2009 Massachusetts Resident Income Tax Form 1Department of Revenue | Commonwealth of Massachusetts

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Special Section on Minimum Creditable CoverageStarting on January 1, 2009, adults must be enrolled in a health insurance plan that meets Minimum Creditable Coverage requirements.

What is “Minimum Creditable Coverage” (MCC)?It’s the minimum level of health insurance benefits that adult tax filers needto be considered insured and avoid tax penalties in Massachusetts.

How do I know if my plan met MCC?Massachusetts-licensed health insurance companies must put an MCC-compliance notice on their plans to indicate if it does or does not meet MCC.Most do meet the MCC standards. If you received a Form MA 1099-HCfrom your insurer, that form will indicate whether your insurance met MCCrequirements. For a list of plans that automatically meet MCC, please referto the plans listed on this page.

What if I did not receive a Form MA 1099-HC from my insurer?You can call your insurer or your employer’s human resources departmentor benefits administrator for help, if you get health coverage through yourjob. If your insurer or your employer is unable to assist you, please referto the “Benefits Required Under MCC” section on this page to see if yourpolicy meets these requirements. If your plan meets all of the requirements,you may certify in line 3 of the Schedule HC that you were enrolled in a planthat met the MCC requirements during that time period.

What if my plan did not meet MCC for all of 2009?If you were enrolled in a plan that did not meet the MCC requirements for allof 2009, you must fill in the “No MCC/None” oval in line 3 of the ScheduleHC and follow the instructions on the Schedule HC. You will not be subjectto a penalty if it is determined that you did not have access to affordableinsurance that met MCC. If you had access to affordable insurance that metMCC but did not purchase it, you are subject to a penalty. However, if youare subject to a penalty, you may appeal and claim that the penalty shouldnot apply to you. For more information about the grounds and procedurefor appeals, go to page HC-8. No penalty will be imposed pending the out-come of your appeal.

What if I was enrolled in an MCC plan for only part of the year?If you were enrolled in an MCC plan for only part of the year, you should fillin the “Part-Year MCC” oval in line 3 of the Schedule HC and go to line 4.In line 4, only provide the health insurance information for the MCC plan(s)you were enrolled in. Do not provide health insurance information in line 4for a plan that did not meet the MCC standards.

Benefits Required Under MCCFor most plans, the 2009 “Minimum Creditable Coverage” standards include:

• Coverage for a comprehensive set of services (for example: doctors vis-its, hospital admissions, day surgery, emergency services, mental healthand substance abuse, and prescription drug coverage);

• Doctor visits for preventive care, without a deductible;

• A cap on annual deductibles of $2,000 for an individual and $4,000 for afamily;

• For plans with up-front deductibles or co-insurance on core services, anannual maximum on out-of-pocket spending of no more than $5,000 for anindividual and $10,000 for a family;

• No caps on total benefits for a particular illness or for a single year;

• No policy that covers only a fixed dollar amount per day or stay in thehospital, with the patient responsible for all other charges; and

• For policies that have a separate prescription drug deductible, it cannotexceed $250 for an individual or $500 for a family.

Other ways of meeting MCC:You automatically meet MCC if you are enrolled in:

• Medicare Part A or B;

• Any Commonwealth Care, Commonwealth Care Bridge plan;

• Any Commonwealth Choice plan (including Young Adult Plans);

• MassHealth;

• A federally-qualified high deductible health plan (HDHP);

• A Student Health Insurance Plan (SHIP) offered in Massachusetts oranother state;

• A tribal or Indian Health Service plan;

• TRICARE;

• The U.S. Veterans Administration Health System;

• A health insurance plan offered by the federal government to federalemployees or retirees; or

• Peace Corps, VISTA or AmeriCorps or National Civilian Community Corpscoverage.

For more information on MCC requirements, see 956 C.M.R.5.00 on theHealth Connector’s website at www.mahealthconnector.org.

What Is E-File?E-File is filing your state personal income tax return electronically throughone of three methods offered by the Massachusetts Department of Rev-enue (DOR). Last year, more than one million taxpayers electronicallyfiled their state income tax returns in the Commonwealth. On average,they received their refunds in three days. These three methods are:

WebFile for IncomeExpanded for Tax Year 2009. The Department’s WebFile for Income onlineservice has been expanded. Almost all taxpayers who file Form 1 are noweligible to electronically their file personal income tax return directly withDOR, at no cost. WebFile for Income is available through our Web Serv-ices for Income application.

How do I begin? Sign up today through DOR’s Web Services for Incomeapplication to start enjoying the benefits of managing your personal in-come tax account online. For more information, visit www.mass.gov/dorand click on “Income Tax Services” in the “Online Services” section atthe top of the page.

Paid PreparerMillions of taxpayers have had their returns electronically filedthrough DOR-approved tax preparers. If your tax preparer does

not offer E-File, ask him or her to give it a try!

Note: For tax years beginning on or after January 1, 2005, income taxreturn preparers who completed 100 or more original MassachusettsForms 1 and 1-NR/PY, including those E-Filed, during the previous cal-endar year are required to use electronic means to file all personal in-come tax returns, unless the taxpayer specifically directs that the filingbe on paper and signs Form EFO, Personal Income Tax Declaration ofPaper Filing.

If you prefer to file using paper, your preparer must use a DOR-approvedtax preparation software package that supports 2-Dimensional (2-D)barcodes. Visit www.mass.gov/dor for a list of approved preparers.

Be sure to use the proper address when mailing your 2-D barcodedreturn. Refund/no tax due: Massachusetts Department of Revenue,PO Box 7001, Boston, MA 02204-7001. Payment/tax due: Massachu-setts Department of Revenue, PO Box 7002, Boston, MA 02204-7002.

Commercial Tax Preparation SoftwareYou can also E-File using DOR-approved commercial tax filing web-sites or software products. Visit www.mass.gov/dor for a com-

plete listing of approved websites and products. If you prefer to fileusing a paper copy, you must use a product that incorporates 2-D bar-codes into their software. This will expedite the processing of your re-turn. If your software-generated return does not print with a 2-D barcodein the upper right hand corner of all pages, you may have a problem withyour printer. To avoid penalties or having your return rejected, contactyour software vendor for instructions on how to print the 2-D barcode.

Be sure to use the proper address when mailing your 2-D barcodedreturn. Refund/no tax due: Massachusetts Department of Revenue,PO Box 7001, Boston, MA 02204-7001. Payment/tax due: Massachu-setts Department of Revenue, PO Box 7002, Boston, MA 02204-7002.

Personal Identification Number (PIN)If you received this booklet in the mail, be sure to retain the PIN printedon the back cover. You will need it to access the Department’s telephone

and Web-based systems that allow you to check the status of your re-fund and perform other actions. If you did not get this booklet in the mailand do not have a PIN, you will need the amount of your requested re-fund or tax due from your 2008 Massachusetts tax return to access thesesystems. If you are a first-time filer, you will still be able to access thesesystems without a PIN.

Why Should You E-File?◗ Less stress. If you E-File you will not have to worry about math errors,missing schedules or other common mistakes which could delay yourrefund or cause other problems that take time to resolve. And E-File issafe. Plus, you will receive immediate confirmation that serves as proofyou filed.

◗ Fast refunds. Whether you E-File in January or mid-April, you willreceive your refund, on average, in three days. You also have the optionof having your refund deposited directly into your bank account. (Somecommercial tax preparation products may not offer direct deposit.)

◗ Easy to use. Whether you file your return, or have your preparer E-Filefor you, the E-File system walks you through it step by step, and doesthe calculations for you.

◗ Convenient payment options. If you have a tax due, you can file nowand pay later (by April 15, 2010) through Web Services for Income atwww.mass.gov/dor or by Electronic Funds Withdrawal. You can also filenow and pay later using Form PV, Massachusetts Income Tax PaymentVoucher (by April 15, 2010). Form PV is attached to the back of theenvelope found in this booklet. If you choose to pay by check, be sureto include Form PV to ensure proper crediting of your account.

Automatic Extension Granted if 100% Tax Due is Paidby Tax Return Due DateIf line 3 of the worksheet below is “0” and 100% of the tax due for 2009has been paid through:

◗ withholding;

◗ timely estimated payments of tax;

◗ credits from your 2009 return; and

◗ a refund from the prior tax year applied to the next year’s tax liability,

you are no longer required to file Form M-4868, Application for AutomaticExtension of Time to File Massachusetts Income Tax Return. However, ifyou do choose to file Form M-4868 in this instance, you must do so elec-tronically, via DOR’s website. See TIR 06-21 for more information.

Also, if you owe no tax or you are making a payment of $5,000 or more,you are required to file your extension via the web. If you are making apayment of less than $5,000, you also have the option of filing your ex-tension electronically. If there is a tax due with your extension, paymentcan be made through Electronic Funds Withdrawal.

Visit www.mass.gov/dor to file via the Web or to obtain Form M-4868.

Extension Worksheet

1. Enter amount from Form 1, line 31 . . . . . . . . . . . . . . 2. Enter the total of Form 1, lines 36 through 38 and 40 through 42 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Amount due. Subtract line 2 from line 1, not less than “0” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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Important NoteAt the time this booklet was printed, the IRS hadnot released final versions of all of its forms andschedules. Therefore, taxpayers should double-check references to U.S. forms and scheduleswithin this booklet before filing their returns.

Form 1 Checklist✔ If you received a booklet in the mail, be sureto retain the four-digit Personal Identification Num-ber (PIN) printed on the back cover. You may needit to use DOR’s Web-based and/or Interactive VoiceResponse (IVR) applications, such as checking thestatus of your refund.

✔ Have you entered your Social Security num-ber(s) on Form 1?

✔ Have you completed and enclosed all threepages of Form 1 and applicable schedules?

✔ Have you completed and enclosed ScheduleHC, Health Care Information? Be sure to attachForm MA 1099-HC to Schedule HC.

✔ If you changed your name, did you enclose acopy of your Social Security card or driver’s licenseshowing your new name and fill in the name/ad-dress change bubble on Form 1?

✔ Have you, and your spouse if married filingjointly, signed your return at the bottom of page 1of Form 1?

✔ Have you marked an “X” in any form orschedule box that shows a loss?

✔ Have you completed Schedule DI, DependentInformation, if claiming a dependent exemption onForm 1, line 2b or taking a deduction/credit(s) onForm 1, lines 12, 13 or 40 (if applicable)?

✔ If making a payment, have you enclosed yourcheck and Form PV with your return? Be sure toput your Social Security number on your check.Form PV is attached to the back of the envelopefound in this booklet. Also, be sure to use the lightblue mailing label when mailing your Form 1 withthe Form PV.

Major 2009Tax ChangesDuty to Obtain Health Insurance; Penaltyfor Failure to Obtain Health InsuranceMost Massachusetts residents age 18 and over arerequired to have health insurance, if it is afford-able to them. Residents who have access to afford-able coverage but do not obtain the coverage mayface state tax penalties pursuant to G.L. c. 111M,

sec. 2. Starting with 2008, adults who can affordhealth insurance are required to have coverageeach month of the year, although 63-day gaps incoverage are allowed. The monthly penalties forfailing to obtain affordable coverage for taxableyear 2009 are set out in TIR 09-1 and are based onhalf of the minimum monthly insurance premiumfor which an individual would have qualifiedthrough the Connector.

Pursuant to its authority under the Act, the Con-nector issued Administrative Information Bulletin02-09 that temporarily extends the permitted, pen-alty-free gap in health insurance coverage to threemonths (as opposed to the statutory 63-day gap).For 2009, adults who lose but then resume theircoverage within three or fewer consecutive calen-dar months will not be subject to tax penalties.

Schedule HC, Health Care Information, must becompleted by all full-year residents and certainpart-year residents age 18 and over to notify theDepartment whether or not they had health insur-ance in each month of 2009. Taxpayers who didnot have coverage for all of 2009, or had a gap incoverage of four or more consecutive months willneed to determine if they had access to affordablehealth insurance (either through an employer, thegovernment or on their own). The instructions toSchedule HC contain the worksheets and tables todetermine whether the taxpayer had access to af-fordable health insurance. If it is determined that ataxpayer could have afforded health insurance, thetaxpayer has the right to appeal the application ofthe penalty due to hardship by requesting an ap-peal to the Connector on the Schedule HC.

For more information about the health care re-form law, including DOR’s regulation at 830 CMR111M.2.1, Health Insurance Individual Mandate;Personal Income Tax Return Requirements, or theConnector’s regulation at 956 CMR 6.00, Deter-mining Affordability for the Individual Mandate,see the Connector’s website at www.mahealthconnector.org or DOR’s website at www.mass.gov/dor.

Circuit Breaker Tax Credit IncreasedA credit is allowed to an owner or tenant of resi-dential property located in Massachusetts equal tothe amount by which the real estate tax paymentor 25% of the rent constituting real estate tax pay-ment exceeds 10% of the taxpayer’s total income,not to exceed $960. The amount of the credit issubject to limitations based on the taxpayer’s totalincome and the assessed value of the real estate,which must not exceed $788,000. For tax year2009, an eligible taxpayer’s total income cannotexceed $51,000 in the case of a single filer who isnot a head of household filer, $64,000 for a headof household filer, and $77,000 for joint filers. Inorder to qualify for the credit, a taxpayer must be

age 65 or older and must occupy the property ashis or her principal residence. See TIR 09-16 formore information.

