Massachusetts Tax Refund: Who Is Eligible and When Could Checks Go Out?

Massachusetts Tax Refund: Who Is Eligible and When Could Checks Go Out?

Gov. Charlie Baker's plan to send $250 checks to middle-income residents fell apart last month, but Massachusetts taxpayers will still probably get a healthy tax rebate this year.

The $250 payout was making headway but a bill failed to pass before the July 31 deadline, in part because legislators suddenly remembered a 35-year-old voter referendum that could mean nearly $3 billion in surplus taxes will be returned to taxpayers this fall.

The 1986 statute -- which has only ever been triggered once, in 1987 -- mandates that, if the money collected in income tax reaches a predetermined dollar amount above and beyond the state budget, the excess must be returned to taxpayers.

Baker insisted there was enough in the coffers to support both his original $250 payout and any mandatory refunds.

"The tax breaks that are currently pending before the legislature are eminently affordable," he told reporters, WBUR reported. "I mean, you're talking about a tax year, this past year, in which tax revenue went up by over 20 percent."

Legislators on Beacon Hill didn't necessarily agree.

"The fiscally responsible thing to do is to hit pause right now on all of this spending," Sen. Michael Rodrigues, chair of the Senate Ways and Means Committee, told reporters on Aug. 1, The Boston Globe reported.

"We want to make sure we get it right," Rodrigues added. "We are committed to getting some real, long-term permanent tax relief done."

Here's what Massachusetts residents need to know about the tax rebate, including who is eligible, how much it could be for and when it may go out.

For more on tax relief, find out which states are mailing out tax rebates, pausing their gas tax and instituting sales tax "holidays."

How much will the Massachusetts tax rebate be?

The original refund proposed in Baker's budget was for $250, intended for individual filers who earned between $38,000 and $100,000 last year and joint filers who made up to $150,000.

The exact dollar amount that could go out now is still to be determined: State Auditor Suzanne Bump has to calculate what, if any, tax surplus there is, using a formula based on annual wage and salary growth.

Baker's office has predicted taxpayers would get 7% of their 2021 income taxes returned, according to MassLive. For an individual earning $75,000, that would work out to about $250.

Couple looks at tax rebate check — While the state auditor hasn't determined whether tax revenue has triggered a refund yet, Gov Baker predicts that thanks to a 1986 voter referendum, taxpayers will get 7% of their 2021 income taxes returned.
Photosomnia/Getty Images

Who qualifies for the Massachusetts tax rebate?

Theoretically, anyone who paid 2021 income tax in Massachusetts would be eligible to be paid back. Residents with outstanding state tax bills may not see a check, though.

When will the Massachusetts tax rebate be sent out?

Baker's original plan would have had $250 checks in the hands of eligible taxpayers by October. The tax cap won't be calculated by the state auditor until September, though the Department of Revenue could start issuing tax credits on Sept. 21, MassLive reported.

"We're looking at what's the quickest and most efficient way to get that money back to the taxpayers," Michael Heffernan, state secretary of administration and finance, told reporters Thursday, WBZ news radio reported.

Lawmakers don't want to rush any decisions and overextend the budget with multiple rounds of tax rebates.

Pausing the economic development and tax relief package forged the "wisest choice," House Speaker Ron Mariano said at a press conference, WGBH reported.

"We wanted to make sure to be fiscally prudent that we know what we're getting into," Mariano added. "The economy is going through some strange things with a big inflation rate [and] oil and gas fluctuations that may lead to a recession."

What other tax breaks could Massachusetts residents receive?

Lawmakers want to increase the earned income tax credit from the 30% match of the federal credit to 40%, raise the child care credit from $180 per child to $310 and increase the rental deduction cap from $3,000 to $4,000.

Certain seniors who own or rent their primary properties in Massachusetts get a "circuit breaker" tax credit, and Democrats want to bump the maximum from $1,170 to $2,340.

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You Missed the Tax Deadline. Now What Should You Do?

You Missed the Tax Deadline. Now What Should You Do?

This story is part of Taxes 2022, CNET's coverage of the best tax software and everything else you need to get your return filed quickly, accurately and on-time.

Yesterday was the federal tax deadline for almost everyone in the US. (Massachusetts and Maine, you've still got today to finish.) If you didn't electronically file your tax return or have a paper return postmarked by midnight April 18, your taxes are now technically late.

There are plenty of reasons why people might not be able to finish and file their tax returns by the deadline -- missing tax info, medical emergencies, family troubles, unexpected travel… you know, life.

