,550 – 6,600 3356,600 – 6,650 3386,650 – 6,700 3406,700 – 6,750 3436,750 – 6,800 3466,800 – 6,850 3486,850 – 6,900 3516,900 – 6,950 3536,950 – 7,000 3567,000 – 7,050 3587,050 – 7,100 3617,100 – 7,150 3637,150 – 7,200 3667,200 – 7,250 3687,250 – 7,300 3717,300 – 7,350 3747,350 – 7,400 3767,400 – 7,450 3797,450 – 7,500 3817,500 – 7,550 3847,550 – 7,600 3867,600 – 7,650 3897,650 – 7,700 3917,700 – 7,750 3947,750 – 7,800 3977,800 – 7,850 3997,850 – 7,900 4027,900 – 7,950 4047,950 – 8,000 407

$ 8,000 – $ 8,050 $ 4098,050 – 8,100 4128,100 – 8,150 4148,150 – 8,200 4178,200 – 8,250 4198,250 – 8,300 4228,300 – 8,350 4258,350 – 8,400 4278,400 – 8,450 4308,450 – 8,500 4328,500 – 8,550 4358,550 – 8,600 4378,600 – 8,650 4408,650 – 8,700 4428,700 – 8,750 4458,750 – 8,800 4488,800 – 8,850 4508,850 – 8,900 4538,900 – 8,950 4558,950 – 9,000 4589,000 – 9,050 4609,050 – 9,100 4639,100 – 9,150 4659,150 – 9,200 4689,200 – 9,250 4709,250 – 9,300 4739,300 – 9,350 4769,350 – 9,400 4789,400 – 9,450 4819,450 – 9,500 4839,500 – 9,550 4869,550 – 9,600 4889,600 – 9,650 4919,650 – 9,700 4939,700 – 9,750 4969,750 – 9,800 4999,800 – 9,850 5019,850 – 9,900 5049,900 – 9,950 5069,950 – 10,000 509

10,000 – 10,050 51110,050 – 10,100 51410,100 – 10,150 51610,150 – 10,200 51910,200 – 10,250 52110,250 – 10,300 52410,300 – 10,350 52710,350 – 10,400 52910,400 – 10,450 53210,450 – 10,500 53410,500 – 10,550 53710,550 – 10,600 53910,600 – 10,650 54210,650 – 10,700 54410,700 – 10,750 54710,750 – 10,800 55010,800 – 10,850 55210,850 – 10,900 55510,900 – 10,950 55710,950 – 11,000 56011,000 – 11,050 56211,050 – 11,100 56511,100 – 11,150 56711,150 – 11,200 57011,200 – 11,250 57211,250 – 11,300 57511,300 – 11,350 57811,350 – 11,400 58011,400 – 11,450 58311,450 – 11,500 58511,500 – 11,550 58811,550 – 11,600 59011,600 – 11,650 59311,650 – 11,700 59511,700 – 11,750 59811,750 – 11,800 60111,800 – 11,850 60311,850 – 11,900 60611,900 – 11,950 60811,950 – 12,000 611

$12,000 – $12,050 $ 61312,050 – 12,100 61612,100 – 12,150 61812,150 – 12,200 62112,200 – 12,250 62312,250 – 12,300 62612,300 – 12,350 62912,350 – 12,400 63112,400 – 12,450 63412,450 – 12,500 63612,500 – 12,550 63912,550 – 12,600 64112,600 – 12,650 64412,650 – 12,700 64612,700 – 12,750 64912,750 – 12,800 65212,800 – 12,850 65412,850 – 12,900 65712,900 – 12,950 65912,950 – 13,000 66213,000 – 13,050 66413,050 – 13,100 66713,100 – 13,150 66913,150 – 13,200 67213,200 – 13,250 67413,250 – 13,300 67713,300 – 13,350 68013,350 – 13,400 68213,400 – 13,450 68513,450 – 13,500 68713,500 – 13,550 69013,550 – 13,600 69213,600 – 13,650 69513,650 – 13,700 69713,700 – 13,750 70013,750 – 13,800 70313,800 – 13,850 70513,850 – 13,900 70813,900 – 13,950 71013,950 – 14,000 71314,000 – 14,050 71514,050 – 14,100 71814,100 – 14,150 72014,150 – 14,200 72314,200 – 14,250 72514,250 – 14,300 72814,300 – 14,350 73114,350 – 14,400 73314,400 – 14,450 73614,450 – 14,500 73814,500 – 14,550 74114,550 – 14,600 74314,600 – 14,650 74614,650 – 14,700 74814,700 – 14,750 75114,750 – 14,800 75414,800 – 14,850 75614,850 – 14,900 75914,900 – 14,950 76114,950 – 15,000 76415,000 – 15,050 76615,050 – 15,100 76915,100 – 15,150 77115,150 – 15,200 77415,200 – 15,250 77615,250 – 15,300 77915,300 – 15,350 78215,350 – 15,400 78415,400 – 15,450 78715,450 – 15,500 78915,500 – 15,550 79215,550 – 15,600 79415,600 – 15,650 79715,650 – 15,700 79915,700 – 15,750 80215,750 – 15,800 80515,800 – 15,850 80715,850 – 15,900 81015,900 – 15,950 81215,950 – 16,000 815

