| I.
Introduction
For tax years beginning on or after January
1, 2001, an owner or renter of a principal
residence located in Massachusetts who is
age 65 or older, at the close of the taxable
year, may be eligible to claim a refundable
credit against personal income taxes.
Known as the "circuit breaker credit,"
this credit is based upon the actual real
estate taxes or rent paid by a taxpayer eligible
to claim the credit.
II. 2002 Income Threshold Amounts
for Renters and Homeowners
A
Massachusetts taxpayer age 65 or older who
owns or rents his or her principal residence
is eligible for the circuit breaker credit
if he or she meets certain requirements.
For
purposes of calculating the circuit breaker
credit total income, assessed valuation
and maximum credit thresholds are adjusted
annually by multiplying the statutory base
amounts of these thresholds by the cost-of-living
adjustment for the calendar year in which
the taxable year begins.
For
tax year 2002, the taxpayer's "total
income" cannot exceed $42,000 for a
single individual who is not the head of
a household, $53,000 for a head of household,
and $63,000 for a husband and wife filing
a joint return. For subsequent tax years,
the Department of Revenue will adjust the
"total income" thresholds to reflect
inflation.
III.
2002 Assessed Valuation Threshold Amount for
Homeowners
For
tax year 2002, the assessed valuation, before
the residential exemptions but after abatements,
of the homeowner's principal residence may
not exceed $425,000. If the taxpayer
owns more than one acre of land, only the
assessed value of the principal residence,
together with the land that immediately
surrounds and is associated with that residence,
not to exceed one acre, should be used in
determining the eligibility of the taxpayer
for the credit.
IV.
Calculation of the Credit Available in 2002
A.
Renters
The credit is equal to the amount by which
25% of the rent actually paid by the taxpayer
during the taxable year for the occupancy
of the principal residence exceeds 10% of
the taxpayer's total income for the taxable
year, provided that such amount does not
exceed the maximum credit amount. For tax
year 2002, the maximum credit amount is
$790.
B.
Homeowners
The credit is equal to the amount by which
the taxpayer's property tax payments in
the current tax year, including water and
sewer use charges paid to a municipality,
but excluding any abatement or exemption
granted, exceeds 10% of the taxpayer's total
income, for the taxable year, provided that
such amount does not exceed the maximum
credit amount. For tax year 2002, the maximum
credit amount is $790.
Planning
for the future is a lot like planting a tree.
You’ve got to do it today if you want
your family to enjoy it tomorrow.
Remember:
“A failure to plan is a plan to fail.”
(Anonymous.)
|
