Tax credits are available from the federal government and the state of Massachusetts to help Worcester residents save money at tax time. Tax credits can lower the amount of tax you owe or, in some cases, give you a cash payment even if you don't owe any taxes. Tax credits benefit working families, families with children, homebuyers, students, and others.
- FEDERAL AND MASSACHUSETTS -
Click on a program name for more information:
The Earned Income Credit (also called the Earned Income Tax Credit) is a federal program that provides a tax credit and frequently a cash payment to low-to-moderate income workers who qualify. The State of Massachusetts has its own version of this program available to workers who are eligible for the federal EIC.
The Child Tax Credit (CTC) is a federal tax credit for low and moderate income families with dependent children under age 17. The purpose of the Child Tax Credit is to lower the tax burden of families who are raising children. The maximum CTC is $1000 per qualifying child.
Housing tax credits offer tax incentives to help revitalize the housing market and prevent foreclosures, including a first-time homebuyer tax credit and a property tax deduction for homeowners who do not itemize deductions.
Education tax credits and deductions are federal tax benefits that help offset the costs of college tuition, fees, and other education related expenses. Education tax credits and deductions include:
- American Opportunity / Hope Credit: a partially refundable federal tax credit up to $2500 per student per year for college tuition, fees, books, and supplies, that can be claimed the first four years of post-secondary education
- Lifetime Learning Credit: a nonrefundable federal tax credit for qualified education expenses, equal to 20% of the first $10,000 that you paid for all family members, up to a maximum of $2000 per year per family
- Tuition and Fees Deduction: a federal income tax deduction for qualified tuition and fees, up to a maximum deduction of $4000, that reduces the amount of income that is taxable
- Student Loan Interest Deduction: a federal income tax deduction for interest you paid during the year for a qualified student loan for yourself, your spouse, or a dependent, that reduces your taxable income
- Business Deduction for Work-Related Education: a federal income tax deduction for employees and self-employed workers who paid qualifying education expenses during the year, that lowers the amount of income subject to tax
Other important federal tax credits for workers with earned income include::
- Making Work Pay tax credit: a temporary refundable tax credit for tax years 2009 and 2010, equal to 6.2% of your earned income, up to $400 ($800 married filing jointly), that most eligible workers get throughout the year, in their paychecks, rather than as a single payment at tax time
- Child and Dependent Care Credit: a nonrefundable federal tax credit that helps working parents or caregivers pay for child care or other dependent care, up to $3000 for one child or dependent, and $6000 for two or more children or dependents
The Circuit Breaker Tax Credit is a state income tax credit for certain Massachusetts residents age 65 or older who paid rent or real estate taxes during the tax year.
Real estate tax exemptions are deductions from the amount of property taxes homeowners must pay to the city or town where they live. Real estate tax exemptions are given to eligible homeowners to help them pay their property tax bills.
The Lead Paint Removal Credit is a state income tax credit for Massachusetts residential property owners who cover or remove lead paint hazards on their property. The maximum tax credit is $1500 per residential unit for full deleading, or $500 per residential unit for interim control measures.