Every year Americans must file for taxes. Luckily, some people can relieve some of the money owed in taxes if it’s determined that they are eligible for certain exemptions, which is determined by each state’s rules and regulations.
Massachusetts residents can potentially reduce the amount owed in taxes with these five possible exemptions:
Residential Tax Exemptions:
Taxpayers that own their own home can save money on their tax bill with a tax exemption. To qualify for this exemption, you will need to have owned and occupied the home since January 1st of that year.
Homestead Tax Exemptions:
The homestead tax exemption is a sector of the residential tax exemption designed to protect the value of homes. It is designed by excluding a portion of home’s value assessment. By doing this, it reduces the property tax that you’ll need to spend. Each state may be different, but for example, if your home is valued at $300,000 and you’re allowed a homestead exemption of $50,000, then you only have to pay property taxes on the $250,000.
Home Office Tax Deduction:
If you have a home office or if you use part of your home for business, then you may be able to deduct certain home business expenses. This deduction is available to homeowners and renters and also applies to various types of homes.
Mortgage Interest Deduction (MID):
As per the recent tax reform, The cap on what can be written off is now at $750,000 a year NOT $1 million as it was for many years. So, it came down $250,000. This will have very little impact around the country. However, in high priced states like Massachusetts, New York, and California where jumbo mortgages are much more popular, it is concerning some property owners. In addition, there was talk of getting rid of it completely for second homes and maybe decreasing even more but this did NOT happen.
Moving Tax Deduction:
If you’re moving yourself or your family for the reason of employment or business income that is subject to Massachusetts tax, then you can have your moving expenses deducted.
If you get any sort of moving reimbursement from an employer, then you cannot claim the move as a deduction; only if you pay out of pocket. To claim the deduction, you must follow the criteria of:
– The taxpayers new job must be 50 miles further from his/her old home.
– The taxpayer has to be a full-time employee that works at least 39 weeks during a 12-month period directly after the move occurs. If the taxpayer is self-employed then they must be employed or working full time for 78 weeks during a 24 month period directly after the move occurs and 39 weeks during the first 12 months.
– The amount spent on the move has to be reasonable
Saving all your receipts, tracking your expenses, and working with an accountant is recommended to determine eligibility for Massachusetts State Tax deductions. If you’re interested in learning more about buying and selling and how that affects you, contact one of our expert agents.
*Check with a Certified Public Accountant for more details and information on qualifications for these exemptions.