Massachusetts Tax law changes starting in 2005 and affecting future years.

Commuter deduction:
The commuter deduction is not available. This deduction was available for 2004 only.

Teachers Deduction:
Massachusetts has now adopted the “Teachers deduction” of up to $250.00 of classroom expenses.

Circuit Breaker Tax Credit increased:
This credit is available to taxpayers 65 and older whose real estate taxes (or 20% of rent) exceed 10% of their income. The maximum deduction is $840.00 and the assessed value of their personal residence cannot exceed $600,000.00. For tax year 2005, total income cannot exceed $45,000.00 for a single taxpayer, $56,000.00 for head of household and $67,000.00 for joint filers. This is a refundable credit, which means that the credit is available even though the taxpayer(s) have no other reportable income.

Home Heating Oil Deduction:
Certain taxpayers can deduct the cost of home heating oil, natural gas, and propane used to heat their personal residence up to a maximum of $800.00. For renters whose heat is included in their rent, 20% of rent paid is considered attributable to heat. For the 2005 tax season the deduction applies to purchases made between November 1 and December 31, 2005 and is available to single filers with AGI of $50,000.00 or less, 75,000.00 or less for married taxpayers filing jointly and heads of household. Taxpayers who do not take the entire deduction in 2005, can take the remainder in 2006 for purchases made between January 1 and March 31, 2006.

Tax Credit for Energy-Efficient Heating Items:
A new credit is available for “energy efficient heating items” purchased between November 1 and December 31, 2005. “Energy efficient heating items” include, but are not limited to, home insulation, new window installation, advanced programmable thermostats, fuel efficient furnaces, boilers, oil, gas, propane, or electric heating systems, solar domestic hot water systems, materials for insulation or sealing of a duct, attic, basement, rim joint or wall and pipe insulation for heating systems. The maximum credit that may be claimed is the lesser of 30% of the net expenditure for the qualifying purchases or $600 ($1,000 for a multi-unit dwelling). The credit may be taken in taxable year 2005 or 2006, regardless of the exact date on which any qualifying purchases were made. The amount of the credit may not exceed the tax due for 2005 and any excess may be carried over to 2006.

Massachusetts Military Family Relief Fund:
This is a newly established fund administered by the Friends of Massachusetts National Guard and Reserve Families. Contributions to this fund are used to help members of the Massachusetts National Guard and Massachusetts residents who are members of the armed forces of The United States and who have been called to active duty after September 11, 2001 and their families to help defray the costs of food, housing, utilities, medical expenses, and other expenses.

This message brought to you by: Cormier & Rea, Inc. Sturbridge MA. Providers of Income tax planning and preparation and financial planning. For more information about this or any other issues regarding income tax planning or preparation or financial planning, feel free to contact us. Like Cormier & Rea, Inc. on Facebook for timely updates.