TAX CREDIT FOR SENIORS

The Circuit Breaker Tax Credit is a state income tax credit for those 65 or over whose property taxes, or 25 percent of rent, exceed 10 percent of their annual income. The maximum credit a person may receive for tax year 2005 is $840. In addition, one may file retroactively for up to three years to claim the tax credit even if they did not file, owe or pay any income tax with the state.

Eligibility:

• Age 65 or over by the end of the tax year for which they are filing
• Total income for 2005 cannot be greater than $45,000 for a single filer, $56,000 for a head of household, or $67,000 for married taxpayers filing jointly. “Total income” includes some types of non-taxable income, such as social security, retirement, pensions and annuities, cash public assistance, tax-exempt interest and dividends, and certain other income.

Own or rent residential property in Massachusetts (primary residence).

• Assessed valuation of home must not be greater than $600,000 for tax year 2005.
• 10% Rule:
• For Owners: Amount by which property tax (plus 50% of water and sewer fees when not covered by property tax) exceeds 10 percent of income, up to the maximum.
• For Renters: Amount by which 25 percent of annual rental payments exceeds 10 percent of total income up to the maximum.

No credit is allowed if any of the following applies. Taxpayer:

• Claims married filing separate status.
• Receives a federal or state rent subsidy.
• Rents from a landlord who is not required to pay real estate taxes.
• Is the dependent of another taxpayer.

For Tax Year 2004:

• Maximum credit was $820
• Total income could not exceed $44,000 for a single filer, $55,000 for a head of household, or $66,000 for married taxpayers filing jointly
• Assessed valuation of home could not be greater than $441,000

For Tax Year 2003:

• Maximum credit was $810
• Total income could not exceed $43,000 for a single filer, $54,000 for a head of household, or $64,000 for married taxpayers filing jointly
• Assess valuation of home could not be greater than $432,000

For Tax Year 2002:

• Maximum credit was $790
• Total income could not exceed $43,000 for a single filer, $54,000 for a head of household, or $64,000 for married taxpayers filing jointly
• Assess valuation of home could not be greater than $432,000

You must file a state income tax return to claim the Circuit Breaker Credit, whether or not you have to file otherwise. If your credit is greater than the amount of income taxes you owe, the state will give you a refund for the difference.

For more information, see http://www.dor.state.ma.us/help/guides/abate_amend/personal/issues/realestate.htm or call the Massachusetts Department of Revenue at 800-392-6089. For help filing for the Circuit Breaker Credit, those age 60 and older may contact the AARP Tax-Aide program, a free tax counseling program for low- and middle-income Massachusetts residents. Call 1-888-227-7669 to locate a Tax-Aide site.

-Adapted from information distributed by the LGBT Aging Project.

03/06