![]() The deduction parallels the federal exclusion for such income provided in the CARES Act. PPP loan borrowers subject to the Massachusetts personal income tax, including Schedule C filers, certain partners in a partnership, and S corporation shareholders should not include in Massachusetts gross income the amount of a PPP loan forgiven under § 1106(b) of the CARES Act during the 2020 tax year. The deduction applies to the taxable year beginning January 1, 2020. Section 12 of the Act provides a deduction for cancellation of debt (“COD”) income related to forgiven PPP loans made under § 1102(a) of the CARES Act. Taxation of Forgiven Paycheck Protection Program Loans Similarly, the Department will continue to assess all other penalties applicable under General Laws Chapter 62C, regardless of whether they relate to unemployment compensation. 62B, § 14 upon a taxpayer’s failure to remit taxes on any income other than unemployment compensation. Thus, the Department will continue to assess applicable penalties pursuant to G.L. ![]() The Act does not provide for a waiver of penalties imposed with respect to any other type of income, nor does it provide for a waiver of other types of penalties that relate to taxes on unemployment compensation. If an amount of tax on unemployment compensation received in 2020 remains unpaid on January 1, 2022, the Department will begin assessing penalties on the failure to remit such taxes. If such penalties are assessed by the Department on a taxpayer’s failure to pay tax on unemployment compensation during this time, the taxpayer should file an appeal through MassTaxConnect ( ), and the Department will abate the penalties. 62B, § 14 will not accrue on a taxpayer’s failure to pay any amount of tax solely attributable to 2020 unemployment compensation. This waiver does not apply to unemployment compensation received during the 2021 tax year.Īccordingly, while Section 8 is in effect, penalties pursuant to G.L. Section 8 states that, until January 1, 2022, no penalty shall be assessed against a taxpayer solely for failure to remit taxes imposed on unemployment compensation received during the 2020 tax year. However, Section 8 of the Act provides for relief from certain penalties with respect to unemployment compensation included in Massachusetts gross income. Waiver of Penalties on Unpaid Taxes on Unemployment Compensation Received in 2020Įxcept as described in Part II above, unemployment compensation is generally taxable under G.L. ![]() For taxpayers who have not yet filed their 2020 personal income tax returns, the Department will make available a worksheet for determining the amount of the deduction and publish instructions as to how to report the deduction on a return. However, if a taxpayer has unpaid tax or other specific governmental liability, the Department will first apply any overpayment toward these liabilities. If a taxpayer is eligible for a refund, the Department will issue a refund payment to the taxpayer and the taxpayer need not take any action. The Department of Revenue (“Department”) expects to send notices to taxpayers who reported unemployment to explain whether those persons may be eligible for relief. Taxpayers who have already filed their 2020 personal income tax returns and reported unemployment compensation as income should not file amended returns at this time. ![]() A deduction of up to $10,200 may be claimed by each eligible individual for unemployment compensation received by that individual the deduction is not limited to $10,200 per return. The calculation of household income follows Section 36B(d) of the Internal Revenue Code and includes all of a taxpayer’s income, including unemployment compensation. 62, § 2, provided that the taxpayer’s household income is not more than 200% of the federal poverty level. However, Section 26 of the Act provides that, for the taxable year beginning on Januand the taxable year beginning on January 1, 2021, up to $10,200 of unemployment compensation that is included in a taxpayer’s federal gross income shall be deducted from federal gross income for purposes of determining Massachusetts gross income under G.L. Generally, unemployment compensation is taxable under G.L.
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