Yes, you should have filed a tax extension. But what to do now that your tax return is late? Whether you owe taxes or are expecting a tax refund, the answer is simple -- complete and file your 2021 tax return as soon as possible.

However, if you owe money, your situation becomes more urgent. The longer you wait to file your tax return and show the IRS you intend to pay what you owe, the more penalties and interest may pile up.

Read on to learn more about how to handle a late tax payment, including information on penalties, interest and payment plans. For more, find the best software for filing your tax return and learn how to track your refund to your bank account or mailbox after you do.

What if I'm late and I am expecting a tax refund for 2021?

If you're expecting money back from the IRS from your 2021 tax return, there are no penalties for filing late. In fact, you have three years to file your 2021 tax return before the IRS turns your tax refund over to the Treasury and your money is gone forever.

Your tax refund might be slightly delayed by filing late, but you should still expect to receive your money in four to six weeks.

You could be making good use of the money the IRS owes you, and the longer you wait to file your taxes, the more you lose out. Whether you use your tax refund to pay down a credit card debt, start an emergency fund, make investments or even just treat yourself to a nice dinner or vacation (depending on your refund amount), you want your money as soon as possible. Letting the IRS keep your tax refund longer only deprives you of possible interest and spending power.

What if I missed the deadline and I owe money on my taxes?

If you missed the tax deadline, didn't file an extension and you owe taxes, you need to hurry up and finish your return as soon as possible and send it in. Not filing taxes when you owe money to the IRS can incur both late filing penalties and late payment penalties.

What are the fees and penalties for filing taxes late?

There are two basic penalties that the IRS charges for filing taxes late when you owe money: a failure-to-file penalty and a failure-to-pay penalty. On top of that, you'll also pay interest on the amount you owe.

The failure-to-file penalty hurts the most. It's generally 5% of the amount you owe for each month or part of a month that your return is late, with a maximum penalty of 25%. If your return is more than 60 days late, the minimum penalty is $435 or the balance of your taxes due, if less than that.

The failure-to-pay penalty will also cost you money, but not nearly as much -- a big reason to file an extension on time even if you can't pay anything. This penalty is usually calculated at 0.5% of any taxes owed that aren't paid by the deadline. The IRS again charges the penalty for each month or part of a month that your payment is late, with a maximum 25% penalty total.

The IRS also charges interest on late taxes. Determined by adding 3% to the short-term federal interest rate, the IRS interest rate is currently 4%. That rate is adjusted quarterly, and interest is compounded daily.

Can I file an extension past the tax deadline?

Unfortunately, no. Tax extensions provide taxpayers six additional months to complete their tax returns, but they must be filed by the tax deadline. Taxpayers filing extensions must also include the estimated amount of money that they owe using IRS Form 1040-ES. Online tax software can also quickly calculate your estimated taxes.

If your deadline has passed, it's too late to file an extension.

What if I filed an extension on time?

Well done. You've got until Oct. 15, 2022, to file your tax return if you filed a tax extension by the April 18 deadline. As long as you paid an estimated amount that's close to what you owe, you won't be subject to fines or penalties if you file your return and pay any remaining tax liability by Oct. 15.

If you didn't pay enough money with your tax extension, you may be subject to the late payment penalty. The IRS expects your estimated payment to be at least 90% of your total tax liability. The agency may charge a 0.5% per month penalty on the amount of unpaid taxes if you paid less than that, so you should still complete your tax return and file it as soon as possible.

What if I can't afford to pay the taxes I owe?

Owing taxes that you don't have the money to pay can be incredibly stressful. However, you can take action now that will lighten both your financial and psychological burdens.

Consider an IRS payment plan. If you can pay off your tax debt within 180 days, the IRS will let you apply for a short-term payment plan that costs nothing, although you'll still accrue penalties and interest until your debt is paid off. It's easy to apply online or at a local IRS office.

If you need more than 180 days, you can apply for a long-term payment plan that costs $31 for automatic monthly bank payments via direct debit, or $130 for non-direct debit payments. Low-income taxpayers -- those with adjusted gross incomes at or below 250% of the federal poverty guidelines -- can waive the fee for the direct-debit installment plan or pay $43 for the non-direct debit plan.

You might consider other borrowing options outside of the IRS. If your tax liability isn't too high, you could use a credit card with a 0% intro APR to pay your taxes, assuming you can pay off that debt before the intro period expires. For larger tax debts, you could consider a debt-consolidation loan, though your rate will generally be higher than the 4% currently charged by the IRS.

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When Can I Expect My Massachusetts Tax Refund