Tax Resources
State And Federal

Massachusetts Schedule Z Instructions

Other Credits

Be sure to enclose with Form 1.

Part 1 Credits

Line 1. Lead Paint

If you incurred expenses for covering or removing lead paint on residential premises in Massachusetts, you may claim a credit for expenses up to $1,500 for each residential unit. The basic rules are explained on Massachusetts Sched ule LP, Credit for Removing or Covering Lead Paint on Residential Premises. If you qualify for the credit, complete Schedule LP and enter the amount of credit in line 1. Be sure to enter in line 1a the total number of units indicated in Schedule LP, line(s) 1a and 3a.

Note: You must enclose Schedule LP with your return. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax.

Line 2. Economic Opportunity Area/Economic Development Incentive Program

Massachusetts allows a credit equal to 5% of the cost of qualifying property purchased for business use within an Economic Opportunity Area (EOA). If you qualify for the credit, fill in the appropriate oval, complete Schedule EOAC and enter the amount of credit in line 2. Note: You must enclose Schedule EOAC with your return. Failure to do so will result in this credit being disallowed on your tax return and an adjust ment of your reported tax.

The Economic Development Incentive Program Credit (EDIPC) is a tax credit under G.L. c. 62, sec. 6(g) and G.L. c. 63, sec. 38N equal to a percentage of the cost of property purchased for business use within a certified project as defined in G.L. c. 23A, sec. 3A.

To be eligible for the EDIP credit, the project must have certified on or after January 1, 2010. As part of the project certification, the Economic Assistance Coordinating Council (EACC) may (but is not required to) award a credit under the program and, when a credit is awarded, the EACC will determine the percentage of the cost of property to be used in determining the credit.

Taxpayers with ongoing projects that were certified prior to January 1, 2010 may be eligible for credits under the prior version of the Economic De - velopment Incentive Program; such taxpayers do not file schedule EDIP (see TIR 10-01 and Schedule EOAC).

The EACC may also, in consultation with the DOR, limit (but not expand) the credit to a specific dollar amount or time duration or in any other manner deemed appropriate by the EACC, St. 2009, c. 166, §18. For example, the EACC may limit the credit available with respect to a particular project to a specific dollar maximum, even if the actual dollar amount of the qualifying purchases would otherwise generate a higher credit amount. Similarly, the EACC may limit the otherwise applicable credit carry forward period provided by G.L. c. 62, sec. 6(g) and G.L. c. 63, sec. 38N (d). See TIRs 10-15 and 10-1 for more information. If you qualify for the credit, fill in the appropriate oval, complete Schedule EDIP and enter the amount of the credit in line 2. Also, be sure to enter the EACC-issued certificate number in line 2. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax. Enter the number from left to right.

Line 3. Septic

An owner of residential property located in Massachusetts who occupies the property as his or her principal residence is allowed a credit of a maximum of $1,500 per taxable year for expenses incurred to comply with the sewer system requirements of Title V as promulgated by the Department of Environmental Protection or to connect to a mu - nicipal sewer system pursuant to a federal court order, administrative consent order, state court order, consent decree or similar mandate. The amount of the credit is 40% of the cost, up to $15,000, for design and construction expenses for repair or replacement of a failed cesspool or septic system. The maximum aggregate amount of the credit is $6,000. A five-year carryover of any unused credit is allowed. See TIRs 97-12, 98-8, 99-5, 99-20 and DOR Directive 01-6 for more information. If you qualify for this credit, complete Massachusetts Schedule SC, Septic Credit, and enter the amount of credit in line 3. Note: You must enclose Schedule SC with your return. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax.

Note: Betterment assessments do not qualify for this credit.

Line 4. Brownfields

Recent legislation extends the Brownfields credit to nonprofit organizations, extends the time frame for eligibility for the credit, and permits the credit to be transferred, sold, or assigned. Under prior law, net response and removal costs incurred by a taxpayer between August 1, 1998 and August 5, 2005, were eligible for the credit provided that the en vironmental response action before August 5, 20 2013 Form 1 - Schedule Instructions 2005. As a result of the recent legislation, the environmental response action commencement cut-off date is changed from August 5, 2005 to August 5, 2013, and the time for incurring eligible costs that qualify for the credit is extended to January 1, 2014. See TIR 10-15 for more information. If you qualify for this credit, you must have completed Schedule BCA, Brownfields Credit Application, and received a certificate number from DOR. Be sure to enter the DOR issued certificate number in the space provided on line 4. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax. Enter the number from left to right. Certificate application forms and additional information are available at www.mass.gov/dor .

