Massachusetts Chapter 62F Taxpayer Refunds 101

Newburg | CPA Special News Brief

September 23, 2022

It has been 36 years since Chapter 62F was enacted by voters, and 35 years since the law was last triggered. Here is what you need to know.

What is Chapter 62F you ask?

Chapter 62F is a Massachusetts General Law that requires the Department of Revenue to issue a credit to taxpayers if total tax revenues in any given fiscal year exceed the annual cap tied to wage and salary growth in the Commonwealth. Under the law, the Department of Revenue is required to submit a report to the State Auditor on the net state tax revenues and the allowable state tax revenues for each fiscal year by September 1^st. The State Auditor makes the determination of whether net state tax revenue exceeds allowable state tax revenue. If so, by what amount, on or before the first Tuesday of September.

What triggered Chapter 62F this year?

The allowable revenue threshold for the FY2022 was determined to be $38,871,154,627; however, the total state revenue collected was $41,812,654,358. This means that under the statute, the exceeded amount of $2,941,499,731 must be returned to the taxpayers.

Eligibility

Who is eligible to receive a refund?

Anyone who paid personal income taxes in Massachusetts in the 2021 tax year and filed a 2021 state tax return on or before October 17, 2022 is eligible to receive a refund.

Please note that:

Both resident and non-resident filers are eligible.
Non-residents on whose behalf a partnership files on a composite basis are eligible.
Fiduciary filers (trusts and estates) are eligible.

Do I need to take any action to receive a refund?

No action is needed to receive your refund. In order to be eligible, you must have filed a 2021 state tax return on or before October 17, 2022. If you are eligible for a refund, you will receive it automatically as a check sent through the mail or through direct deposit.

More information on how you will receive your refund will become available November 2022. Distribution of refunds is expected to begin in November 2022.

How much am I eligible to receive?

Chapter 62F statute requires distribution of the credits in proportion to personal income tax liability in Massachusetts incurred by taxpayers in the immediately preceding taxable year – Tax Year 2021.

That means that in general, taxpayers will receive a refund that is approximately 13% of their personal income tax liability in Massachusetts in Tax Year 2021. This percentage is a preliminary estimate and will be finalized in late October, after the 2021 tax return filing extension deadline of October 17, 2022. Please also note that credits are subject to offsets, including for unpaid tax liability, unpaid child support, and certain other debts.

The estimator at the top of this page can help you calculate a preliminary estimate of your refund amount.

How do I find out what my personal income tax liability was in 2021?

Your “income tax liability” is the amount of taxes that were due to Massachusetts for the 2021 tax year, after application of any credit and before estimated taxes and withholding.

To find out what your income tax liability was for Tax Year 2021:

For residents: your income tax liability is the amount on line 32 of Form 1 for Tax Year 2021 minus the sum of lines 43 through 47 on Form 1 for Tax Year 2021.
For non-residents or part-year residents: your income tax liability is the amount on line 36 of Form 1-NR/PY for Tax Year 2021 minus the sum of lines 47 through 51 of Form 1-NR/PY for Tax Year 2021.

Will I still get a refund if I received a 2021 income tax refund? Will the 2021 income tax refund reduce the refund I am getting now?

Previously issued Tax Year 2021 income tax refunds will not reduce or otherwise impact your 62F refund, and your receipt of a 62F refund has no bearing on whether you will be due an income tax refund for Tax Year 2022. 62F refunds will only be reduced due to intercepts, including for unpaid tax liability, unpaid child support, and certain other debts.

What if I am filing on extension and have not yet filed my 2021 tax return?

Any tax filings filed with the Department of Revenue by the filing extension deadline of October 17, 2022 will be eligible for a refund.

Receiving Your Refund

When should I expect my refund?

Distribution of refunds is expected to begin in November 2022. No action is needed to receive your refund. More specific information about timing for refunds will be shared closer to that time.

What if I filed jointly in Tax Year 2021?

Your refund will be tied to your 2021 filing status.

For example, there will be a single refund for taxpayers who filed jointly in 2021, even if not filing jointly in 2022.

How will I receive my refund?

More information on how you will receive your refund will be available by November 2022.

Will the refunds be treated as taxable income?

The refunds are not taxable as income at the state level.

All tax refunds, including the 62F refunds, are taxable at the federal level only to the extent that an individual claimed itemized deductions on his or her federal return for Tax Year 2021, including his or her state income tax. Refund recipients who itemized on their federal returns for Tax Year 2021 will receive a Form 1099-G from the Department of Revenue by January 31, 2023 to use when completing their 2022 federal return.

Additional Information

Beginning Tuesday, September 20, 2022, a call center will be available to answer 62F refund questions at 877-677-9727 Monday through Friday from 9am – 4pm. Please note that the exact refund amount for each eligible taxpayer will be determined as refunds are processed, so the call center will not be able to provide your refund amount until after it has been issued.

Newburg | CPA can help

Newburg CPA, a Boston-based accounting firm can assist you. Contact us if you have questions.