$16,000 – $16,050 $ 81716,050 – 16,100 82016,100 – 16,150 82216,150 – 16,200 82516,200 – 16,250 82716,250 – 16,300 83016,300 – 16,350 83316,350 – 16,400 83516,400 – 16,450 83816,450 – 16,500 84016,500 – 16,550 84316,550 – 16,600 84516,600 – 16,650 84816,650 – 16,700 85016,700 – 16,750 85316,750 – 16,800 85616,800 – 16,850 85816,850 – 16,900 86116,900 – 16,950 86316,950 – 17,000 86617,000 – 17,050 86817,050 – 17,100 87117,100 – 17,150 87317,150 – 17,200 87617,200 – 17,250 87817,250 – 17,300 88117,300 – 17,350 88417,350 – 17,400 88617,400 – 17,450 88917,450 – 17,500 89117,500 – 17,550 89417,550 – 17,600 89617,600 – 17,650 89917,650 – 17,700 90117,700 – 17,750 90417,750 – 17,800 90717,800 – 17,850 90917,850 – 17,900 91217,900 – 17,950 91417,950 – 18,000 91718,000 – 18,050 91918,050 – 18,100 92218,100 – 18,150 92418,150 – 18,200 92718,200 – 18,250 92918,250 – 18,300 93218,300 – 18,350 93518,350 – 18,400 93718,400 – 18,450 94018,450 – 18,500 94218,500 – 18,550 94518,550 – 18,600 94718,600 – 18,650 95018,650 – 18,700 95218,700 – 18,750 95518,750 – 18,800 95818,800 – 18,850 96018,850 – 18,900 96318,900 – 18,950 96518,950 – 19,000 96819,000 – 19,050 97019,050 – 19,100 97319,100 – 19,150 97519,150 – 19,200 97819,200 – 19,250 98019,250 – 19,300 98319,300 – 19,350 98619,350 – 19,400 98819,400 – 19,450 99119,450 – 19,500 99319,500 – 19,550 99619,550 – 19,600 99819,600 – 19,650 1,00119,650 – 19,700 1,00319,700 – 19,750 1,00619,750 – 19,800 1,00919,800 – 19,850 1,01119,850 – 19,900 1,01419,900 – 19,950 1,01619,950 – 20,000 1,019

If your 5.1% income for the tax table is less than $10, your tax is “0.”

