CHICOPEE, Mass. (WWLP) – Some Massachusetts residents have received their checks and direct deposits from Chapter 62F that were distributed from the state last week.

Roughly three million Massachusetts residents are expected to receive a refund, which will come in the form of a mailed check or direct deposit that will be worth roughly 14 percent of what they owed in state income tax in 2021, according to a spokesperson for the Executive Office of Administration and Finance.

The money is being returned due to a voter-approved tax cap law first called Chapter 62F, which has been triggered for the first time since 1987 due to the massive amount of taxes the state received last year. Nearly $3 billion in excess tax revenue will be sent back to taxpayers.

The Executive Office of Administration and Finance said in a statement:

“These refunds will be sent out on a rolling basis through December 15. An estimated 3 million taxpayers will receive a refund of approximately 14% of their 2021 Massachusetts income tax liability.”

The Mass.gov website has a refund estimator available for residents interested in seeing how much they can expect in their return checks. Checks will continue to be mailed through December 15th.

Question 1

DEBATE: Massachusetts Ballot Question 1, additional 4% tax on income over $1 million

Question 1 is sometimes referred to as the Fair Share Amendment, opponents call it a tax hike. A yes vote would change the tax structure in Massachusetts and create a 4% surtax on any income over 1 million dollars. Revenue from this question would be used, subject to appropriation, for education and transportation.

This proposed constitutional amendment would establish an additional 4% state income tax on that portion of annual taxable income in excess of $1 million. This income level would be adjusted annually, by the same method used for federal income-tax brackets, to reflect increases in the cost of living. Revenues from this tax would be used, subject to appropriation by the state Legislature, for public education, public colleges and universities; and for the repair and maintenance of roads, bridges, and public transportation. The proposed amendment would apply to tax years beginning on or after January 1, 2023. 

SECRETARY OF STATE SUMMARY

Frequently Asked Questions from Mass.gov

Q. What is Chapter 62F?

Chapter 62F is a Massachusetts General Law that requires the Department of Revenue to issue a credit to taxpayers if total tax revenues in a given fiscal year exceed an annual cap tied to wage and salary growth in the Commonwealth.

See the full law here: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleIX/Chapter62F

Enacted by voters in 1986 via a ballot question, the Chapter 62F process has been triggered once before, in 1987.

Q. Who determines whether Chapter 62F is triggered?

The law requires that the Department of Revenue submit a report to the State Auditor on the net state tax revenues and the allowable state tax revenues for each fiscal year by September 1st.

The State Auditor then makes the determination of whether net state tax revenue exceeds allowable state tax revenue – and, if so, by what amount – on or before the third Tuesday of September (September 20th in 2022).

Q. Why is Chapter 62F being triggered this year?

In FY22, total state tax revenue collected was $41,812,654,358, which exceeded the allowable revenue threshold for FY22 as defined by Chapter 62F of $38,871,154,627 by a total of $2,941,499,731.

This means that the amount that must be returned to taxpayers under the statute is $2,941,499,731.

Eligibility

Q. Who is eligible to receive a refund?  

Anyone who paid personal income taxes in Massachusetts for the 2021 tax year and filed a 2021 state tax return on or before September 15, 2023, is eligible to receive a refund.

Please note that:

  • Both resident and non-resident filers are eligible.
  • Non-residents on whose behalf a partnership or S corporation files on a composite basis are eligible.
  • Fiduciary filers (trusts and estates) are eligible.

Q. Do I need to take any action to receive a refund?

No action is needed to receive your refund. In order to be eligible, you must have filed a 2021 state tax return on or before September 15, 2023. If you are eligible for a refund, you will receive it automatically as a check sent through the mail or through direct deposit.

More information on how you will receive your refund will become available in November 2022. Distribution of refunds is expected to begin in November 2022. 

Q. How much am I eligible to receive?

Chapter 62F requires the distribution of the credits in proportion to personal income tax liability in Massachusetts incurred by taxpayers in the immediately preceding taxable year – Tax Year 2021. 

