The Massachusetts Child and Family Tax Credit
Understand the nonrefundable MA Household Dependent Tax Credit, a state benefit for those supporting children, seniors, or disabled family members.
Many individuals searching for information on the “Massachusetts Child Tax Credit” are actually seeking details about the state’s Child and Family Tax Credit (CFTC). As of 2023, this credit consolidated previous dependent-related credits into a single, streamlined benefit for taxpayers who support qualifying dependents.
Eligibility Requirements for the Credit
To qualify for the Child and Family Tax Credit, the person being claimed must meet specific criteria. A qualifying individual can be a dependent child under the age of 13 at the end of the tax year. Alternatively, a dependent of any age who is disabled and incapable of self-care, a dependent who is age 65 or older, or a disabled spouse who is incapable of self-care can also be a qualifying individual.
Beyond these rules, a dependent must also meet relationship and residency tests. The individual must be a dependent of the taxpayer as defined under federal tax law, which includes children, grandchildren, parents, or other qualifying relatives. The dependent must have lived with the taxpayer in a Massachusetts household for more than half of the year.
The taxpayer’s filing status also impacts eligibility for this credit. The credit is available to individuals who file as single, head of household, or married filing jointly. Taxpayers who choose the married filing separately status are not permitted to claim the Child and Family Tax Credit.
Calculating the Credit Amount
The value of the Child and Family Tax Credit is a fixed amount for each qualifying person. For the 2024 tax year, the credit is $440 per eligible dependent. There is no limit on the number of dependents that a taxpayer can claim for this credit, provided each one meets all the necessary eligibility requirements.
A significant feature of this credit is that it is refundable. This means that if the credit amount is greater than the taxes you owe, you will receive the difference as a refund. For instance, if a taxpayer owes $300 in state income tax and qualifies for a $440 credit for one dependent, the credit will eliminate their tax bill and they will receive the remaining $140 as a tax refund.
How to Claim the Credit on Your Tax Return
Claiming the Child and Family Tax Credit is integrated directly into the main Massachusetts income tax returns. Taxpayers will report the necessary information on either Form 1 for residents or Form 1-NR/PY for part-year and nonresidents.
On the Massachusetts Resident Income Tax Return, Form 1, the taxpayer must enter the number of qualifying dependents on line 46a. The taxpayer then multiplies this number by the credit amount and enters the total on line 46.
For part-year residents filing Form 1-NR/PY, a similar process is followed. The number of qualifying dependents is entered on Line 50a, and the calculated credit is entered on Line 50b. The final credit amount is then prorated based on the number of days they resided in Massachusetts, with the result entered on Line 50.
Relationship to Federal Tax Credits
The Massachusetts Child and Family Tax Credit is a state-specific benefit, entirely separate from tax credits offered by the federal government. Its rules for eligibility and calculation are determined by state law.
Taxpayers may also be eligible for federal credits, such as the federal Child Tax Credit or the federal Credit for Child and Dependent Care Expenses. The federal Child Tax Credit, for example, has its own set of rules regarding the child’s age, residency, and the taxpayer’s income.
Eligibility for the Massachusetts credit does not impact a taxpayer’s ability to claim any federal credits they qualify for. For example, a family might claim the Child and Family Tax Credit on their Massachusetts Form 1 and also claim the federal Child Tax Credit for the same child on their federal Form 1040.