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2006 Form 1-NR/PY Instructions — Before You Begin

◗ compensation earned by members of the armed

benefits under the Trade Act of 1974, employee

Any income received for the decedent for the tax-

forces for service in a combat zone (excluded to

business expenses of fee-basis state or local gov-

able year after the decedent’s death, and for

the same extent as under federal law).

ernment officials, business expenses of National

succeeding taxable years until the estate is com-

Guard Reserve members, the deduction for attor-

pleted, must be reported each year on Massachu-

What Adjustments Must I Make

ney’s fees and court costs involving certain un-

setts Form 2, Massachusetts Fiduciary Income

as a Part-Year Resident?

lawful discrimination suits and deductible

Tax Return.

expenses related to income reported on U.S.

Part-year residents must adjust income, deduc-

If the decedent’s return shows a refund due, and if

Form 1040, line 21 and Massachusetts Schedule

tions and exemptions when completing Form

the Probate Court has not appointed a legal repre-

X, line 4) and line 13 are based on the actual

1-NR/PY. In general, these items are reduced be-

sentative and none is contemplated, a Massachu-

amounts paid or received for the period of time

cause all of your income will not be subject to

setts Form M-1310, Statement of Claimant to Re-

you were in Massachusetts. For example, you

Massachusetts tax. Your deductions and exemp-

fund Due on Behalf of Deceased Taxpayer, must be

may only deduct the amount of alimony paid

tions are based on the number of days you were a

enclosed with the return so the refund check may

(Schedule Y, line 3) while you were a Massachu-

Massachusetts resident or the amount of income

be made payable to the proper person.

setts resident. Similarly, the deduction for attor-

that is subject to Massachusetts tax.

ney’s fees and court costs involving certain

When to File

Income: Lines 5 through 11, 24, 27 and 28

unlawful discrimination suits (Schedule Y, line 9)

If you earned only a portion of the income you re-

must be directly related to Massachusetts income

Your Return

ported on your U.S. return while you were a Mass-

as reported on Form 1-NR/PY, line 12.

achusetts legal resident, subtract from your U.S.

Note: The home heating fuel deduction (Schedule

income the amount earned and received while

Form 1-NR/PY is due on or before April 17, 2007.

Y, line 14) is based on the amount paid for home

you were legally domiciled in another state or

heating oil, natural gas or propane purchased

Automatic Extension Granted if

country. However, you may be required to include

while a resident between January 1, 2006 and

100% Tax Due is Paid by Tax Return

all income derived from Massachusetts sources

March 31, 2006.

earned while you were a nonresident, such as

Due Date

from rental property or from a trade or business,

Exemptions: Lines 4a through 4f

If line 3 of the Extension Worksheet on page 3 is

including employment, on Schedule R/NR, Resi-

Your total exemptions (line 4f) must be prorated

“0” and 100% of the tax due for 2006 has been

dent/Nonresident Worksheet. Such income now

based upon the ratio of days you were a Mass-

paid through:

includes gains from the sale of a business or an

achusetts resident. To adjust your exemptions, use

◗ withholding;

interest in a business, separation, sick or vacation

the formula in line 2 and see line 22 instructions.

pay, deferred compensation, income from cove-

◗ timely estimated payments of tax;

Earned Income Credit: Line 43

nants not to compete, and nonqualified pension

◗ credits from your 2006 return; and

Your earned income credit (line 43) must be pro-

income that federal law allows states to tax.

◗ a refund from the prior tax year applied to the

rated based upon the ratio of days you were a

Deductions: Lines 15 through 19

Massachusetts resident. To adjust this credit, use

next year’s tax liability,

Most deductions are based on the actual amounts

the formula in line 2 and see line 43 instructions.

you are no longer required to file Form M-4868,

paid by you associated with the deduction for the

Application for Automatic Extension of Time to

period of time you were in Massachusetts.

Should I Make Estimated Tax

File Massachusetts Income Tax Return. However,

Payments in 2007?

Line 17 (the deduction for a dependent under age

if you do choose to file Form M-4868 in this in-

12, or dependents age 65 or over as of December

Every taxpayer (whether a resident or nonresi-

stance, you must do so electronically, either by

31, 2006, or disabled dependent(s)), Schedule Y,

dent) who expects to pay more than $400 in

telephone or via DOR’s website. See TIR 06-21

lines 6 (Archer medical savings account (MSA) de-

Massachusetts income taxes on income which is

for more information.

duction), 8 (health savings account deduction), 9

not covered by Massachusetts withholding must

Also, if you owe no tax or you are making a pay-

(deduction for clean fuel vehicles, 10 (student loan

pay Massachusetts estimated taxes. See line 42

ment of $5,000 or more, you are required to file

interest deduction), 11 (college tuition deduction),

instructions for more information.

your extension by telephone or via the web. If you

12 (undergraduate student loan interest deduction)

How Do I File a Decedent’s Return?

are making a payment of less than $5,000, you

and 16 (commuter deduction) are the only deduc-

also have the option of filing your extension elec-

A final income tax return must be filed for a tax-

tions based on the proration of the number of days

tronically. If there is a tax due with your exten-

payer who died during the taxable year. It must be

you were a Massachusetts resident. For example, if

sion, payment can be made through Electronic

signed and filed by his/her executor, administrator

you are entitled to claim one dependent under age

Funds Withdrawal.

or surviving spouse for the portion of the year be-

12, and if you lived in Massachusetts for only four

fore the taxpayer’s death. Be sure to fill in oval 1 if

months, you can claim a deduction equal to $1,200

Call (617) 660-2222 to file your extension by

the taxpayer who was listed first on last year’s in-

(one-third of the $3,600 to which you are other-

telephone or visit to file via

come tax return is deceased, or oval 2 if the tax-

wise entitled). See line 2 on Form 1-NR/PY for the

the Web.

payer who was listed second on last year’s income

proration formula.

Note: Your extension will not be valid if you fail to

tax return is deceased. Also, enclose a statement

Lines 15, 16 and 18 and Schedule Y, lines 1

pay 80% of your total tax liability through with-

with the refund claimant’s name and Social Secu-

through 4, lines 5 (moving expenses), 7 (self-

holding, estimated tax payments or with your ex-

rity number clearly printed.

employed health insurance deduction), 9 (quali-

tension. Form M-4868 is available at

A joint return may be filed by a surviving spouse.

fied performing arts-related expenses, jury duty

gov/dor or by calling (617) 887-MDOR or toll-free

In the case of the death of both spouses, a final re-

pay given to your employer, reforestation amorti-

in Massachusetts 1-800-392-6089.

turn must be filed by their legal representative.

zation, repayment of supplemental unemployment

Instructions For Form 1-Nr/py - Massachusetts Nonresident Or Part-Year Resident Income Tax - 2006 Page 8

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