Line 5. Low-Income Housing

A low-income housing credit is available to individual taxpayers. The Department of Housing and Community Development will allocate the lowincome housing credit from a pool of available cred its granted under section 42 of the Internal Revenue Code among qualified low-income housing projects. A taxpayer allocated a federal lowincome housing credit may also be eligible for a state credit based on the credit amount allocated to a low-income housing project that the taxpayer owns. A five-year carryforward of unused credit is allowed. See TIR 99-19 for more information. If you qualify for the credit, enter the amount in line 5. Note: You must enter the building identification number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjust ment of your reported tax. Enter the number from left to right.

Line 6. Historic Rehabilitation

Effective for tax years beginning on January 1, 2005 and ending on or before December 31, 2017, taxpayers may be eligible for the Historic Rehabilitation Credit (HRC). To claim this credit, a historic rehabilitation project must be complete and have been certified by the Massachusetts Historical Commission. Unused portions of the credit may be carried forward for 5 years. The credit may be transferred or sold to another taxpayer. The HRC is not subject to the 50% limitation rule for corporate taxpayers. If the taxpayer disposes of the property generating the HRC, a portion of the credit may be subject to recapture. For further information, see TIR 10-11 and 830 CMR 63.38R.1, Massachusetts Historic Rehabilitation Credit. If you qualify for this credit, enter the amount in line 6. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax. Be sure to omit hyphens, spaces, decimals and other special symbols. Also, enter the number from left to right.

Line 7. Film Incentive

For tax years beginning on or after January 1, 2006 and before January 1, 2023, motion picture production companies may claim (1) a credit equal to 25% of the total qualifying aggregate payroll for employing persons within the Commonwealth in connection with the filming and production of a motion picture and (2) a credit equal to 25% of their Massachusetts production expenses. Each credit has its own qualification requirements and a taxpayer is allowed to qualify for and claim both credits. The credits are also transferable. For more information, see TIR 07-15. If you qualify for this credit, enter the amount of credit in line 7. Also, be sure to enter the DOR-issued certificate number in the space provided on line 7. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax. Enter the number from left to right. Certificate application forms and additional information are available at www.mass.gov/dor .

Note: Motion picture production companies qualify to elect a refundable film credit if they have not transferred or carried forward a portion of the film credit for the production/certificate number to be refunded. If you qualify this election, enter the amount from line 5 of Schedule RFC, Refundable Film Credit, in Schedule RF, line 1.

Line 8. Medical Device

Medical device companies that develop or manufacture medical devices in Massachusetts can claim a credit equal to 100% of the user fees paid by them when submitting certain medical device applications and supplements to the United States Food and Drug Administration. The credit is also transferable. For more information, see TIR 06-22. If you qualify for this credit, enter the amount of credit in line 8. Also, be sure to enter the DORissued certificate number in the space provided on line 8. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment of your reported tax. Enter the number from left to right. Certificate application forms and additional information are available at www.mass.gov/dor .

Line 9. Employer Wellness Program Tax Credit

Effective for tax years beginning on or after January 1, 2013, a Massachusetts business that employs 200 or fewer workers may qualify for a tax credit for up to 25% of the cost of implementing a "certified wellness program" for its employees. A taxpayer seeking to claim the credit must apply to the Department of Public Health (DPH) for certification of its wellness program. DPH will approve a dollar amount of credit for a qualifying taxpayer and issue a certificate number to be provided in connection with filing a tax return in order to claim the credit. The amount of the credit that may be claimed by a taxpayer cannot exceed $10,000 in any tax year. DPH has promulgated a regulation, 105 CMR 216.000, entitled Massachusetts Wellness Tax Credit Incentive, which sets forth criteria for authorizing and certifying the credit. The credit is set to expire on December 31, 2017. Note: You must enter the certificate number on Schedule Z. Failure to do so will result in this credit being disallowed on your tax return and an adjustment on your reported tax. Enter the number from left to right.