Dairy Farmer Tax Credit The Massachusetts dairy farmer tax credit wasestablished to offset the cyclical downturns in milkprices paid to dairy farmers and is based on theU.S. Federal Milk Marketing Order for the applica-ble market. A taxpayer who holds a certificate ofregistration as a dairy farmer pursuant to G.L. c.94, s. 16A is allowed a refundable tax credit basedon the amount of milk produced and sold. Thedairy farmer tax credit as originally enacted was90% refundable. Under recent legislation, the dairyfarmer tax credit is now 100% refundable.

Military Spouses Residency Relief ActOn November 11, 2009, the Military Spouses Res-idency Relief Act (P.L. 111-97) was enacted. TheAct prohibits a servicemember’s spouse from ei-ther losing or acquiring a residence or domicile forpurposes of taxation because of being absent orpresent in any U.S. tax jurisdiction solely to be withthe servicemember in compliance with the service-member’s military orders if the residence or domi-cile is the same for the servicemember and thespouse. For more information, see TIR 09-23.

New Current Code ProvisionsAs a general rule, Massachusetts will not adopt anyfederal tax law changes incorporated into the Inter-nal Revenue Code (“Code”) after January 1, 2005.However, certain specific provisions of the per-sonal income tax automatically adopt the currentCode. Provisions of the Code adopted on a currentCode basis are (i) Roth IRAs, (ii) IRAs, (iii) the ex-clusion for gain on the sale of a principal residence,(iv) trade or business expenses, (v) travel expenses,(vi) meals and entertainment expenses, (vii) themaximum deferral amount of government employ-ees’ deferred compensation plans, (viii) deduc-tion for health insurance costs of self-employed,(ix) medical and dental expenses, (x) annuities, and(xi) health savings accounts. See TIRs 98-8, 02-11,and 07-4 for further details on Massachusetts’ per-sonal income tax current Code provisions.

New Exclusion AllowedTemporary Subsidy for COBRA Coverageof Unemployed WorkersThe federal American Recovery and ReinvestmentAct of 2009 (P.L. 111-5 or “ARRA”) allows aCOBRA subsidy for certain involuntarily-terminatedemployees and their families. Recently, the Legis-lature adopted the current Code with regard to thefederal exclusion from gross income of the COBRAsubsidy under IRC sec. 139C. Thus, Massachu-setts adopts the new federal exclusion from grossincome for the COBRA subsidy. See TIR 09-21 formore information.

4 Before You Begin

Temporary Increase in Earned IncomeCreditFor federal income tax purposes, the ARRAamends IRC sec. 32 to increase the earned in-come tax credit percentage for families with threeor more qualifying children to 45% for 2009 and2010. The ARRA also increases the thresholdphase-out amounts for married couples filing jointreturns to $5,000 above the threshold phase-outamounts for singles, surviving spouses, and headsof household for 2009 and 2010. The Massachu-setts earned income tax credit equals 15 % of thefederal earned income tax credit received by thetaxpayer for the taxable year. Therefore, Massachu-setts allows 15% of whatever the taxpayer receivesfederally under IRC sec. 32. The effect is thatMassachusetts will allow a larger credit for 2009and 2010 due to the ARRA and its increases to thefederal earned income tax credit for those years.

Temporary Increase in Section 179ExpensingEffective for the tax years beginning in 2009, forfederal income tax purposes, the ARRA increasedthe IRC sec. 179 election to expense property inits initial year from $133,000 to $250,000. Thefederal Act also increased the sec. 179 overall in-vestment limit from $530,000 to $800,000. Mass-achusetts adopts the increases in this expensingprovision given sec. 179 is a trade or businessexpense deduction adopted by Massachusetts ona current Code basis.

Tax-Free Distributions fromIndividual Retirement AccountsQualified Charitable Distribution from anIndividual Retirement Account (“IRA”)IRC sec. 408(d)(8)The Pension Protection Act of 2006 (P.L. 109-280)allowed taxpayers age 701/2 or greater to maketax-free distributions from traditional and RothIRAs to qualified charities for the 2006 and 2007tax years, not to exceed $100,000 per tax year. Theexclusion was extended for distributions made intax years 2008 and 2009 by the Emergency Eco-nomic Stabilization Act of 2008 (P.L. 110-343).Massachusetts adopts this exclusion from grossincome, including the extension for tax years 2008and 2009, given this federal Code provision forIRAs is adopted by Massachusetts on a currentCode basis. See TIR 06-20 and Schedule X, line 2for further details.

New Exclusion — Not AllowedPartial Exclusion of UnemploymentCompensationFor federal income tax purposes, pursuant to IRCsec. 85(c), individuals must include in gross in-come any unemployment compensation receivedunder the laws of the U.S. or any state. Under the

ARRA, up to $2,400 of unemployment compensa-tion benefits received in 2009 are excluded fromfederal gross income by the recipient. Massachu-setts follows the provisions of IRC sec. 85(c) asamended and in effect on January 1, 2005. Mass-achusetts does not adopt the partial exclusion ofunemployment compensation because it was en-acted after January 1, 2005.

New Deduction — Not AllowedFederal “Bonus” DepreciationFor federal income tax purposes, the ARRA pro-vides for an additional depreciation deduction,under IRC sec. 168(k), in the placed-in-serviceyear equal to 50% of the adjusted basis of “quali-fied property.” The property must be acquired afterDecember 31, 2008 and before January 1, 2010.Under 2002 legislation, Massachusetts decoupledfrom bonus depreciation allowed under IRC sec.168(k), as amended and in effect for the currentyear. Therefore, Massachusetts does not adopt thisadditional depreciation deduction. See TIRs 02-11and 03-25 for further details.

New Deduction — Not AllowedDeduction for State or Local Sales TaxPaid on the Purchase of a QualifiedMotor VehicleUnder the ARRA, for federal income tax purposes,an individual can deduct the state or local salesand excise taxes paid on the purchase of a quali-fied motor vehicle, subject to certain limitationsand adjusted gross income phase out. For federalpurposes, the deduction can either increase theamount of a taxpayer’s standard deduction or betaken as an itemized deduction. Massachusettsdoes not adopt the federal standard deduction orfederal itemized deductions. Thus, Massachusettsdoes not adopt this deduction for sales tax paidon a qualified motor vehicle.

Massachusetts Decouples fromCertain Business Tax ProvisionsRecent legislation includes provisions decouplingMassachusetts tax law from certain federal busi-ness tax law changes made by ARRA and, in oneinstance, from the impact of an IRS Notice thatwas effectively repealed (but only prospectively)by ARRA. The specific federal provisions fromwhich the Massachusetts legislation decouplesinclude: (a) deferral of the recognition of certaincancellation of indebtedness income under theCode, (b) suspension of Code rules that wouldotherwise disallow or defer deductions for origi-nal issue discount claimed by issuers of debtobligations, and (c) relief from certain limitationson the use of losses after a change of ownershipunder (i) IRS Notice 2008-83 (for periods prior toits effective repeal by ARRA) and (ii) new IRC sec

382(n) as added by ARRA. For more information,see TIR 09-21.

Exclusion — Not AllowedMortgage Forgiveness — IRC sec. 108(a)The Mortgage Forgiveness Debt Relief Act of 2007(P.L. 110-142) amended IRC section 108(a) byadding an exclusion for indebtedness that is dis-charged before January 1, 2010 and is qualifiedprincipal residence indebtedness. The EconomicStabilization Act of 2008 extended this exclusion forthree years, until January 1, 2013. Massachusettsdoes not adopt this exclusion or the extension be-cause they were enacted after January 1, 2005.

Extended Deductions — Not AllowedMassachusetts allows certain federal deductionsbased on the Internal Revenue Code as amendedand in effect on January 1, 2005. Under the Janu-ary 1, 2005 Code, certain federal deductions due toexpire, have now been extended. Massachusettswill not adopt the extensions because they wereenacted after January 1, 2005.

Tuition and Fees Deduction — IRC secs.62(a)(18) and 222The Emergency Economic Stabilization Act of2008 extended the federal deduction for qualifiedhigher education expenses to tax years 2008 and2009. Massachusetts will not adopt this extensionbecause it was enacted after January 1, 2005.However, there is a separate Massachusetts de-duction for undergraduate tuition if the total paidexceeds 25% of the taxpayer’s Massachusettsadjusted gross income. See TIR 97-13 for addi-tional information.

Educators Deduction — IRC sec. 62(a)(2)(D)The Emergency Economic Stabilization Act of 2008extended the federal deduction for certain ex-penses paid by educators to tax years 2008 and2009. Massachusetts will not adopt this extensionbecause it was enacted after January 1, 2005.

Criminally Fraudulent InvestmentArrangementsIn 2009, the IRS issued Revenue Procedure2009-20 providing an optional safe harbormethod for qualified investors to deduct theftlosses under IRC sec. 165(c) from investments incriminally fraudulent Ponzi-type schemes. Also, in2009, the IRS issued Revenue Ruling 2009-9 todescribe the proper federal income tax treatmentfor losses resulting from these Ponzi schemes. Inthe case of individual investors, Massachusetts lawdoes not adopt the federal safe harbor treatmentfor qualified investors with theft losses from aPonzi scheme that is outlined in Revenue Proce-dure 2009-20. In a further departure from federallaw, Massachusetts does not adopt a net operatingloss in the case of the personal income tax.

52009 Form 1 — Before You Begin

The Massachusetts tax relief potentially availableto qualifying individual taxpayers who invested ina criminally fraudulent investment arrangement isexplained in TIR 09-15.

Fringe BenefitsParking, Combined Commuter HighwayVehicle Transportation and T-Pass FringeBenefit — IRC sec. 132(f)The federal exclusion amounts for tax year 2009are $230 per month for qualified parking, and$120 per month for combined commuter highwayvehicle transportation and transit passes for themonths of January and February. For federal in-come tax purposes, ARRA increased the exclusionamount to $230 per month for combined com-muter highway vehicle transportation and transitpasses for the months of March through Decem-ber. Massachusetts follows the inflation adjust-ment formula allowed under the January 1, 2005Code and does not adopt the increased exclusionallowed by ARRA for combined commuter high-way vehicle transportation and transit passes. TheMassachusetts exclusion amounts for tax year2009 are $230 per month for qualified parking, and$120 per month for combined commuter highwayvehicle transportation and transit passes. Thesedifferences will be reflected in the Form W-2 pro-vided by your employer.

Privacy Act NoticeUnder the authority of 42 U.S.C. sec. 405(c)(2)(C)(i), and M.G.L. c. 62C, sec. 5, the Departmentof Revenue has the right to require an individual tofurnish his or her Social Security number on astate tax return. This information is mandatory.The Department of Revenue uses Social Securitynumbers for taxpayer identification to assist inprocessing and keeping track of returns and in de-termining and collecting the proper amount of taxdue. Under M.G.L. c. 62C, sec. 40, the taxpayer’sidentifying number is required to process a refundof overpaid taxes. Although tax return informationis generally confidential pursuant to M.G.L. c. 62C,sec. 21, the Department of Revenue may disclosereturn information to other taxing authorities andthose entities specified in M.G.L. c. 62C, secs. 21,22 or 23, and as otherwise authorized by law.

Common Form 1MistakesAn incomplete or incorrect return can delay theprocessing of your return. Following are a numberof tips to help us process your return as quicklyas possible.

Note: You should not staple any items, other thanany required Form(s) W-2 or 1099, to Form 1. Anyenclosures such as schedules, statements, FormPV, etc. should simply be placed in the envelopealong with Form 1 when mailing.

◗ Missing Social Security number(s). Be sure toenter your Social Security number(s) in the spacesprovided on all pages and schedules.

◗ Missing Schedule HC. Be sure you have com-pleted and enclosed Schedule HC, Health Care In-formation and Form MA 1099-HC. We cannotprocess your return without this schedule.

◗ Incorrect computation. The Department cor-rects many returns each year due to errors incomputation. Before mailing your return, checkyour arithmetic to make sure the computationsare correct.

◗ Filing status. Be sure to fill in the correct ovalin line 1, Filing Status. This line is frequentlyoverlooked.

◗ Exemptions. Be sure that you specify the num-ber of exemptions you are claiming in line 2, itemsb, c and d. Enter the appropriate number(s) in thesmall white box(es). Note: You must completeSchedule DI, Dependent Information, if claiming adependent exemption in line 2b.

◗ Missing pages of Form 1. Form 1 is threepages. Be sure to include all three pages of the re-turn when mailing.

◗ Missing withholding statement(s). Be surethe state copy of Form(s) W-2 (Wages), W-2G(Winnings), PWH-WA (Promoter Withholding),2G, K-1, 2K-1, 3K-1 and SK-1 and any Form 1099that show Massachusetts income tax withheld areattached with a single staple. These forms are fre-quently missing and must be obtained later fromyou in order to process the return.

◗ Missing supporting schedules. Be sure all re-quired schedules are enclosed to support the in-formation on your Form 1. These include Mass-achusetts Schedules HC, X, Y, Z, B, C, C-2, D, DI,E, E-1, E-2, E-3, and CB. We cannot process yourreturn without these forms.