That means that in general, taxpayers will receive a refund that is approximately 13% of their personal income tax liability in Massachusetts in Tax Year 2021. This percentage is a preliminary estimate and will be finalized in late October, after the 2021 individual tax return filing extension deadline of October 17, 2022. Please also note that credits are subject to offsets, including for unpaid tax liability, unpaid child support, and certain other debts.

The estimator at the top of this page can help you calculate a preliminary estimate of your refund amount.  

Q. How do I find out what my personal income tax liability was in 2021?

Your “income tax liability” is the amount of taxes that were due to Massachusetts for the 2021 tax year, after the application of any credit and before estimated taxes and withholding.

To find out what your income tax liability was for Tax Year 2021:

  • For residents: your income tax liability is the amount on line 32 of Form 1 for Tax Year 2021 minus the sum of lines 43 through 47 on Form 1 for Tax Year 2021.
  • For non-residents or part-year residents: your income tax liability is the amount on line 36 of Form 1-NR/PY for Tax Year 2021 minus the sum of lines 47 through 51 of Form 1-NR/PY for Tax Year 2021  

Q. What if I need a copy of my 2021 Massachusetts tax return for the purposes of using the estimator at the top of this page?  

The following Department of Revenue website explains how to request a copy of your previously filed 2021 Massachusetts tax return:

Request copies of previously filed tax returns and other taxpayer-specific records from DOR | Mass.gov

Q. Will I still get a refund if I received a 2021 income tax refund? Will the 2021 income tax refund reduce the refund I am getting now? 

Previously-issued Tax Year 2021 income tax refunds will not reduce or otherwise impact your 62F refund, and your receipt of a 62F refund has no bearing on whether you will be due an income tax refund for Tax Year 2022. 62F refunds will only be reduced due to intercepts, including unpaid tax liability, unpaid child support, and certain other debts. 

Q. What if I am filing an extension and have not yet filed my 2021 tax return?

Any tax filings filed with the Department of Revenue by September 15, 2023, will be eligible for a refund.

Q. My family member recently died.  How does 62F work for us?

If an individual income tax return was filed by or for your family member for 2021, and the family member otherwise qualified for a 62F refund, the refund will be issued to the individual taxpayer even if now deceased. Conversely, if a return was filed for a trust, then the refund would be issued to the trust. If the trust has since closed, DOR would require the following documents in order to re-issue a new check to the executor of the estate:

  • Original uncashed check
  • The legal instrument used to close the trust
  • Death certificate

Receiving Your Refund

Q. When should I expect my refund?

Distribution of refunds is expected to begin in November 2022. No action is needed to receive your refund. More specific information about the timing for refunds will be shared closer to that time.

Q. What if I filed jointly in Tax Year 2021?

Your refund will be based on your 2021 filing status.

For example, there will be a single refund for taxpayers who filed jointly in 2021, even if not filing jointly in 2022.

Q. How will I receive my refund?

More information on how you will receive your refund will be available by November 2022.

Q. How will I receive my refund if a partnership or S corporation is filed on a composite basis on my behalf?

As with any other refund due on a composite filing, the refund will be issued to the partnership or S corporation. Whether and how you receive a share of the refund will depend upon the terms of the entity’s operating agreement.

Q. Will the refunds be treated as taxable income?

The refunds are not taxable as income at the state level.

All tax refunds, including the 62F refunds, are taxable by the federal government to the extent that the recipient claimed itemized deductions on his or her federal return for Tax Year 2021, including his or her state income tax. Refund recipients who itemized on their federal returns for Tax Year 2021 will receive a Form 1099-G from the Department of Revenue by January 31 of the year following the year in which the refund was received.

Q. Can I change my bank account information to receive a refund to a different bank account?

No.  Open verified direct deposit bank account information as reported on your Tax Year 2021 filed Income tax return will be used to disperse 62F refunds. No changes to bank account information can be submitted. If your bank account reported on your 2021 filed income tax return is closed, you will receive your 62F refund by check. More information on how you will receive your refund and the timing will become available in the coming months.

Q. What if my address has changed since I filed my 2021 tax return?

Log into MassTaxConnect and update your address to be current.  https://mtc.dor.state.ma.us/mtc/_/