Source: Massachusetts Department of Revenue
Some important, recent legislative changes will have an impact on Massachusetts taxpayers. The changes affect the treatment of unemployment income and Paycheck Protection Program [PPP] loan forgiveness. Additionally, the individual income tax filing and payment deadline was recently extended.
We have updated the FAQs covering these changes and will continue to add to them with new information to answer taxpayer questions. A Technical Information Release with updated guidance will be issued soon.
Unemployment Income Deduction
For tax years 2020 and 2021, taxpayers with household income under 200% of the federal poverty level may deduct up to $10,200 of unemployment income per person. Review the chart on our FAQ page for detailed information on the deduction. Please note that the income threshold for Massachusetts taxpayers is different from the federal income threshold. Some Massachusetts taxpayers may be eligible for a deduction on their federal tax return but not on their Massachusetts tax return.
The taxpayer does not have to do anything. Any taxpayer who claimed unemployment income on their 2020 return will be contacted directly by DOR by mail with information. DOR will handle any calculations to determine if a refund is due to a taxpayer. If a taxpayer is entitled to a refund, a check will be mailed after satisfying liabilities. There’s no need to file an amended tax return.
If a taxpayer who received unemployment income has not yet filed a 2020 return, all unemployment income should be reported on the return [line 8a for residents or line 10a for nonresidents/part-year residents], and if eligible for a deduction, the deduction amount should be reported on line 9 of Schedule Y.
PPP Loan Forgiveness
Recent legislation excludes forgiven PPP loan amounts from gross income for Massachusetts personal income taxpayers for 2020. Learn how income from PPP loans is treated by reviewing the FAQs on the DOR website.
New extended deadline for individual income tax filing and payment
A reminder that the deadline for filing and paying 2020 Massachusetts individual income tax was extended from April 15 to May 17, 2021. Learn how income from PPP loans is treated by reviewing the FAQs on the DOR website.