◗ Government employee pension contributions.If you were a state, local or county employee andmade contributions to a Massachusetts state orlocal pension plan, your total wages for state pur-poses will be different from the amount you re-port on your U.S. return. Report your total statewages from your Form(s) W-2 on Form 1. This isgenerally box 16 of Form W-2.

◗ Earned Income Credit. You must have yourfederal earned income credit amount from yourU.S. return or as computed by the IRS if you wishto claim the Earned Income Credit on Form 1.

Also, you must complete Schedule DI, DependentInformation, if you have one or more qualifyingchildren/dependents for the Earned Income Credit.

◗ Missing signatures. Thousands of unsignedreturns are received by the Department every year.These returns must be returned to the taxpayers forsignatures. If a joint return is filed, both spousesmust sign the return. Make sure signatures are onthe correct lines. Remember to sign your return atthe bottom of page 1 of Form 1.

◗ Missing Form PV. If you are making a payment,make certain you fill out Form PV, MassachusettsIncome Tax Payment Voucher. Form PV is attachedto the back of the envelope found in this booklet.Enclose Form PV and your check with your return.Be sure to use the light blue mailing label whenmailing your Form 1 with the Form PV. Note: Go towww.mass.gov/dor and click on Web Services forIncome for online payment options.

Filing YourMassachusettsReturnIf you were a legal resident of Massachusetts andyour gross income was more than $8,000 —whether received from sources inside or outside ofMassachusetts — you are required to file a Mass-achusetts income tax return. If your gross incomewas $8,000 or less, you do not need to file a return.

If you did not live in Massachusetts but receivedMassachusetts source income in excess of yourpersonal exemption amount multiplied by the ratioof your Massachusetts income to your total in-come, you must file as a nonresident on the Non-resident/Part-Year Resident Income Tax Return,Form 1-NR/PY. Generally, this means you must fileForm 1-NR/PY if you were a nonresident of Mass-achusetts and you received Massachusetts sourceincome in excess of $4,400 if single or married fil-ing separately, $6,800 if head of household or$8,800 if married filing jointly.

If, during the taxable year, you either moved toMassachusetts or terminated your status as aMassachusetts resident to establish residency out-side the state, and your gross income was morethan $8,000 — whether received from sources in-side or outside of Massachusetts — you must fileas a part-year resident on the Nonresident/Part-Year Resident Income Tax Return, Form 1-NR/PY.

What Is Gross Income?Massachusetts gross income includes thefollowing:◗ all wages, salaries, tips, bonuses, fees and othercompensation;

6 2009 Form 1 — Before You Begin

◗ taxable pensions and annuities;◗ pension income from another state or politicalsubdivision before any deduction;◗ taxable IRA/Keogh and Roth IRA distributions;◗ alimony;◗ income from a business, trade, profession, part-nership, S corporation, trust or estate;◗ rental, royalty and REMIC income;◗ unemployment compensation;◗ taxable interest and dividends;◗ gambling winnings;◗ capital gains;◗ forgiveness of debt;◗ mortgage forgiveness;◗ taxable portion of scholarships and fellowships;and◗ any other income not specifically exempt.Massachusetts gross income also includesthe following, which are not subject to U.S. in-come tax:◗ interest from obligations of states and their po-litical subdivisions, other than Massachusetts andits political subdivisions; and◗ income earned by a resident from foreignemployment.

Massachusetts gross income does not include:◗ interest on obligations of the U.S. and U.S.territories;◗ Pension income received from a contributoryannuity, pension, endowment or retirement fundof the U.S. Government or the Commonwealth ofMassachusetts and its political subdivisions.◗ amounts received as U.S. Social Security, pub-lic welfare assistance, Veterans Administrationdisability payments, G.I. Bill education payments,certain worker’s compensation, gifts, accident orlife insurance payments, or certain payments re-ceived by Holocaust survivors; and◗ compensation earned by members of the armedforces for service in a combat zone (excluded tothe same extent as under federal law).

Am I a Resident, Nonresident,or Part-Year Resident?There are three different categories of residentstatus under Massachusetts tax law:

1. You are a Full-Year Resident if your legal resi-dence (domicile) is in Massachusetts or if youmaintain a permanent place of abode in Massachu-setts and during the year spend more than 183days, in the aggregate, in the state. If you fit thisdescription you should file a Massachusetts Resi-dent Income Tax Return, Form 1.

2. You are a Nonresident if you were not a residentof Massachusetts but earned Massachusetts in-come (e.g., from a job in Massachusetts). Youmust report such income by filing a MassachusettsNonresident/Part-Year Resident Income Tax Re-turn, Form 1-NR/PY.

3. You are a Part-Year Resident if you eithermoved into or moved out of Massachusetts dur-ing the taxable year. In this case, you must reducecertain income, deductions and exemptions basedon the number of days you were a resident or onthe amount of your income that is subject toMassachusetts tax. Part-year residents must file aMassachusetts Nonresident/Part-Year ResidentIncome Tax Return, Form 1-NR/PY.

If both categories 2 and 3 apply to you, you willhave to file both as a nonresident and as a part-year resident. In these cases, you must file oneMassachusetts Form 1-NR/PY and complete theResident/Nonresident Worksheet, Schedule R/NR,to calculate the portion of income earned while apart-year resident and the portion of incomeearned while a nonresident. If you are required tofile as both a part-year resident and a nonresident,be sure to fill in the oval below the address sectionof Form 1-NR/PY to indicate that you are complet-ing Schedule R/NR and enclose Schedule R/NRwith your return.

See TIR 95-7 for more information regarding res-ident status. For information on how to file as apart-year resident/nonresident, visit DOR’s websiteat www.mass.gov/dor or call (617) 887-MDOR ortoll-free in Massachusetts 1-800-392-6089.

Are Military Personnel Requiredto File?If you enlisted in the service as a Massachusettsresident and have not established a new domicile(legal residence) elsewhere (refer to military guide-lines), and if your gross income is more than$8,000, you are required to file a Massachusettsresident income tax return. This applies eventhough you may be stationed outside of Mass-achusetts. The terms “legal residence” and “domi-cile” are used to denote that place where you haveyour permanent home and to which, whenever youare absent, you have the intention of returning.Nonresident military personnel stationed in Mass-achusetts may be subject to Massachusetts taxesand should file Form 1-NR/PY if they earn incomefrom outside military sources.

The following example illustrates circumstancesunder which military pay is or is not taxable inMassachusetts. No guidance is intended on thetax treatment of such pay under the laws of otherstates. Generally, when income is taxable in twojurisdictions, a credit for taxes paid to the otherjurisdiction is allowed on the taxpayer’s return inthe state of his/her residence.

Example: Betsy enlisted in the Navy in Massachu-setts, but moved with her husband, Eric, fromMassachusetts to Delaware when she was sta-tioned there. They did not change their domicile toDelaware. She received military income while her

husband received income working as a reporter fora local newspaper.

Betsy’s income from the Navy, as well as her hus-band’s income from the newspaper, are both sub-ject to Massachusetts income tax since sheenlisted in the Navy in Massachusetts and theydid not become legal residents of Delaware. Betsyand her husband are, therefore, Massachusettsresidents, and any income they receive, whetherderived in Massachusetts or not, is included intheir Massachusetts gross income.

Military Spouses: On November 11, 2009, the Mil-itary Spouses Residency Relief Act (P.L. 111-97)was enacted. For tax years beginning on or afterJanuary 1, 2009, the Act prohibits a service-member’s spouse from either losing or acquiringa residence or domicile for purposes of taxationbecause of being absent or present in any U.S.tax jurisdiction solely to be with the servicemem-ber in compliance with the servicemember’s mili-tary orders. In general, for Massachusetts taxpurposes, the new law will affect only service-members and their spouses who are domiciled ina state other than Massachusetts. For more infor-mation see TIR 09-23.

What Are the Rules for Filinga Joint Return?A joint Form 1 is not allowed if both spouses werenot Massachusetts residents for the same portionof 2009.

If your spouse died during 2009, you may stillchoose to file a joint return.

If you are legally married, you have the option offiling either a joint return or a married filing sepa-rate return. Married taxpayers who file a joint re-turn are allowed to claim the following exemptions,deductions and credits which married taxpayersfiling separate returns may not claim:

◗ a deduction of $3,600 ($7,200 for two or moredependents) for a dependent member of house-hold under age 12, or dependent age 65 or over asof December 31, 2009 (not you or your spouse)or a disabled dependent;

◗ No Tax Status if joint Massachusetts AGI was$16,400 or less plus $1,000 for each dependent;

◗ Limited Income Credit if joint MassachusettsAGI is between $16,400 and $28,700 plus $1,750for each dependent;

◗ excess unused exemptions against interest in-come (other than interest from Massachusettsbanks), dividends or capital gain income; and

◗ a senior circuit breaker tax credit which allowssenior citizens meeting certain eligibility criteriato claim a refundable credit on their state incometaxes for the real estate taxes paid on the Mass-achusetts residential property they own or rent, and

72009 Form 1 — Before You Begin

which they occupy as their principal residence. Thecredit is the amount by which the real estate taxpayment or 25% of the rent constituting real es-tate tax payments exceeds 10% of their total in-come, but not more than $960. The credit isrefundable to the extent the credit exceeds the tax-payer’s tax liability.

How Do I File a Decedent’s Return?A final income tax return must be filed for a tax-payer who died during the taxable year. This re-turn should include income received until date ofdeath. It must be signed and filed by his/her ex-ecutor, administrator or surviving spouse for theportion of the year before the taxpayer’s death. Besure to fill in oval 1 if the taxpayer who was listedfirst on last year’s income tax return is deceased,or oval 2 if the taxpayer who was listed second onlast year’s income tax return is deceased. Also,enclose Form M-1310, Statement of Claimant toRefund Due on Behalf of Deceased Taxpayer, withthe refund claimant’s name and Social Securitynumber clearly printed.

A joint return may be filed by a surviving spouse.In the case of the death of both spouses, a final re-turn must be filed by their legal representative.

Any income received for the decedent for the tax-able year after the decedent’s death, and for suc-ceeding taxable years until the estate is completed,must be reported each year on Massachusetts Form2, Massachusetts Fiduciary Income Tax Return.Form 2 is available online at www.mass.gov/dor.

If the decedent’s return shows a refund due, and ifthe Probate Court has not appointed a legal repre-sentative and none is contemplated, a Massachu-setts Form M-1310 must be enclosed with thereturn so the refund check may be made payableto the proper person.

Should I Make Estimated TaxPayments in 2010?Every resident or nonresident who expects to paymore than $400 in Massachusetts income tax onincome which is not covered by Massachusettswithholding must pay Massachusetts estimatedtaxes. Estimated tax payments can be made on-line by using Web Services for Income by visitingwww.mass.gov/dor or by filing MassachusettsForm 1-ES. See line 38 instructions and TIR 04-25for more information.

When to FileYour ReturnYour Massachusetts Form 1 is due on or beforeApril 15, 2010.

Automatic Extension Granted if100% Tax Due is Paid by Tax ReturnDue DateIf line 3 of the Extension Worksheet on page 3 is“0” and 100% of the tax due for 2009 has beenpaid through:

◗ withholding;

◗ timely estimated payments of tax;

◗ credits from your 2009 return; and

◗ an overpayment from the prior tax year appliedto the next year’s estimated tax,

you are no longer required to file Form M-4868,Application for Automatic Extension of Time to FileMassachusetts Income Tax Return. However, if youdo choose to file Form M-4868 in this instance,you must do so electronically, via DOR’s website.See TIR 06-21 for more information.

Also, if you owe no tax or you are making a pay-ment of $5,000 or more, you are required to fileyour extension via the web. If you are making apayment of less than $5,000, you also have the op-tion of filing your extension electronically. If thereis a tax due with your extension, payment can bemade through Electronic Funds Withdrawal.

Visit www.mass.gov/dor to file via the Web.

Note: Your extension will not be valid if you fail topay 80% of your total tax liability through with-holding, estimated tax payments or with your ex-tension. Form M-4868 is available at www.mass.gov/dor or by calling (617) 887-MDOR or toll-freein Massachusetts 1-800-392-6089.

Must I File on a Calendar Year Basis?No. You may file on a fiscal year basis if you keepyour books and records on that fiscal year basisand if you receive permission from the Commis-sioner of Revenue. If you file on a fiscal year basis,you must file on or before the fifteenth day of thefourth month after the end of your fiscal year. Tax-payers filing on a fiscal year basis must completeand file Form 13, Notice of Designation of FiscalYear, available at www.mass.gov/dor or by calling(617) 887-MDOR or toll-free in Massachusetts 1-800-392-6089.

What Should I Do If I Make a Mistakeor Leave Something Off My Return?If, after filing your income tax return, you receivean additional tax statement or discover that anerror was made, do not submit a second tax re-turn. If corrections are necessary, go to www.mass.gov/dor and use DOR’s online abatement ap-plication or file Form CA-6, Application for Abate-ment/Amended Return. Form CA-6 is available atwww.mass.gov/dor, or you may have one mailed

to you by calling (617) 887-MDOR or toll-free inMassachusetts 1-800-392-6089.

