Instructions For Form 1 - Massachusetts Resident Income Tax

2006 Form 1 — Line by Line Instructions

Line 5. Interest from Massachusetts

entered on the Massachusetts and U.S. sched-

You are not allowed to deduct amounts unless they

ules. See Massachusetts Schedule E instructions

are directly related to income that is subject to tax-

Banks

for an explanation of possible differences.

ation and reported on Massachusetts Form 1.

Enter in line 5a the total amount of interest re-

ceived or credited to deposit accounts (term and

Line 8a. Unemployment

Line 11. Amount Paid to Social

time deposits, including certificates of deposit, sav-

Compensation

Security (FICA), Medicare,

ings accounts, savings shares, and NOW accounts)

Railroad, U.S. or Massachusetts

If you received unemployment compensation,

in Massachusetts banks. Then, enter your exemp-

enter in line 8a the amount reported on U.S. Form

Retirement Systems

tion amount in line 5b (if married filing jointly,

1040, line 19; 1040A, line 13; or 1040EZ, line 3. If

enter $200; otherwise, enter $100). Subtract line

If you have paid into any of the retirement systems

you elected voluntary withholding of Massachu-

5b from 5a and enter the result in line 5, but not

listed above during 2006, you may deduct those

setts state income taxes on your unemployment

less than “0.”

contributions, up to a maximum of $2,000.

compensation, be sure to include the amount of

Note: This exemption amount does not apply to

Enter in lines 11a and 11b the amount you, and

Massachusetts state income tax withheld, as re-

your U.S. tax return.

your spouse if filing jointly, paid to Social Security

ported on Form 1099-G, on Form 1, line 35 and

(FICA), Medicare or Railroad Retirement and the

attach with a single staple, where indicated on the

Do not subtract interest forfeited or penalties

U.S. or Massachusetts retirement systems during

return, Form 1099-G.

charged to you for early savings withdrawal. You will

2006 as shown on your Form W-2, but not more

be allowed to deduct these amounts on Schedule

Note: DOR routinely matches the amounts in line

than $2,000 each. Payment amounts may not be

Y, line 2. All other interest, unless exempt, should

8a with files from the Division of Unemployment

combined or transferred from one spouse to the

be entered on Massachusetts Schedule B. Interest

Assistance.

other. Add lines 11a and 11b and enter the result in

on an IRA/Keogh is not taxable until distributed.

line 11. Be sure to add any amount of Medicare tax

Line 8b. Massachusetts State

Lines 6, 7 and 10. If showing a loss in lines 6, 7 or

withheld as shown on Form W-2 and any amount

Lottery Winnings

10, be sure to mark over the “X” in the box to the

of self-employment tax as reported on your U.S.

left. Do not use parentheses or negative signs to

Enter in line 8b all winnings from the Massachu-

Form 1040 to the amount of Social Security tax

indicate losses.

setts state lottery. Do not enter less than “0.” You

withheld, the total not to exceed $2,000 per person.

may only deduct the price of your winning ticket.

Line 6. Business/Profession or

Note: Medicare premiums deducted from your

Lottery losses claimed as itemized deductions on

Social Security or retirement payments are not

Farm Income or Loss

U.S. Form 1040, Schedule A are not allowed on

deductible.

Enter in line 6 the amount of income or loss from

your Massachusetts return.

a business or profession from Massachusetts

Payments to an IRA, Keogh, Simplified Employee

Note: DOR routinely matches the amounts in line

Schedule C, line 31. You must enclose Massachu-

Pension Plan (SEP), or Savings Incentive Match

8b with files from the Lottery Commission.

setts Schedule C with this return. Also, enclose a

Plan for Employees (SIMPLE) Account are not de-

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

copy of your U.S. Schedule C or Schedule C-EZ if

ductible for Massachusetts income tax purposes.

substituting U.S. Schedule C or C-EZ for Mass-

Line 9. Other Income

Line 12. Child Under Age 13,

achusetts Schedule C.

(from Schedule X)

or Disabled Dependent/Spouse

Note: You may substitute U.S. Schedule C or C-EZ

Alimony Received, Taxable IRA/Keogh

Care Expenses

for Massachusetts Schedule C if there are no dif-

and Roth IRA Conversion Distributions,

Massachusetts now allows taxpayers to exceed

ferences between the amounts reported on U.S.

Other Gambling Winnings, Fees and

the federal limit on employment-related expenses

Schedule C or C-EZ and amounts that would be

Other 5.3% Income

for the care of a qualified child under the age of 13,

reported on Massachusetts Schedule C. Be sure

“Other 5.3% income” includes the items listed

a disabled dependent or a disabled spouse. The

to write “No Massachusetts Differences” on the

above and must be included on Schedule X. Enter

maximum deduction is $4,800 for one qualifying

top of the U.S. Schedule C or C-EZ.

the total from Schedule X, line 5. Not less than “0.”

individual, and $9,600 for two or more qualifying

If you operate a farm as an individual or coopera-

Be sure to enclose Schedule X with your return.

individuals. Complete the following worksheet to

tive, enter the amount of income or loss from op-

Failure to enclose this schedule will delay the

calculate your Massachusetts child or disabled de-

erating a farm from U.S. Schedule F, Profit or Loss

processing of your return.

pendent/spouse care expense deduction.

from Farming, line 36. Enclose a copy of U.S.

Note: You cannot claim this deduction if married

Schedule F. Complete a pro-forma U.S. Schedule

Deductions

filing a separate return.

F to report Massachusetts differences, such as

bonus depreciation.

Taxpayers who received dependent care benefits

Lines 11 through 15

should complete a pro forma U.S. Form 2441 or

Line 7. Rental, Royalty, REMIC,

Massachusetts allowable deductions differ from

U.S. Form 1040A, Schedule 2. When completing

“Itemized Deductions” on Schedule A of U.S. Form

Partnership, S Corporation,

this pro forma form, taxpayers should enter

1040. You may claim only the deductions speci-

Trust Income or Loss

$4,800 (or $9,600 for two or more qualifying per-

fied on Massachusetts Form 1, lines 11 through

Enter in line 7 the total of: Massachusetts Schedule

sons) in line 29 of U.S. Form 2441 or line 23 of

14 and Schedule Y.

E, Part I, line 5; Part II, line 8; and Part III, line 11.

U.S. Form 1040A, Schedule 2. The amount from

Please read the instructions for lines 12 and 13 to

Remember to subtract losses when calculating the

this pro forma Form 2441, line 33 or U.S. Form

determine which deduction you qualify for or which

total. You must enclose Massachusetts Schedule

1040A, Schedule 2, line 27 should then be en-

is better for you. You cannot claim a deduction in

E. You must retain with your records documenta-

tered in line 1 of the following worksheet.

both lines 12 and 13.

tion to substantiate any differences in amounts

Instructions For Form 1 - Massachusetts Resident Income Tax - 2006 Page 11

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