$20,000 – $20,050 $1,02120,050 – 20,100 1,02420,100 – 20,150 1,02620,150 – 20,200 1,02920,200 – 20,250 1,03120,250 – 20,300 1,03420,300 – 20,350 1,03720,350 – 20,400 1,03920,400 – 20,450 1,04220,450 – 20,500 1,04420,500 – 20,550 1,04720,550 – 20,600 1,04920,600 – 20,650 1,05220,650 – 20,700 1,05420,700 – 20,750 1,05720,750 – 20,800 1,06020,800 – 20,850 1,06220,850 – 20,900 1,06520,900 – 20,950 1,06720,950 – 21,000 1,07021,000 – 21,050 1,07221,050 – 21,100 1,07521,100 – 21,150 1,07721,150 – 21,200 1,08021,200 – 21,250 1,08221,250 – 21,300 1,08521,300 – 21,350 1,08821,350 – 21,400 1,09021,400 – 21,450 1,09321,450 – 21,500 1,09521,500 – 21,550 1,09821,550 – 21,600 1,10021,600 – 21,650 1,10321,650 – 21,700 1,10521,700 – 21,750 1,10821,750 – 21,800 1,11121,800 – 21,850 1,11321,850 – 21,900 1,11621,900 – 21,950 1,11821,950 – 22,000 1,12122,000 – 22,050 1,12322,050 – 22,100 1,12622,100 – 22,150 1,12822,150 – 22,200 1,13122,200 – 22,250 1,13322,250 – 22,300 1,13622,300 – 22,350 1,13922,350 – 22,400 1,14122,400 – 22,450 1,14422,450 – 22,500 1,14622,500 – 22,550 1,14922,550 – 22,600 1,15122,600 – 22,650 1,15422,650 – 22,700 1,15622,700 – 22,750 1,15922,750 – 22,800 1,16222,800 – 22,850 1,16422,850 – 22,900 1,16722,900 – 22,950 1,16922,950 – 23,000 1,17223,000 – 23,050 1,17423,050 – 23,100 1,17723,100 – 23,150 1,17923,150 – 23,200 1,18223,200 – 23,250 1,18423,250 – 23,300 1,18723,300 – 23,350 1,19023,350 – 23,400 1,19223,400 – 23,450 1,19523,450 – 23,500 1,19723,500 – 23,550 1,20023,550 – 23,600 1,20223,600 – 23,650 1,20523,650 – 23,700 1,20723,700 – 23,750 1,21023,750 – 23,800 1,21323,800 – 23,850 1,21523,850 – 23,900 1,21823,900 – 23,950 1,22023,950 – 24,000 1,223

34

Department of Revenue Resources

What kind of help is availableDOR’s website at mass.gov/dor is a valuable resource for tax information 24 hours a day. Thousands of tax-payers use DOR’s website to e-mail and receive prompt answers to their general tax inquiries. Taxpayers canalso check the status of their refunds, make estimated tax payments and review their estimated tax paymenthistories through the MassTaxConnect section of our website.

Public libraries and DOR district offices (listed on this page) also offer access to DOR’s website for those tax -payers 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 the Department’s website is mass.gov/dor.

To obtain Massachusetts forms and publications by phone, call the Department’s main information linesat 617-887-6367 or toll-free in Massachusetts at 1-800-392-6089.

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 irs.gov or call the IRS toll-free at1-800-829-3676.

For help in one of the following specific areas◗ Certificates of Good Standing 617-887-6367 ◗ 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 receive assistance.◗ Upon request, this publication is available in an alternative format. Please send your request to: Office of Diversity and Equal Opportunity, PO Box 9557, Boston, MA 02114-9557.

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 mass.gov/connectandserve.

DOR Locationsin MassachusettsBoston19 Staniford St.Boston, MA 02114(617) 887-6367

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

Worcester67 Millbrook St.Worcester, MA 01606(508) 792-7300

96M 12/13 2014JMBPRINTOFF33014 partially printed on recycled paper

Massachusetts

Department of

Revenue

PO Box 7011

Boston, MA 02204

PRSRT STDU.S. POSTAGEPAIDCOMMONWEALTH OFMASSACHUSETTS

A Special Message from Revenue Commissioner Michael HeffernanI hope you find this Form 1 booklet helpful in preparing your taxes. When you are ready to file, please consider electronic filing ratherthan using the paper form.

There are many benefits to e-filing your tax return. Let me share just a few of the reasons why most Massachusetts taxpayers chooseto file electronically:

• Processing is much faster

• Refunds can be issued three times faster than filing on paper

• Automatic corrections help you file a more accurate return

• Security features are in place to protect electronically-filed tax returns

• If you need to make a payment, you can set up an electronic payment and choose the date. You save time and a trip to the post office

There are free filing options available for qualifying taxpayers. Please take a look at the opportunities for support on the Department ofRevenue website at mass.gov/MAFreeFile.

This tax season consider all your choices, including the services of a tax preparer or filing on your own with approved tax preparationsoftware, rather than using the paper form. Once you review the options, I hope that e-filing will be your first choice.

Sincerely,

Commissioner Michael J. Heffernan