Instructions For Form 1 - Massachusetts Resident Income Tax

2006 Form 1 — Before You Begin

2005 may be carried over, as reduced, and ap-

Film Incentive Credits

Tuition and Fees Deduction — IRC secs.

plied against the tax liability for 2006. To take this

For tax years beginning on or after January 1,

62(a)(18) and 222

credit, see Schedule Z, line 8. For more informa-

2006 and before January 1, 2013, motion picture

Effective for tax years on or after January 1, 2006,

tion, see TIR 05-18.

production companies may claim (1) a credit

Massachusetts does not allow the federal deduc-

equal to 20% of the total qualifying aggregate

tion for qualified higher education expenses.

Claim of Right Deduction

payroll for employing persons within the Common-

For tax years beginning on or after January 1, 2005,

Educators Deduction — IRC sec.

wealth in connection with the filming and produc-

taxpayers who have paid Massachusetts personal

62(a)(2)(D)

tion of a motion picture and (2) a credit equal to

income taxes in a prior year on income attributed

Effective for tax years on or after January 1, 2006,

25% of their Massachusetts production expenses.

to them under a “claim of right” may deduct the

Massachusetts does not allow the federal deduc-

Each credit has its own qualification requirements

amount of that income from their gross income if it

tion for expenses paid or incurred by an eligible

and a taxpayer is allowed to qualify for and claim

later develops that they were not in fact entitled to

educator for books, supplies, equipment and other

both credits. However, the total amount of tax

the income, and have repaid the amounts in ques-

qualified materials used in the classroom.

credits allowed for any one motion picture may not

tion. The deduction is allowed in the year of repay-

exceed $7,000,000. The credits are also transfer-

Expired Deduction — Allowed

ment, provided that the repayment is not otherwise

able. For more information, see TIR 06-1 and

Deduction for Clean-Fuel Vehicles and Certain

deductible in determining Massachusetts income

Schedule Z, line 9.

Refueling Property IRC secs. 62(a)(14)

taxable under M.G.L. ch. 62. For more information,

and 179A

Medical Device Tax Credit

see Schedule Y, line 15 and TIR 06-4.

Under the January 1, 2005 Code, the federal de-

For tax years beginning on or after January 1,

Commuter Deduction

duction for clean-fuel vehicles is due to expire for

2006, medical device companies that develop or

For tax years beginning on or after January 1, 2006,

tax years after December 31, 2006. The federal

manufacture medical devices in Massachusetts

individuals may deduct certain commuting costs

Energy Policy Act of 2005 (P.L. 109-58, enacted

can claim a credit equal to 100% of the user fees

paid in excess of $150 for:

August 8, 2005) replaced the deduction for clean-

paid by them when submitting certain medical de-

◗ tolls paid through the Massachusetts FastLane

fuel vehicles with a tax credit for hybrid vehicles

vice applications and supplements to the United

account; and

effective for vehicles purchased or placed in serv-

States Food and Drug Administration. The credit

ice on or after January 1, 2006. This Act changed

◗ the cost of weekly or monthly passes for MBTA

is also transferable. For more information, see

the expiration date for the deduction from Decem-

TIR 06-22, and Schedule Z, line 10.

transit, bus, commuter rail or commuter boat.

ber 31, 2006 to December 31, 2005. However,

The total amount deducted may not exceed $750

New Current Code Provision

given the change in effective date was not part of

per individual. Amounts paid must be reduced by

As a general rule, Massachusetts will not adopt any

the January 1, 2005 Code, Massachusetts con-

any amounts reimbursed or otherwise deductible.

federal tax law changes incorporated into the Code

tinues to adopt the deduction for the 2006 tax

For more information, see TIR 06-14 and the

after January 1, 2005. However, certain specific

year. See instructions to Schedule Y, line 9.

Schedule Y, line 16 worksheet.

provisions of the personal income tax automati-

New Deduction — Not Allowed

cally adopt the current Code. Effective for tax years

Brownfields Credit

Deduction for Energy Efficient Improvements

on or after January 1, 2006, a new current Code

Recent legislation extends the Brownfields credit

to Depreciable Buildings IRC sec. 179C

provision has been adopted. The Massachusetts

to nonprofit organizations, extends the time frame

Health Care bill adopted Health Savings Accounts

The federal Energy Policy Act of 2005 (P.L. 109-58,

for eligibility for the credit, and permits the credit to

on a current Code basis. See, St. 2006, c. 58, sec.

enacted August 8, 2005) added this federal deduc-

be transferred, sold, or assigned. Under prior law,

10, An Act Providing Access to Affordable, Quality,

tion. Massachusetts does not adopt this deduc-

net response and removal costs incurred by a tax-

Accountable Health Care. Other provisions of the

tion given it was enacted after January 1, 2005.

payer between August 1, 1998 and August 5,

Code adopted on a current Code basis are (i) Roth

2005, were eligible for the credit provided that the

Tax-Free Distributions from Individual

IRAs, (ii) Education IRAs, (iii) the exclusion for gain

taxpayer commenced and diligently pursued an en-

Retirement Accounts

on the sale of a principal residence, (iv) trade or

vironmental response action before August 5,

Qualified Charitable Distribution from an

business expenses, (v) travel expenses, (vi) meals

2005. As a result of the recent legislation, the envi-

Individual Retirement Account (“IRA”) IRC

and entertainment expenses, (vii) the maximum de-

ronmental response action commencement cut-off

sec. 408(d)(8)

ferral amount of government employees’ deferred

date is changed from August 5, 2005 to August 5,

compensation plans, (viii) deduction for health in-

The Pension Protection Act of 2006 (P.L. 109-280,

2011, and the time for incurring eligible costs that

surance costs of self-employed, (ix) medical and

enacted August 17, 2006) allows taxpayers age

qualify for the credit is extended to January 1,

dental expenses and (x) annuities. See TIRs 98-8

or greater to make tax-free distributions from

⁄

2012. For more information, see TIR 06-16.

and 02-11 for further details on Massachusetts’

traditional and Roth IRAs to qualified charities for

Historic Rehabilitation Credit Increased

personal income tax current Code provisions.

the 2006 and 2007 tax years, not to exceed

Recent legislation extends the time period and in-

$100,000 per tax year. Even though this federal Act

Expired Deductions — No Longer Allowed

creases the amount of the Historic Rehabilitation

was enacted after January 1, 2005, Massachusetts

Massachusetts allows certain federal deductions

Credit. Under prior law, the credit was available

adopts this exclusion from gross income given

based on the Internal Revenue Code (the “Code”)

from January 1, 2005 to December 31, 2009, and

this federal Code provision for IRAs is adopted by

as amended and in effect on January 1, 2005.

was limited to $15,000,000 per year. As a result of

Massachusetts on a current Code basis. See TIR

Under the January 1, 2005 Code, certain federal

the recent legislation, credit availability is extended

06-20 and Schedule X, line 2 for further details.

deductions previously allowed have now expired.

through December 31, 2011, in an amount not to

Even if the deductions are renewed federally, Mass-

exceed $50,000,000 per year. The credit is also

achusetts will not adopt the renewal because it will

transferable. For more information, see TIR 06-16.

occur after January 1, 2005.

Instructions For Form 1 - Massachusetts Resident Income Tax - 2006 Page 5

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