What If I am Unable to Pay?If you are unable to pay the full amount of tax thatyou owe, you should pay as much of your tax lia-bility as possible with this return. You will receivea bill from the Department for the remainingamount of tax due plus accrued interest andpenalty charges. If the amount of that bill is lessthan $5,000 and you still cannot pay it in full, youmust apply formally to the Department for a smallpayment agreement in order to avoid collectionactivity. You can apply for a small payment agree-ment by visiting Web Services for Income atwww.mass.gov/dor.

Note: Do not mail your request for a paymentagreement with your tax return. Requests can bemade once a bill is issued through DOR’s WebServices for Income application at www.mass.gov/dor or by calling the Department at (617) 887-MDOR or toll-free in Massachusetts 1-800-392-6089 using the Department’s Interactive VoiceResponse (IVR) system. Setting up a small pay-ment agreement will allow you to make monthlypayments within a set time period to satisfy yourunpaid liability.

Name and AddressPrint the full name, address, and Social Securitynumber of each person filing the return in thespaces provided. Enter names as they appear onyour federal return. Be sure to retain the four-digitPersonal Identification Number (PIN) printed onthe back cover. You will need it to use DOR’sWeb-based and/or Interactive Voice Response(IVR) applications, such as checking the status ofyour refund.

Social Security Number(s)Be sure to enter your Social Security number(s) onyour return. Also, enter your Social Security num-ber on pages 2 and 3 of Form 1 and on page 2 ofSchedules B or C, if filed. Failure to show the cor-rect Social Security number in the space providedwill delay the processing of your return. If filingjointly, list your numbers in the order they appearon your federal return. Taxpayers filing their U.S.return using an Individual Taxpayer Identificationnumber (ITIN) should enter that ITIN as their So-cial Security number in the appropriate space. Also,be sure your employer has listed the correct SocialSecurity number on your Form W-2. If you are mar-ried, you must list your spouse’s Social Securitynumber even if you are filing a separate return.

To apply for an SSN, you must complete FormSS-5. Form SS-5 is available online at www.socialsecurity.gov, from your local Social Security Admin-istration (SSA) office, or by calling the SSA at 1-800-772-1213. It usually takes about 2 weeks to

8 Line by Line Instructions

receive an SSN. If you are a nonresident or residentalien and you do not have and are not eligible to getan SSN, you must apply for an ITIN. For details onhow to do so, see Form W-7 and its instructions.Form W-7 is available online at www.irs.gov or bycalling the IRS at 1-800-829-1040. It usually takesabout four to six weeks to receive an ITIN.

Deceased TaxpayerBe sure to fill in the appropriate oval if a taxpayerdied during the taxable year. For further informa-tion, refer to the section “How Do I File a Dece-dent’s Return?”

Name/Address ChangeIf you legally changed your name or address in2009, fill in the oval. If you changed your name,enclose a copy of your Social Security card ordriver’s license showing your new name. Failure toinclude this documentation could delay processingof your return. If you move after filing, be sure toleave a forwarding address with your local post of-fice and file a Change of Address Form with theMassachusetts Department of Revenue. This formis available to be filed online at www.mass.gov/dor,or by calling (617) 887-MDOR or toll-free inMassachusetts 1-800-392-6089.

Veterans BenefitsFill in the appropriate oval(s) for you, and/or yourspouse if married filing a joint return, if you are aveteran who served in the Armed Forces of theUnited States in active service as part of OperationEnduring Freedom, Operation Iraqi Freedom orOperation Noble Eagle and were discharged underhonorable conditions and were domiciled for sixmonths in Massachusetts immediately prior toentry into the Armed Forces. The Department ofRevenue will then forward the name and addressto the Department of Veterans’ Services and theadjutant general of the Massachusetts NationalGuard to verify eligibility for any benefits you maybe entitled to.

Voluntary Contribution toState Election Campaign FundYou, and your spouse if filing jointly, may volun-tarily contribute $1 each to the State Election Cam-paign Fund. The purpose of this fund is to providelimited public financing for campaigns of eligiblecandidates for statewide and elective office. Thiscontribution will not change your tax or reduceyour refund.

Noncustodial ParentFill in this oval if you are a “noncustodial parent.”A noncustodial parent is defined as a person whohas a minor child, but does not live with the child.

Note: If you are the biological parent of a child,but your parental rights have been terminated, youare not the noncustodial parent of that child.

Schedule TDS — InconsistentFiling Position PenaltyFill in the oval and attach Schedule TDS, TaxpayerDisclosure Statement, if you are disclosing any in-consistent filing positions. Schedule TDS is avail-able on our website at www.mass.gov/dor. Theinconsistent filing position penalty (see TIR 06-5,section IV) applies to taxpayers that take an in-consistent position in reporting income. Thesetaxpayers must “disclose the inconsistency” whenfiling their Massachusetts return. If such inconsis-tency is not disclosed, the taxpayer will be subjectto a penalty equal to the amount of tax attributableto the inconsistency. This penalty is in addition toany other penalties that may apply.

A taxpayer is deemed to have taken an “inconsis-tent position” when the taxpayer pays less tax inMassachusetts based upon an interpretation ofMassachusetts law that differs from the positiontaken by the taxpayer in another state where thetaxpayer files a return and the governing law in thatother state “is the same in all material respects” asthe Massachusetts law. The Commissioner maywaive or abate the penalty if the inconsistency orfailure to disclose was attributable to reasonablecause and not willful neglect.

Under Age 18If you are under age 18 as of January 1, 2010, besure to fill in the oval(s).

Note: Lines without specific instructions are con-sidered to be self-explanatory.

Line 1. Filing StatusNote: More than one filing status may apply to you.If so, you may wish to figure your taxes basedupon more than one filing status to see which sta-tus is to your benefit.

SingleFill in the “Single” oval if you were single as of De-cember 31, 2009. This status applies to you if atthe close of the taxable year you fit into any of thefollowing categories:

◗ you were unmarried;

◗ you were a widow or widower whose spousedied before 2009; or

◗ you were legally separated under a final judg-ment of the probate court.

Please note that you are not single if: (1) you haveobtained a judgment of divorce which has not yetbecome final; (2) you have a temporary supportorder; or (3) you and your spouse simply chooseto live apart.

Married Filing Joint ReturnFill in the “Married filing joint return” oval if youwere legally married as of December 31, 2009.Both spouses are responsible for the accuracy of

all information entered on a joint return and bothmust sign. A joint return is allowed even if only onespouse had income or if one spouse died during2009. For further information, refer to the section“What Are the Rules for Filing a Joint Return?”

Note: Same-sex spouses filing a Massachusettsjoint return must combine their figures from theirseparate U.S. returns. See TIR 04-17 for more in-formation.

Married Filing Separate ReturnFill in the “Married filing separate return” oval ifyou were legally married as of December 31, 2009,and if you and your spouse are not filing a jointreturn. Be sure to enter your spouse’s Social Se-curity number in the space provided.

Head of HouseholdFill in the “Head of household” oval if you qualifyto file this status federally. This status is for un-married people who paid over half the cost ofkeeping up a home for a qualifying person, suchas a child who lived with you or your dependentparent. See TIR 04-17 for Massachusetts differ-ences. Certain married people who lived apart fromtheir spouse for the last six months of 2009 mayalso be able to use this status. See IRS Publica-tion 501, Exemptions, Standard Deduction, and Fil-ing Information, for more information.

Whole Dollar Method RequiredThe Department of Revenue requires that thewhole dollar method be used for entries made onforms or schedules. For example, amounts be-tween $1.00 and $1.49 should be entered as $1.00and amounts between $1.50 and $2.00 should beentered as $2.00. However, calculations on work-sheets used to reach amounts shown on the re-turn may be made in one of two ways: (1) roundamounts before adding them up and enter the re-sulting total on the form, or (2) add amounts tothe penny, and then round to the whole dollar forentry on the form. Either method is acceptable aslong as one method is used consistently through-out the return.

Line 2. ExemptionsLine 2a: Personal ExemptionsEach taxpayer is entitled to claim a personal ex-emption. The amount of your personal exemptiondepends on your filing status in line 1.

◗ If you are single or married filing a separate re-turn, enter $4,400 in line 2a.

◗ If filing as head of household, enter $6,800 inline 2a.

◗ If married filing a joint return, enter $8,800 inline 2a.

92009 Form 1 — Line by Line Instructions

Line 2b: Number of DependentsYou may claim a $1,000 exemption for each ofyour dependents if you claimed them on your U.S.return. Enter in the box in item b the number ofdependents you listed on U.S. Form 1040, line 6cor U.S. Form 1040A, line 6c. Do not include your-self or your spouse. Then, multiply that total by$1,000 and enter the total amount in line 2b. Besure to fill out Schedule DI, Dependent Informa-tion, if you are claiming a dependent exemp-tion(s). Failure to do so will delay the processingof your return.

Note: In a few cases, the number of dependentsclaimed for Massachusetts purposes and for U.S.purposes may differ. Massachusetts allows a de-pendent exemption for each individual who quali-fies for exemption as a dependent under sec.151(c) of the Code. For purposes of sec. 151(c),the definition of dependent in sec. 152 is adopted.Under federal law, there are additional restrictionson the dependent exemption beyond the rules ofsec. 152 that are not adopted by Massachusetts.For Massachusetts tax purposes, if an individualqualifies as a dependent under the rules of sec.152, you can claim a dependent exemption forsuch a person. If you claim such a dependent inMassachusetts, increase the number reported initem b from your U.S. return by the number ofsuch additional dependents. Also, same-sex jointfilers should combine the number of dependentsfrom their federal returns to arrive at the numberof Massachusetts dependents. See TIR 04-17 formore information.

Line 2c: Age 65 or Over Before 2010You are allowed an additional $700 exemption ifyou were age 65 or over before January 1, 2010.If your spouse was age 65 or over and you are fil-ing a joint return, you may also claim a $700 ex-emption for your spouse. Fill in the appropriateoval(s) and enter the total number of persons age65 or over in the small box. Multiply that total by$700 and enter the total in line 2c.

Line 2d: Blindness ExemptionYou are allowed an additional $2,200 exemption ifyou are legally blind. If your spouse is also legallyblind and you are filing a joint return, you may alsoclaim a $2,200 exemption for your spouse. Fill inthe appropriate oval(s) and enter the total numberof blindness exemptions in the small box. Multiplythat total by $2,200 and enter the total in line 2d.

Legal Definition of BlindnessYou are legally blind and qualify for the blindnessexemption if your visual acuity with correction is20/200 or less in the better eye, or if your peripheralfield of vision has been contracted to a 10-degreeradius or less, regardless of visual acuity.

Line 2e: Other: Medical/Dental Expensesand Adoption Agency FeeYou may claim an exemption for medical and den-tal expenses paid during 2009 only if you itemizedthese expenses on your U.S. Form 1040, Sched-ule A. If you are married filing a joint U.S. Form1040, you must file a joint Massachusetts Form 1to claim this exemption. Enter in line 2e, item 1 theamount reported on your U.S. Form 1040, Sched-ule A, line 4.

Note: Same-sex joint filers should recalculate theirU.S. Form 1040, Schedule A by combining allow-able expenses as reported on U.S. Form 1040,Schedule A, line 1 and their adjusted gross incomesas reported on U.S. Form 1040, Schedule A, line 2in calculating U.S. Form 1040, Schedule A, line 4.

If you paid adoption fees to a licensed adoptionagency during 2009, you are eligible for an ex-emption of the total amount of the fees paid dur-ing the year. Fees paid during 2009 to an agencylicensed to place children for adoption on accountof the adoption process of a minor child regard-less of whether an adoption actually took placeduring 2009 should also be included for this ex-emption. Enter this amount in line 2e, item 2.

Add items 1 and 2 and enter the total in line 2e.

Line 2f: Total ExemptionsAdd items 2a through 2e and enter the total in line2f. This amount should also be entered on line 18of Form 1.

5.3% IncomeNote: DOR and the IRS maintain an extensive ex-change program, routinely sharing computer tapesand audit results. Discrepancies between income,deductions, and schedules reported federally andon this return, except those allowed under statelaw, will be identified and may result in a state auditor further investigation.

Line 3. Wages, Salaries, Tips andOther Employee CompensationReport in line 3 total state wages and allocated tipsfrom Form(s) W-2. Income earned by a Massachu-setts resident in another state is subject to taxationin Massachusetts. Generally, your total wages andallocated tips will be the same amount reported onyour U.S. 1040 or 1040A, line 7; or 1040EZ, line 1.

Following are instances that require an adjustmentto these amounts:

Massachusetts Legal Residents Workingin a Foreign CountryIncome earned by a Massachusetts resident in aforeign country is subject to taxation in Massachu-setts. If you excluded part or all of the compensa-

tion earned in a foreign country on your U.S. return(under Section 911 of the U.S. IRC), you must in-clude any such amount in line 3 for Massachusettstax purposes.