Part 2 Credits for Residents and Part-Year Residents Only

Line 11. Income Tax Paid to Another State

If any of the income reported on this return is subject to taxation in another state or jurisdiction and you have filed a return and paid taxes in the other state or jurisdiction, complete the Schedule Z, Part 2, Line 11 Work sheet and enter the amount of credit in line 11. Do not include taxes paid to the U.S. government. (This credit does not apply to city or local taxes.) You are allowed to claim a credit for taxes paid to the following jurisdictions: (a) other states in the U.S., including payments made under the Rhode Island Temporary Disability In - surance Act (see DOR Directive 12-1); (b) any territory or dependency of the U.S. (including Puerto Rico, the Virgin Islands, Guam, the District of Columbia); or (c) the Dominion of Canada or any of its prov inces (less any U.S. credit amount allowable from U.S. Form 1116).

The total credit which you calculate on the worksheet is the smaller of the amount of taxes due to other jurisdictions (net of certain adjustments) or the portion of your Massachusetts tax due on your gross income that is taxed in such other jurisdictions.

Credit is not given for a property tax due to another jurisdiction on account of capital stock or property. This does not refer to a tax on gain or income from the sale of capital stock or property, as included on Schedule B or D. Credit is also not given for any interest and penalties paid on a tax due to another jurisdiction.

You must complete separate worksheets if you had 5.25% and interest income (other than interest from Massachusetts banks), dividends or capital gain in come taxed by another jurisdiction. 2013 Form 1 - Schedule Instructions 21 If you use this worksheet to calculate a credit for interest income (other than interest from Massachusetts banks), dividends or capital gain income, substitute interest income (other than interest from Massachusetts banks), dividends or capital gain income for 5.25% income in line 1 of the worksheet. You must also substitute Schedule B, line 7 (interest and dividend income) and Schedule B, line 13 (taxable 12% capital gains) or Schedule D, line 13, (gross long-term capital gains and losses), but not less than "0," for Form 1, line 10 in line 2 of the worksheet, and the total of Form 1, line 20 multiplied by .0525 (tax on interest and dividend income) and Form 1, line 23 (12% tax) or line 24 (tax on long-term capital gains) for Form 1, line 19 in line 4 of the worksheet.

  • When using the worksheet to calculate credit for interest income (other than interest from Massachu setts banks), dividends or capital gain income, enter in line 1 such income taxed in another jurisdiction calculated as if it was earned in Massachusetts.
  • If you choose to pay the optional 5.85% tax rate, substitute .0585 for .0525 in line 4 of the worksheet.

Note: Be sure to enter the two-letter state or jurisdictional postal code for each state or jurisdiction for which you are taking the credit. Taxpayers from a territory or dependency of the U.S., or the Dominion of Canada or any of its provinces, must enter "FC" as the postal code.

Schedule Z, Part 2, Line 11 Worksheet. Income Tax Paid to Another Jurisdiction

1. Enter the total 5.25% income included in Form 1, line 10 on which you paid taxes to another jurisdiction _____
2. Enter the total of Form 1, line 10 and the total Massachusetts bank interest or the interest exemption amount, whichever is smaller, from Form 1, line 5a or line 5b _____
3.Divide line 1 by line 2. Not greater than "1" _____
4.Multiply Form 1, line 19 by .0525 _____
5. Enter any Limited Income Credit from Form 1, line 29 _____
6. Subtract line 5 from line 4. _____
7.Multiply line 6 by line 3 _____
8. Enter the total tax liability before credits, W-2 withholding and payments to other jurisdictions on income also reported on this return, in clud ing payments made under the Rhode Island Tem po - rary Disability Insurance Act, unless the tax was paid to Canada. If the tax was paid to Canada, the amount reported in this line must be re - duced by the amount claimed as a foreign tax credit on U.S. Form 1040, line 47. Credit is only allowable for amount of tax paid. _____
9. Enter the smaller of lines 7 or 8 here and on Schedule Z, line 11 _____

Line 12. Solar and Wind Energy

If you had expenditures for certain renewable energy source items, such as equipment which uses or transmits solar or wind energy to heat, cool, or provide hot water for your principal residence in Massachusetts, you may qualify for a credit. If you qualify for the credit, complete Schedule EC, Residential Energy Credit, and enter the amount of credit in line 12. Note: You must enclose Schedule EC with your return. Failure to do so will result in this credit being disallowed on your tax