State or Local Employees Contributing toPension PlansIf you are a Massachusetts state, city, town orcounty employee and contributed to your pensionplan, enter in line 3 the Massachusetts W-2 statewage amount. This is generally box 16 of FormW-2. This amount will be higher than the U.S.amount because your pension contributions areexcluded from your income for U.S. tax purposes.Contributions up to $2,000 per taxpayer may stillbe deducted in lines 11a and/or 11b.

Line 4. Taxable Pensions andAnnuitiesIncome from most private pensions or annuityplans is taxable in Massachusetts. Certain govern-ment pensions, however, are exempt under Mass-achusetts law. In general, exempt pensions includecontributory pensions from the U.S. Governmentor the Commonwealth of Massachusetts and itspolitical subdivisions, and noncontributory militarypensions. The following section describes somespecific pensions which are exempt. If your pen-sion is exempt, enter “0” in line 4 and note thesource on the dotted line to the left.

If your pension is not exempt, you should generallyenter in line 4 the taxable amount reported on yourU.S. Form 1040, line 16b, or U.S. Form 1040A, line12b. In some cases, however, Massachusetts lawrequires an adjustment to the federal amount.Distributions from annuity, stock bonus, pension,profit-sharing or deferred payment plans or con-tracts described in Sections 403(b) and 404 of theU.S. IRC must be adjusted to account for your con-tributions that have been previously taxed. Sub-tract from such income (as reported on your U.S.Form 1040, line 16a, or U.S. Form 1040A, line 12a)the amount of your contributions which was pre-viously taxed by Massachusetts until the total ofyour taxed contributions is received. If your pen-sion falls into this category, enter the adjustedamount in line 4. If you are receiving distributionsfrom an IRA or Keogh plan, do not report the in-come here; instead, see the instructions for Sched-ule X, line 2.

Note: Massachusetts does not tax Social Securityincome; therefore, you should not report such in-come on Massachusetts Form 1.

What pensions are exempt?◗ Pension income received from a contributoryannuity, pension, endowment or retirement fundof the U.S. Government or the Commonwealth ofMassachusetts and its political subdivisions.

10 2009 Form 1 — Line by Line Instructions

◗ Pensions from other states or its political subdi-visions which do not tax such income from Mass-achusetts or its political subdivisions may beeligible to be deducted from Massachusetts taxableincome. This pension income, however, should bereported in line 4. Refer to Schedule Y, line 13 in-structions to determine eligibility for this deduction.

◗ Noncontributory pension income or survivorshipbenefits received from the U.S. uniformed services(Army, Navy, Marine Corps, Air Force, Coast Guard,commissioned corps of the Public Health Serviceand National Oceanic and Atmospheric Adminis-tration) is exempt from taxation in Massachusetts.

◗ Massachusetts state court judges who were ap-pointed on or after January 2, 1975 are participantsin the Massachusetts contributory retirement sys-tem and their pensions are nontaxable. State courtjudges who were appointed prior to January 2,1975 receive taxable noncontributory pensions.

If you retired under Chapter 32, Sections 56–60 ofMassachusetts General Laws and are a veteran whobegan Massachusetts state service prior to July 1,1939, all or part of your pension income may besubject to tax. If you elected to receive your pro-ceeds from contributions in one lump-sum distrib-ution, your original contributions to the retirementsystem are not taxable. Noncontributory pensionincome received after a lump-sum distribution isfully taxable and should be reported in line 4.

How do I report lump-sum distributions?If you were an employee of the U.S., Massachu-setts or one of its political subdivisions and leftpublic employment prior to retirement, you arenot required to report as income the lump-sumdistribution of your previously-taxed pensioncontributions.

Lump-sum distributions of qualified employee ben-efit plans in excess of the employee’s contributionswhich were previously subject to Massachusetts tax(or not previously excluded from Massachusettstax) must be reported in line 4. Generally, qualifiedrollovers are not taxable in Massachusetts to theextent they are not taxable on your U.S. return.Lump-sum distributions related to IRA/Keogh andRoth IRA distributions should be reported in line 9.

Rollover from a traditional IRA to a Roth IRA.Taxpayers with $100,000 or less in federal adjustedgross income are allowed to make partial or com-plete rollovers from existing IRAs to Roth IRAs.Any taxable portion of these rollovers included infederal gross income is also included in Massachu-setts gross income, except for amounts previouslysubject to Massachusetts personal income tax. SeeSchedule X, line 2 instructions for further details.

Line 5. Interest from MassachusettsBanksEnter in line 5a the total amount of interest re-ceived or credited to deposit accounts (term andtime deposits, including certificates of deposit, sav-ings accounts, savings shares, and NOW accounts)in Massachusetts banks. Then, enter your exemp-tion amount in line 5b (if married filing jointly,enter $200; otherwise, enter $100). Subtract line5b from 5a and enter the result in line 5, but notless than “0.”

Note: This exemption amount does not apply toyour U.S. tax return.

Do not subtract interest forfeited or penaltiescharged to you for early savings withdrawal. You willbe allowed to deduct these amounts on ScheduleY, line 2. All other interest, unless exempt, shouldbe entered on Massachusetts Schedule B. Intereston an IRA/Keogh is not taxable until distributed.

Lines 6, 7 and 10. If showing a loss in lines 6, 7 or10, be sure to mark over the “X” in the box to theleft. Do not use parentheses or negative signs toindicate losses.

Line 6. Business/Profession orFarm Income or LossEnter in line 6 the amount of income or loss froma business or profession from MassachusettsSchedule C, line 31. You must enclose Massachu-setts Schedule C with this return. Also, enclose acopy of your U.S. Schedule C-EZ if substituting U.S.Schedule C-EZ for Massachusetts Schedule C.

Note: U.S. Schedule C is no longer allowed as asubstitute for Massachusetts Schedule C. How-ever, you may substitute U.S. Schedule C-EZ forMassachusetts Schedule C if there are no differ-ences between the amounts reported on U.S.Schedule C-EZ and amounts that would be re-ported on Massachusetts Schedule C. Be sure towrite “No Massachusetts Differences” on the topof the U.S. Schedule C-EZ.

If you operate a farm as an individual or coopera-tive, enter the amount of income or loss from op-erating a farm from U.S. Schedule F, Profit or Lossfrom Farming, line 36. Enclose a copy of U.S.Schedule F. Complete a pro-forma U.S. ScheduleF to report Massachusetts differences, such asbonus depreciation.

Line 7. Rental, Royalty, REMIC,Partnership, S Corporation,Trust Income or LossFor tax years beginning on or after January 1, 2008,any taxpayer with income or loss reported on aSchedule E must file his or her tax return usingcomputer-generated forms produced by third-

party software. The tax return may be generatedby the taxpayer or by a tax professional. The tax-payer is encouraged, but not required, to submitthe return electronically. Paper forms producedusing the third-party software product will containa two-dimensional (2D) bar code and will also beaccepted. If the taxpayer hires an income tax pre-parer to complete the taxpayer’s taxes, the preparermust follow the Commissioner’s electronic filingrules. See TIR 08-22 for more information.

If you do not have access to a software packagewhen filing your 2009 income tax return, you mayfile your Schedule(s) E on paper. Visit our websiteat www.mass.gov/dor to download a paper copyof the 2009 Schedule(s) E (and instructions) tofile with your income tax return.

Line 8a. UnemploymentCompensationPartial Federal Exclusion ofUnemployment CompensationFor federal income tax purposes, pursuant to IRCsec. 85(c), individuals must include in gross in-come any unemployment compensation receivedunder the laws of the U.S. or any state. Under theARRA, up to $2,400 of unemployment compensa-tion benefits received in 2009 are excluded fromfederal gross income by the recipient. Massachu-setts follows the provisions of IRC sec. 85(c) asamended and in effect on January 1, 2005. Mass-achusetts does not adopt the partial exclusion ofunemployment compensation because it was en-acted after January 1, 2005.

If you received unemployment compensation,enter in line 8a the amount from box 1 of all Forms1099-G, Certain Government Payments. If youelected voluntary withholding of Massachusettsstate income taxes on your unemployment com-pensation, be sure to include the amount of Mass-achusetts state income tax withheld, as reportedon Form 1099-G, on Form 1, line 36 and attachwith a single staple, where indicated on the return,Form 1099-G.

Note: DOR routinely matches the amounts in line8a with files from the Division of UnemploymentAssistance.

Line 8b. Massachusetts StateLottery WinningsEnter in line 8b all winnings from the Massachu-setts state lottery. Do not enter less than “0.” Youmay only deduct the price of your winning ticket.Lottery losses claimed as itemized deductions onU.S. Form 1040, Schedule A are not allowed onyour Massachusetts return.

Note: DOR routinely matches the amounts in line8b with files from the Lottery Commission.

112009 Form 1 — Line by Line Instructions

12 2009 Form 1 — Line by Line Instructions

Line 9. Other Income(from Schedule X)Alimony Received, Taxable IRA/Keoghand Roth IRA Conversion Distributions,Other Gambling Winnings, Fees andOther 5.3% Income“Other 5.3% income” includes the items listedabove and must be included on Schedule X. Enterthe total from Schedule X, line 5. Not less than “0.”Be sure to enclose Schedule X with your return.Failure to enclose this schedule will delay theprocessing of your return.

DeductionsLines 11 through 15Massachusetts allowable deductions differ from“Itemized Deductions” on Schedule A of U.S. Form1040. You may claim only the deductions speci-fied on Massachusetts Form 1, lines 11 through14 and Schedule Y.

Please read the instructions for lines 12 and 13 todetermine which deduction you qualify for or whichis better for you. You cannot claim a deduction inboth lines 12 and 13.

You are not allowed to deduct amounts unless theyare directly related to income that is subject to tax-ation and reported on Massachusetts Form 1.

Line 11. Amount Paid to SocialSecurity (FICA), Medicare,Railroad, U.S. or MassachusettsRetirement SystemsIf you have paid into any of the retirement systemslisted above during 2009, you may deduct thosecontributions, up to a maximum of $2,000.

Enter in lines 11a and 11b the amount you, andyour spouse if filing jointly, paid to Social Security(FICA), Medicare or Railroad Retirement and theU.S. or Massachusetts retirement systems during2009 as shown on your Form W-2, but not morethan $2,000 each. Payment amounts may not becombined or transferred from one spouse to theother. Be sure to add any amount of Medicare taxwithheld as shown on Form W-2 and any amountof self-employment tax as reported on your U.S.Form 1040 to the amount of Social Security taxwithheld, the total not to exceed $2,000 per person.

Note: Medicare premiums deducted from yourSocial Security or retirement payments are notdeductible.

Payments to an IRA, Keogh, Simplified EmployeePension Plan (SEP), or Savings Incentive MatchPlan for Employees (SIMPLE) Account are not de-ductible for Massachusetts income tax purposes.

Line 12. Child Under Age 13,or Disabled Dependent/SpouseCare ExpensesMassachusetts allows taxpayers to exceed thefederal limit on employment-related expenses forthe care of a qualified child under the age of 13, adisabled dependent or a disabled spouse. Themaximum deduction is $4,800 for one qualifyingindividual, and $9,600 for two or more qualifyingindividuals. Complete the following worksheet tocalculate your Massachusetts child or disabled de-pendent/spouse care expense deduction.

Note: You cannot claim this deduction if marriedfiling a separate U.S. 1040 or 1040A return. If youare filing a joint U.S. 1040 or 1040A return but aremarried filing separately for Massachusetts pur-poses, either spouse may claim the deduction forexpenses he or she incurred, but their combineddeduction cannot exceed $4,800 for one qualify-ing individual or $9,600 for two or more qualify-ing individuals.

Taxpayers who received dependent care benefitsshould complete a pro forma U.S. Form 2441 orU.S. Form 1040A, Schedule 2. When completingthis pro forma form, taxpayers should enter$4,800 (or $9,600 for two or more qualifying per-sons) in line 30 of U.S. Form 2441 or line 23 ofU.S. Form 1040A, Schedule 2. The amount fromthis pro forma Form 2441, line 34 or U.S. Form1040A, Schedule 2, line 27 should then be en-tered in line 1 of the following worksheet.

Note: Same-sex joint filers should complete a proforma U.S. Form 2441 or U.S. Form 1040A,Schedule 2. In addition to changing the maximumamount of the deduction allowed on U.S. Form2441 or U.S. Form 1040A, Schedule 2 (see pre-ceding paragraph), same-sex spouses should pre-pare the pro forma federal forms as though theywere filing a joint federal return. See TIR 04-17for more information.

Line 12 Worksheet — Child Under 13 orDisabled Dependent/Spouse Care Deduction

Use this worksheet to calculate your Mass-achusetts child under age 13 or disableddependent/spouse care deduction.

1. Enter the amount of qualified expensesyou incurred and paid in 2009 for a qualifyingperson(s). This amount may exceed the federallimit of $3,000 for one qualifying person or$6,000 for two or more persons. However,do not enter more than $4,800 for onequalifying person or $9,600 for two ormore persons . . . . . . . . . . . . . . . . . 2. Enter the amount from U.S. Form 2441,line 4, or U.S. Form 1040A, Schedule 2, line 4 . . . . . . . . . . . . . . . . . . . . . . . .

3. Enter the amount from U.S. Form 2441,line 5, or U.S. Form 1040A, Schedule 2, line 5 . . . . . . . . . . . . . . . . . . . . . . . . 4. Enter the smallest of line 1, 2 or 35. If you paid 2008 expenses in 2009, enter theamount of the allowed 2008 expenses used tocompute the credit on U.S. Form 2441, line 9,or U.S. Form 1040A, Schedule 2, line 9.Otherwise, enter “0” . . . . . . . . . . . . 6. Add lines 4 and 5. Not to exceed more than$4,800 for one qualifying person or $9,600 fortwo or more persons. Enter here and in Form 1,line 12 . . . . . . . . . . . . . . . . . . . . . . .

Note: If you choose to take a deduction in line12, you cannot take the deduction in line 13.

Line 13. Dependent Member(s)of Household Under Age 12,or Dependents Age 65 or Over(not you or your spouse) as ofDecember 31, 2009, or DisabledDependentYou may deduct $3,600 for a dependent member ofhousehold, or $7,200 for two or more dependents,under age 12, or dependent age 65 or over (notyou or your spouse) as of December 31, 2009, ordisabled dependent. Enter the number of qualifieddependents in line 13a, not to exceed two, and mul-tiply that amount by $3,600. Enter the result in line13. Only if single, head of household or married fil-ing jointly. You cannot claim this deduction if mar-ried filing a separate return.

Note: You may claim an amount in line 13 only ifthere is no entry in line 12.

Line 14. 50% Rental DeductionYou may be entitled to a rental deduction equal toone-half (50%) of the rent you paid during 2009(up to a maximum of $3,000 per return) for yourprincipal residence in Massachusetts. Enter thetotal amount of qualified rent paid by you during2009 in line 14a. Divide line 14a by 2 and enter theresult, or $3,000 ($1,500 if married filing a sepa-rate return) — whichever is smaller — in line 14.

Note: This deduction amount does not apply toyour U.S. tax return.

What Qualifies for the Rental Deduction?The deduction must be for rent you paid to a land-lord for the rental or lease of your principal resi-dence in Massachusetts.

If two or more persons jointly rent a unit, each oc-cupant using it as his/her principal residence is en-titled to a deduction based on the amount of rentthat each person paid.

132009 Form 1 — Line by Line Instructions

If the rent is paid by a third party (such as a parent)who maintains a principal residence elsewhere, no50% rental deduction is allowed for either party.

A principal residence does not include any resi-dence for vacation, an apartment for a person ona temporary assignment or a student or facultymember who has a principal residence elsewhere.It also does not include any apartment or housein Massachusetts of a nonresident who has alegal residence in another state or country.

Payment for occupying a hotel, motel or roominghouse is not considered rent unless a rental agree-ment exists. All separately stated charges such asutilities, furnishings or parking cannot be includedin rent for purposes of this deduction. Also, rentdoes not include any advance payments (such assecurity deposit, last month’s rent, etc.) until ac-tually applied as rent.

How Do I Calculate My Rental DeductionIf I Am Married Filing Separately?If a husband and wife file separate returns, they areeach entitled to a rental deduction equal to 50% ofthe rent each pays, not to exceed $1,500 per re-turn. However, a married couple filing separatelymay allocate the rent deduction differently, pro-vided the amount taken by each spouse does notexceed 50% of the rent actually paid by thatspouse, and provided their combined rental deduc-tions do not exceed $3,000. If the allocation re-sults in one spouse claiming a deduction in excessof $1,500, that spouse must enclose with his/herreturn a statement signed by the other spouse in-dicating consent to the allocation. The statementmust contain the name, address and Social Secu-rity number of the consenting spouse and theamount of rental deduction taken by that spouse.

Line 15. Other Deductions(from Schedule Y)Enter the total from Schedule Y, line 16. Be sure toenclose Schedule Y with your return. Failure to doso will delay the processing of your return.

Line 17. 5.3% Income AfterDeductionsSubtract line 16 from line 10. Enter the result in line17. If line 16 exceeds line 10, enter “0” in line 17.

Line 19. 5.3% Income AfterExemptionsSubtract line 18 from line 17. If line 18 exceedsline 17, enter “0” in line 19.

If line 18 exceeds line 17 and you received interestincome (other than interest from Massachusettsbanks), dividends or capital gain income, com-plete the worksheet for Schedule B, line 36 andSchedule D, line 19, if applicable. All others pro-ceed to line 20.

Line 20. Interest and DividendIncomeIf you have any interest income other than interestfrom deposits in banks located in Massachusetts,dividend income in excess of $1,500, certain cap-ital gains or losses, or any adjustments to interestincome (other than interest from Massachusettsbanks), you must complete Schedule B. Be sure toenclose Massachusetts Schedule B. To determineif you need to file Schedule B, refer to the Sched-ule B instructions in this booklet.

Enter in line 20 the amount from Schedule B, line38. If not required to file Schedule B, enter divi-dend income of $1,500 or less (from U.S. Form1040 or 1040A, line 9a) in line 20.

Tax on 5.3% IncomeLine 22. 5.3% Tax (from Tax Table)Based upon the amount in line 21, find the properamount of tax in the table at the back of this book-let. Enter the tax in line 22. If line 21 is more than$24,000, multiply the amount in line 21 by .053and enter the result in line 22. You must use thetax table if line 21 is $24,000 or less.

Note: Personal income tax forms must provide anelection to voluntarily pay tax at a rate of 5.85% ontaxable income which would otherwise be taxedat a rate of 5.3%. The election to pay tax at the rateof 5.85% does not apply to items of income taxedat 12% (short-term capital gains and gains on col-lectibles). If choosing the optional 5.85% tax rate,multiply line 21 and Schedule D, line 20 by .0585and fill in the oval.

12% Income &TaxLine 23. 12% Income from CertainCapital GainsIf you have any interest income other than interestfrom deposits in banks located in Massachusetts,dividend income in excess of $1,500, certain cap-ital gains or losses, or any adjustments to interestincome (other than interest from Massachusettsbanks), you must complete Schedule B. Be sure toenclose Massachusetts Schedule B. To determineif you need to file Schedule B, refer to the Sched-ule B instructions in this booklet.

Enter in line 23a the amount from Schedule B, line39. Multiply this amount by .12 (12%) and enterthe tax in line 23.

Tax on Long-TermCapital GainsLine 24. Schedule D (Long-TermCapital Gains and Losses ExcludingCollectibles)Enter in line 24 the amount from Schedule D, line21, but not less than “0.” To determine if you needto file Schedule D, refer to the Schedule D instruc-tions in this booklet.

Schedule B, Line 36 and Schedule D, Line 19Worksheet — Excess Exemptions from Interestand Dividend Income, 12% Income and Long-Term Capital Gain Income (Only if Single,Head of Household, or Married Filing Jointly)

If your total exemptions in line 18 are more thanthe amount of your 5.3% income after deduc-tions in line 17, the excess may be appliedagainst your interest and dividend income andincome taxed at 12%. Any remaining excessamount may then be applied against your long-term capital gain income. Complete this work-sheet only if line 17 is less than line 18 todetermine if you qualify for the excessexemption. Enter all losses as “0.”

1. Enter amount from Schedule B, line 35.Not less than “0” . . . . . . . . . . . . . . . 2. Enter amount from Form 1, line 18 . . . . . . . . . . . . . . . . . . . . . . . 3. Enter amount from Form 1, line 17 . . . . . . . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If “0” or less,you do not qualify for this exemption.Omit remainder of worksheet . . . . . 5. Excess exemptions applied against interestand dividend income and 12% income. If line 1is larger than line 4, enter line 4 here and inSchedule B, line 36. If line 4 is equal to orlarger than line 1, enter line 1 here and inSchedule B, line 36. Complete lines 6 through 8. . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 4. If “0,” omitremainder of worksheet . . . . . . . . . 7. Enter Schedule D, line 18. Not less than “0” . . . . . . . . . . . . . . . . . . . . . . 8. Excess exemptions applied against long-termcapital gain income. If line 7 is larger than line 6,enter line 6 here and in Schedule D, line 19. Ifline 6 is equal to or larger than line 7, enter line7 here and in Schedule D, line 19 . .

Excess ExemptionsIf excess exemptions were used in calculating lines20, 23 or 24 (see Schedule B, line 36 and/or Sched-ule D, line 19), be sure to fill in the oval in line 24.

Line 25. Credit Recapture AmountIf any Brownfields Credit (BC), Economic Opportu-nity Area Credit (EOA), Low Income Housing Credit(LIH) or Historic Rehabilitation Credit (HR) prop-erty is disposed of or ceases to be in qualified useprior to the end of its useful life, the difference be-tween the credit taken and the total credit allowedfor actual use must be added back to your tax onForm 1. Complete and enclose Schedule H-2,Credit Recapture. Schedule H-2 is available atwww.mass.gov/dor or by calling (617) 887-MDORor toll-free in Massachusetts 1-800-392-6089.

MassachusettsAdjusted GrossIncome (AGI)No Tax Status — Single, Married Filing aJoint Return or Head of Household OnlyIf your Massachusetts AGI was $8,000 or less ifsingle, $14,400 or less plus $1,000 per depen-dent if head of household, or $16,400 or less plus$1,000 per dependent if married filing a joint re-turn, you qualify for No Tax Status and are not re-quired to pay any Massachusetts income taxes.

Limited Income Credit — Single, Married Filing a Joint Returnor Head of Household OnlyIf you do not qualify for No Tax Status, but you aresingle and your Massachusetts AGI is between$8,000 and $14,000, or if you are filing as head ofhousehold and your Massachusetts AGI is be-tween $14,400 and $25,200 plus $1,750 per de-pendent, or if you are married filing a joint returnand your Massachusetts AGI is between $16,400

and $28,700 plus $1,750 per dependent, you mayqualify for the Limited Income Credit. This creditis an alternative tax calculation that can result in asignificant tax reduction for people whose incomeis close to the No Tax Status threshold.

Massachusetts AGIMassachusetts AGI is not the same as taxable in-come. Massachusetts AGI includes:◗ wages, salaries, tips;◗ taxable pensions and annuities;◗ pension income from another state or politicalsubdivision before any deduction;◗ taxable IRA/Keogh and Roth IRA distributions;◗ fees and unemployment compensation;◗ income or loss from a business or profession;◗ income or loss from partnerships, S corpora-tions and trusts;◗ rents, royalties and REMIC income;◗ alimony and other 5.3% income;◗ interest from Massachusetts banks before ex-emptions; and◗ other interest, dividends, and capital gains.

Complete the Massachusetts AGI Worksheet to seeif you may qualify for the College Tuition Deduction(Schedule Y, line 11), No Tax Status or the LimitedIncome Credit.

Massachusetts AGI Worksheet

1. Enter your total 5.3% income from Form 1,line 10. Not less than “0”* . . . . . . . 2. Enter the total of Schedule Y, lines 1through 10. . . . . . . . . . . . . . . . . . . . 3. Subtract line 2 from line 1. Not less than “0” . . . . . . . . . . . . . . . . . . . . . . 4. Enter total Massachusetts bank interest or theinterest exemption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . .

Note: If Form 1, line 10 is a loss, combine Form1, line 10 with the smaller amount of total Mass-achusetts bank interest or the interest exemptionamount. Enter the result in line 4, unless theresult is a loss. If the result is a loss, enter “0.”

5. Enter amount from Schedule B, line 35. Ifthere is no entry in Schedule B, line 35 or ifnot filing Schedule B, enter the amount fromForm 1, line 20 . . . . . . . . . . . . . . . . 6. Enter the amount from Schedule D, line 18.**Not less than “0” . . . . . . . . . . . . . . . 7. Add lines 3 through 6 . . . . . . . . .

If you are single and the total in line 7 is $8,000or less, you qualify for No Tax Status (see line26 instructions). If you are single but do notqualify for No Tax Status, and your total in line 7is $14,000 or less, complete line 27 and see line28 instructions for the Limited Income Credit.If you are filing as head of household or marriedfiling a joint return, compare line 7 with the NoTax Status/Limited Income Credit chart to see ifyou may qualify for No Tax Status or the LimitedIncome Credit.

*Add back any Abandoned Building Renovationdeduction claimed on Schedule(s) C and/or Ebefore entering an amount in line 1.

**If filing Schedule D-IS, Installment Sales, see theSchedule D-IS instructions (available at www.mass.gov/dor) for the amount to enter in line 6.

Line 26. No Tax StatusIf you qualify for No Tax Status, fill in the oval inline 26, enter “0” in line 27 and omit lines 28through 30. Also, enter “0” in line 31 and completeForm 1. However, if there is an amount entered inline 25, Credit Recapture Amount, enter thatamount in line 27 and complete lines 29 and 30.

Note: If married filing separately, you do not qual-ify for No Tax Status.

Line 28. Limited Income Credit

Line 28 Worksheet — Limited Income Credit(Only if Single, Head of Household, or MarriedFiling Jointly)

1. Enter amount from line 7 of MassachusettsAGI Worksheet . . . . . . . . . . . . . . . . 2. Enter $8,000 if single. If married filing a jointreturn or head of household, enter the amountfrom the No Tax Status column of the No TaxStatus/Limited Income Credit chart3. Subtract line 2 from line 1. . . . . . 4. Enter in line 4 the amount of tax from Form 1,line 27 . . . . . . . . . . . . . . . . . . . . . . . 5. Multiply line 3 by 10% (.10) . . . . 6. If line 4 is smaller than line 5, you are not eli-gible for this credit. Enter “0.” If line 4 is largerthan line 5, subtract line 5 from line 4 and enterresult here and in line 28 on Form 1

14 2009 Form 1 — Line by Line Instructions

Filing status:Head of household. Line 7 of Married filing a joint return.the AGI worksheet is less than Line 7 of the AGI worksheet or equal to: is less than or equal to:

Number of dependents(from Form 1, line 2b):

0123456

$14,40015,40016,40017,40018,40019,40020,400

you qualify forNo Tax Status

$25,20026,95028,70030,45032,20033,95035,700

you may qualifyfor the LimitedIncome Credit

$16,40017,40018,40019,40020,40021,40022,400

you qualify forNo Tax Status

$28,70030,45032,20033,95035,70037,45039,200

you may qualifyfor the LimitedIncome Credit

If the number of dependents is more than 6, add $1,000 per dependent to the No Tax Status column, or$1,750 per dependent to the Limited Income Credit column.

If you qualify for No Tax Status, see the instructions for line 26. If you may qualify for the Limited IncomeCredit, go to line 27 and complete the worksheet for line 28.

No Tax Status/Limited Income Credit Chart

Line 29. Other Credits(from Schedule Z)Enter the total from Schedule Z, line 14. Be sure toenclose Schedule Z with your return. Failure to doso will delay the processing of your return.

Line 32. Voluntary ContributionsYou may contribute any amount you choose to thefollowing funds. Remember, these amounts areadded to your tax. They increase the amount ofyour payment or reduce the amount of your refund.

a. Endangered Wildlife Conservation: The NaturalHeritage and Endangered Species Fund is admin-istered by the Division of Fisheries and Wildlife.Contributions are used to protect and restore rareand endangered wildlife and plants, and their habi-tats. This fund has helped restore and conserve inthe Commonwealth populations of the Bald Eagle,Hessel’s Hairstreak Butterfly, the Redbelly Turtleand the Plymouth Gentian.

b. Organ Transplant Fund: The Organ TransplantFund is administered by the Massachusetts De-partment of Public Health. All contributions re-ceived by the Fund assist patients with the costs ofmedications without which they might lose theirtransplanted organs. For information on how to be-come an organ donor, visit the Registry of MotorVehicle’s website at www.mass.gov/rmv.

c. Massachusetts AIDS Fund: The MassachusettsAIDS Fund is administered by the MassachusettsDepartment of Public Health. Contributions areused for research, experimental treatment and ed-ucation related to Acquired Immune DeficiencySyndrome (AIDS). Massachusetts residents livingwith AIDS receive experimental treatment throughclinical trials which are wholly supported with thisFund. The Fund also educates people with AIDSabout treatment options and how to gain accessto medication and experimental treatment.

d. Massachusetts United States Olympic Fund:Contributions to this fund are used to assist Mass-achusetts residents in paying all or part of any costsassociated with the development, maintenance andoperation of the United States Olympic Team par-ticipating in the Olympics and the United StatesParalympic Team participating in the Paralympics.

e. Massachusetts Military Family Relief Fund:The Massachusetts Military Family Relief Fund Isadministered by the Friends of Massachusetts Na-tional Guard and Reserve Families. Contributionsto this fund are used to help members of the Mass-achusetts National Guard and Massachusetts res-idents who are members of the reserves of thearmed forces of the United States and who havebeen called to active duty after the September 11,2001 terrorist attacks, and their families, to defraythe costs of food, housing, utilities, medical serv-ices, and other expenses.

Line 33. Massachusetts Use TaxDue On Out-of-State PurchasesMade in 2009A Massachusetts use tax is due on your taxablepurchases of tangible personal property purchasedfor use in Massachusetts on which you did notpay Massachusetts sales or use tax. These in-clude, but are not limited to, purchases made out-of-state, on the Internet or from a catalog, whereno Massachusetts sales tax was paid. The use taxdoes not apply to out-of-state purchases that areexempt from the sales tax (for example, clothingthat costs $175 or less). Examples of taxableitems include computers, furniture, jewelry, cam-eras, appliances, and any other item that is notexempt. Generally, anyone who pays a sales oruse tax to another state or territory of the UnitedStates on tangible personal property to be used inMassachusetts is entitled to a credit against theMassachusetts use tax, up to either 5% or 6.25%,depending on when the transaction occurred. Thiscredit is allowed for sales or use tax paid to an-other state only if that state has a correspondingcredit similar to the Massachusetts credit. See TIR03-1 for more information. Prepare and retain withyour records a list of your purchases in 2009 thatare subject to the Massachusetts use tax.

Taxpayers may use the following table to self-re-port a “safe-harbor” amount of use tax based ontheir Massachusetts adjusted gross income. Ataxpayer may pay this amount in lieu of the actualamount of use tax that would otherwise be due withrespect to such purchases. Individual taxpayerselecting to report use tax under this method willnot be assessed additional use tax on audit, even ifthe actual amount of use tax due would have beengreater than the amount from the schedule.

The estimated liability applies only to purchasesof any individual items each having a total salesprice of less than $1,000. For each taxable itempurchased at a sales price of $1,000 or greater,the actual use tax liability for each purchase mustbe added to the amount of the estimated liabilityderived from the table below. See TIR 04-26.

Mass. AGI per return* Use tax liability$25,010 – $025,000 $20$25,001 – $040,000 $15$40,001 – $060,000 $25$60,001 – $080,000 $35$80,001 – $100,000 $45Above $100,000 Multiply Mass. AGI* by .0005

*From line 7 of Massachusetts AGI worksheet.

Complete the following worksheet to calculate youruse tax if you are not self-reporting a “safe-harbor”amount. For more information about use tax, visitDOR’s website at www.mass.gov/dor.

Form 1, Line 33 Worksheet —Use Tax Due on Out-of-State Purchases

1. Total of purchases in 2009 subject to Mass-achusetts use tax purchased between 1/1/09and 7/31/09 . . . . . . . . . . . . . . . . . . . 2. Total of purchases in 2009 subject to Mass-achusetts use tax purchased between 8/1/09and 12/31/09. . . . . . . . . . . . . . . . . . 3. 5% Use tax. Multiply line 1 by .05 (5%) . . . . . . . . . . . . . . . . . . . . . . . . 4. 6.25% Use tax. Multiply line 2 by .0625(6.25%) . . . . . . . . . . . . . . . . . . . . . . 5. Credit for sales/use tax paid to other states orjurisdictions between 1/1/09 and 7/31/09. Addthe amount of any sales/use tax paid to anotherstate or jurisdiction, or 5% of the sales pricewhichever is less, on each purchase reportedin line 1 . . . . . . . . . . . . . . . . . . . . . . 6. Credit for sales/use tax paid to other states orjurisdictions between 8/1/09 and 12/31/09. Addthe amount of any sales/use tax paid to anotherstate or jurisdiction, or 6.25% of the sales pricewhichever is less, on each purchase reportedin line 2 . . . . . . . . . . . . . . . . . . . . . . 7. 5% Total amount due. Subtract line 5 fromline 3. Not less than “0”. . . . . . . . . . 8. 6.25% Total amount due. Subtract line 6from line 4. Not less than “0” . . . . . 9. Total amount due. Add line 7 to line 8. Notless than “0”. Enter result here and on Form 1,line 33 . . . . . . . . . . . . . . . . . . . . . . .

Line 34. Health Care PenaltyIf you are subject to the Health Care Penalty for2009 and are not appealing the application of thepenalty, enter the penalty amount from line 8 ofthe Penalty Worksheet on page HC-7 in line 34afor you and/or line 34b for your spouse.

Note: If married filing a joint return and both youand your spouse are subject to the penalty, separatePenalty Worksheets must be filled out to calculatethe separate penalty amounts for you and yourspouse, using your married filing jointly income.

Line 36. Massachusetts IncomeTax WithheldThis represents all income taxes withheld for theCommonwealth of Massachusetts as indicated onyour copies of Forms W-2, W-2G, PWH-WA (pro-moter withholding), 2G, K-1, 2K-1, 3K-1 and cer-tain 1099s, if applicable. Enter the total of allMassachusetts withholdings in line 36. Attach,with a single staple, state copies to your return;otherwise your claim of amounts withheld will notbe allowed. If you have lost your state copy, askthe payer for a duplicate. Copies of 1099s needonly be attached if they show an amount forMassachusetts tax withheld.

152009 Form 1 — Line by Line Instructions

Line 37. 2008 Overpayment Appliedto Your 2009 Estimated TaxInclude the exact amount of any 2008 overpay-ment you applied to your 2009 estimated taxesfrom your 2008 Massachusetts Form 1, line 45 orForm 1-NR/PY, line 50. Do not include any 2008refund in this line.

Line 38. 2009 MassachusettsEstimated Tax PaymentsIf you paid Massachusetts estimated income taxfor 2009, enter in line 38 the total of all Massachu-setts estimated tax payments. Be sure to includeany last quarter (of 2009) payment made on or be-fore January 15, 2010. Do not include any 2008overpayment applied to your 2009 estimated tax.Every resident who expects to pay more than $400in Massachusetts income tax on income which isnot covered by Massachusetts withholding mustpay Massachusetts estimated taxes. Estimated taxpayments can be made online by using Web Serv-ices for Income by visiting www.mass.gov/dor orby filing Massachusetts Form 1-ES.

Income which is not subject to withholdingincludes:◗ salaries and wages where the employer is notsubject to Massachusetts withholding;◗ dividends and interest, including interest fromMassachusetts banks;◗ gains from capital assets;◗ income from an individual trade, business orprofession;◗ income from any estate or trust not taxed directly;◗ certain pensions;◗ taxable Keogh or IRA distributions (only if youelected not to have federal withholding);◗ rental, royalty or REMIC income;◗ unemployment compensation (from which noMassachusetts income tax was withheld);◗ alimony received;◗ distributions from SIMPLE accounts;◗ illegal income; and◗ any other income received while a Massachu-setts resident from which Massachusetts tax willnot be withheld.

Generally, the first payment must be filed on orbefore April 15 of the taxable year. The estimatedtax may be paid in full with the first payment or infour installments on or before April 15, June 15,September 15 of the current taxable year and Jan-uary 15 of the following year.

If you wish to verify estimated tax payments thathave already been made, check the Estimated TaxPayment History Application at www.mass.gov/dor.You will need to know the PIN that appeared on theback of your Form 1 booklet or the amount of lastyear’s refund or balance due to access your account.

You may request your employer to withhold addi-tional amounts from your salary on Form M-4,Massachusetts Employee’s Withholding ExemptionCertificate to cover the taxes on other income sothat you do not have to file and pay estimated taxes.

If 80% of the tax is not paid throughout the yearthrough withholding and/or estimated payments,a penalty may be imposed.

Line 39. Payments Made withExtensionIf you filed Massachusetts Form M-4868, Applica-tion for Automatic Six-Month Extension of Time toFile Massachusetts Income Tax Return, for 2009 onor before April 15, 2010, enter in line 39 the amountyou paid with Massachusetts Form M-4868.

Line 40. Earned Income CreditThe earned income credit is a tax credit for certaintaxpayers who work and have earned incomeunder $48,279. Taxpayers who qualify for andclaim the federal earned income credit are alloweda refundable credit equal to 15% of the federalamount. If the credit due the taxpayer exceeds theamount of the total income tax payable for the yearby the taxpayer, the excess amount of the creditwill be refunded to the taxpayer without interest.You must enter the number of qualifying children,if any, in line 40a. Then, enter the federal earnedincome credit amount from your U.S. Form 1040,line 64a, 1040A, line 41a; or 1040EZ, line 9a. Mul-tiply this amount by .15 (15%) and enter the re-sult in line 40. Be sure to fill out Schedule DI,Dependent Information, if you are claiming thiscredit for one or more qualifying children/depen-dents. Failure to do so will delay the processing ofyour return.

If you choose to have the IRS compute your federalearned income credit, wait until the IRS notifiesyou of that amount before making an entry in line40. If you have not received your earned incomecredit amount as computed by the IRS by April 15,2010, you may file Massachusetts Form M-4868,Application for Automatic Six-Month Extension ofTime to File Massachusetts Income Tax Return.See page 3 for information about filing your exten-sion via the Web. For more information about thefederal earned income tax credit, see IRS publica-tion 596, available at www.irs.gov.

Line 41. Senior Circuit Breaker CreditCertain senior citizens in Massachusetts may beeligible to claim a refundable credit on their stateincome taxes for the real estate taxes paid on theMassachusetts residential property they own orrent and which they occupy as their principal resi-dence. The maximum credit allowed is $960 for thetax year beginning January 1, 2009. If the creditdue the taxpayer exceeds the amount of the total

income tax payable for the year by the taxpayer,the excess amount of the credit will be refunded tothe taxpayer without interest. To determine if youqualify for this credit, refer to the Senior CircuitBreaker Credit instructions in this booklet.

If you qualify for this credit and you are a home-owner, enter the amount from Schedule CB, Cir-cuit Breaker Credit, line 17; if you are a renter, enterthe amount from line 21. Be sure to complete andenclose Schedule CB with your return.

Line 42. Other Refundable CreditsEnter in line 42 the amount from Schedule RF,line 3.

Refund AmountLine 45. Amount of OverpaymentYou Want Applied to Your 2010Massachusetts Estimated TaxEnter the amount of your 2009 overpayment thatyou wish to apply to your 2010 Massachusettsestimated tax. Once an election is made to applyyour overpayment to your 2010 estimated tax, itcannot be refunded later or applied to any addi-tional tax you may owe for 2009. The amount en-tered in this line can only be claimed as a credit onyour 2010 Massachusetts return.

Line 46. Refund AmountSubtract line 45 from line 44. Enter the result inline 46. This is the amount of your refund.

Note: Your state tax refund may be taxable on yourU.S. tax return if you deducted state income taxpaid as an itemized deduction on U.S. Schedule A.

You may elect to have your refund deposited di-rectly into your savings or checking account.Check with your financial institution to make surethat it accepts direct deposit and verify the routingtransit number (RTN) of the issuing financial insti-tution. If we are unable to honor your request fora direct deposit, a paper check will be sent to you.

The routing number of your financial institutionis nine digits and begins with 01 through 12 or 21through 32. The account number can be up to 17characters (both numbers and letters). Omit hy-phens, spaces and special symbols. Enter thenumber from left to right and leave any unused

16 2009 Form 1 — Line by Line Instructions

boxes blank. You must enter the routing numberand the account number in the spaces provided inline 46 if you are requesting direct deposit. Failureto do so will result in your request for direct de-posit being denied. See sample check for locationof this information.

Tax DueLine 47. Tax DueIf line 35 is larger than line 43, subtract line 43from line 35, and enter the result in line 47. Thisis the amount of tax you owe with your return.Pay in full with your return. Go to Web Servicesfor Income at www.mass.gov/dor for online pay-ment options. If you need to mail your payment,make your check or money order payable to theCommonwealth of Massachusetts and write yourSocial Security number on the front of your checkor money order in the lower left corner. Completeand remove Form PV, Massachusetts Income TaxPayment Voucher, attached to the back of the en-velope included in this booklet. Enclose the checkand Form PV with your return. Form PV must beincluded with your check to ensure proper credit-ing of your account. Be sure to use the light bluemailing label when mailing your Form 1 with theForm PV.

Failure to file or failure to pay the proper amount oftax when due will result in an increasing amountof interest and penalties. It is to your advantage tofile when your return is due, whether or not youare able to make full payment.

If you owe any interest, penalty or addition for theunderpayment of estimated tax, add thoseamounts to the tax you owe and enter the totalamount in line 47.

What Are Interest and Penalties?Interest: If you fail to pay the tax when due, inter-est will be charged. For an explanation of how in-terest is compounded in Massachusetts, see TIR92-6 or call the Customer Service Bureau at (617)887-MDOR or toll-free, in Massachusetts at1-800-392-6089.

Penalty for Late Payment: The penalty for latepayment is 1% per month (or fraction thereof) ofthe tax due, up to a maximum of 25%.

Penalty for Failure to File: The penalty for failureto file a tax return by the due date is 1% per month(or fraction thereof) of the tax due, up to a maxi-mum of 25%. If you were required to file a tax re-turn for income received in any prior year and youdid not file, you must file for that prior year.

Penalty for Protested (“Bad”) Payment: If yourpayment is not honored by your bank because ofinsufficient funds or any other reason, a penalty

17

may be added of $30 or the amount of the pay-ment, whichever is less.

Addition for Underpayment of Estimated Tax: Youwill generally be subject to this addition to tax ifyou did not have withholding and/or estimatedpayments equal to 80% of the total tax liability re-quired to be paid and your 2009 tax due after cred-its and withholding is greater than $400. The 80%requirement is reduced to 662⁄3% for individualswho receive two-thirds of their income from fish-ing or farming. If you failed to meet these require-ments, you must complete and enclose Massachu-setts Form M-2210 to calculate the amount youmust add to line 47. You do not have to completeForm M-2210 if the balance due with your returnis $400 or less.

You may not be subject to an underpayment penaltyif you qualify for one of the following exceptions:

◗ you are a qualified farmer or fisherman and arepaying the full amount of the tax due on or beforeMarch 1, 2010;

◗ you were a Massachusetts resident and werenot liable for 2008 taxes (where the taxable yearwas 12 months); or

◗ the sum of your estimated payments and with-holding equals or exceeds your 2008 total tax due(where the taxable year was 12 months and a re-turn was filed).

If you qualify for one of these exceptions, please fillin the oval marked “EX” under line 47 on Form 1and enclose Form M-2210 indicating which of theexceptions applies to your circumstances.

A limited number of taxpayers may also qualify fora waiver of the underpayment penalty for one ormore installments if:

◗ the underpayment was because of casualty ordisaster; or

◗ during 2008 or 2009 you retired after reachingage 62 or became disabled and the underpaymentwas due to reasonable cause and not willful neglect.

If you think you qualify for one of these waivers,go to www.mass.gov/dor and use DOR’s onlineapplication for abatement/amended return atwww.mass.gov/dor or enclose Form M-2210 andan explanatory statement with your return and fillin the oval marked “EX” under line 47. If yourwaiver is not for all four installments, completeForm M-2210 to calculate the underpaymentpenalty for the installments which are not coveredby the waiver. Form M-2210 is available by visit-ing www.mass.gov/dor.

Penalty for Failure to Report Federal Change: Ifthe U.S. Internal Revenue Service changes yourincome for a prior year (generally through audit),file an online application for abatement/amended

return at www.mass.gov/dor within one year of thefinal federal determination to avoid this penalty.This penalty is equal to 10% of the additional taxdue or $100, whichever is smaller. If the change in-dicates a refund, file an online application for abate-ment/amended return within one year, includingacceptance of an amended federal return by the In-ternal Revenue Service. Form CA-6, Application forAbatement, can also be downloaded from DOR’swebsite at www.mass.gov/dor.

Sign HereNow that you have completed Form 1, sign yourname at the bottom of page 1 of Form 1. Yourspouse must also sign if this is a joint return. Writethe date you signed the return.

Note: Be sure to include all three pages of Form1, as well as Schedule HC.

Attach to your Form 1, with a single staple, all statecopies of your Forms W-2, W-2G, PWH-WA, 2Gand any Forms 1099 which included Massachu-setts withholding. If making a payment, be sure toenclose Form PV with your Form 1. Form PV is at-tached to the back of the envelope found in thisbooklet. Form PV must be included with your checkto ensure proper crediting of your account. Makeyour check or money order payable to Common-wealth of Massachusetts and be sure to sign thecheck and write your Social Security number onit. Also, be sure to use the light blue mailing labelwhen mailing your Form 1 with the Form PV.

Paid Preparer Must Sign Your ReturnGenerally, anyone you pay to prepare your returnmust sign it in the space provided. Tax return pre-parers are authorized to sign the return by meansof a rubber stamp, mechanical device, or computersoftware program, which must include either a fac-simile or printed name of the preparer. Preparersare personally responsible for affixing their signa-tures to returns. Preparers must also provide theirSocial Security Number (SSN) or Preparer TaxIdentification Number (PTIN) and Employer Identi-fication Number (EIN) in the spaces provided. Thepreparer must give you a copy of the return for yourrecords. Someone who prepares your return butdoes not charge you should not sign your return.

Paid Preparer AuthorizationIf you want to allow the Massachusetts Depart-ment of Revenue (DOR) to discuss your 2009 taxreturn with the paid preparer who signed it, fill inthe “Yes” oval in the signature area of the return.This authorization applies only to the individualwhose signature appears in the “Paid Preparer”section of your return. It does not apply to thefirm, if any, shown in that section.

2009 Form 1 — Line by Line Instructions

If you fill in the “Yes” oval, you, and your spouse iffiling a joint return, are authorizing DOR to call thepaid preparer to answer any questions that mayarise during the processing of your return. You arealso authorizing the paid preparer to:

◗ give DOR any information that is missing fromyour return;

◗ call DOR for information about the processingof your return or the status of your refund or pay-ment(s); and

◗ respond to certain DOR notices that you haveshared with the preparer about math errors, offsetsand return preparation. The notices will not be sentto the preparer.

You are not authorizing the paid preparer to receiveany refund check, bind you to anything (includingany additional tax liability), or otherwise representyou before DOR. If you want to expand the paidpreparer’s authorization, see Form M-2848, Powerof Attorney and Declaration of Representative. FormM-2848 is available by visiting www.mass.gov/dor.

The authorization cannot be revoked. However, theauthorization will automatically end no later thanthe due date (without regard to extensions) forfiling your 2010 tax return. This is April 15, 2011for most people.

E-File Opt OutFor tax years beginning on or after January 1,2005, income tax return preparers who completed100 or more original Massachusetts Forms 1 and1-NR/PY, including those E-filed, during the previ-ous calendar year are required to use electronicmeans to file all personal income tax returns, un-less the taxpayer specifically directs on the paperform that the filing be on paper and signs FormEFO, Personal Income Tax Declaration of Paper Fil-ing. Fill in oval if you do not want your preparer tofile your return electronically. See TIR 04-30 formore information.

MailingIf you are expecting a refund or if you have no taxdue, use the white mailing label on the back of theenvelope that came with this booklet. If you do nothave one, mail Form 1 to: Massachusetts Depart-ment of Revenue, PO Box 7000, Boston, MA02204-7000. If using a tax software product, besure to use the correct PO box. See page 3.

If you have a tax due, use the light blue mailinglabel on the back of the envelope that came withthis booklet. If you do not have one, mail Form 1to: Massachusetts Department of Revenue, POBox 7003, Boston, MA 02204-7003. If using a taxsoftware product, be sure to use the correct PObox. See page 3.

Note: Schedule lines without specific instructionsare considered to be self-explanatory. Be sure to

list on each schedule the name and Social Securitynumber that appears first on Form 1. Do not cutor separate schedules.

Schedule DIDependent InformationBe sure to enclose with Form 1.

You must complete this schedule if you are claim-ing a dependent exemption(s) on Form 1, line 2b ortaking a deduction/credit(s) on Form 1, lines 12, 13or 40 (if applicable). Failure to provide this informa-tion will delay the processing of your return. Youmust complete the information for each dependent.

In the spaces provided, enter the name, Social Se-curity number, date of birth and the relationshipof the dependent to you (son, daughter, mother,father, etc.). Also, if the dependent is a qualifyingchild for the Earned Income credit, fill in the “Yes”oval. If you are claiming more than 10 depen-dents, attach a statement listing the name, SocialSecurity number, date of birth and the relationshipof the dependent to you and if the dependent is aqualifying child for the Earned Income credit.

Schedule XOther IncomeBe sure to enclose with Form 1.

Line 1. Alimony ReceivedEnter in Schedule X, line 1 the total amount of allperiodic payments of alimony or separate mainte-nance received under a court judgment or decree,or for excess alimony amounts recaptured, as re-ported on U.S. Form 1040, line 11. Paymentsspecified as child support are not taxable.

Line 2. Taxable IRA/Keogh,Qualified Charitable IRADistributions and RothIRA Conversion DistributionsComplete the Schedule X, line 2 worksheet to cal-culate the taxable portion of any amount you re-ceived from an Individual Retirement Account(IRA), Keogh, qualified charitable IRA distributionor Roth IRA conversion distribution. Since Mass-achusetts does not allow a deduction for amountsoriginally contributed to an IRA or Keogh, the dis-tributions are not taxable until the full amount ofyour contributions which were previously subjectto Massachusetts taxes are recovered.

Contributions made to Keogh accounts prior to1975 were deductible when made. Therefore, nodeduction may be taken from a Keogh distribu-tion for amounts contributed before 1975.

Massachusetts generally adopts the federal con-version rules for partial or complete rollovers fromexisting IRAs to Roth IRAs. Generally, the rolloveramount is treated as a distribution and included infederal gross income to the extent it is attributableto investment growth or previously deducted con-tributions. See TIR 98-8, Massachusetts 1998 Re-ducing Income Taxes Act, for further details.

Note: Massachusetts adopts the federal exclusionfor qualified charitable distributions from IRAs andRoth IRAs, including the extension for tax years2008 and 2009. Not to exceed $100,000 per taxyear. See TIR 06-20, The Pension Protection Actof 2006: Charitable IRA Distributions, for furtherinformation.

Schedule X, Line 2 Worksheet — TaxableIRA/Keogh Plan, Qualified Charitable IRADistributions and Roth IRA ConversionDistributions

Complete this worksheet to report conventionalIRA/Keogh distributions, qualified charitableIRA distributions or Roth IRA conversiondistributions.

1. Total IRA/Keogh plan distributions, qualifiedcharitable IRA deductions, Roth IRA conversiondistributions in 2009 . . . . . . . . . . . . 2. Total IRA/Keogh plan contributions previously taxed by Massachusetts3. Total distributions received in previous years . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If line 3 is largerthan line 2, enter “0” . . . . . . . . . . . . 5. Subtract line 4 from line 1 and enter theresult here. Not less than “0” . . . . . 6. Total qualified charitable IRA distributionsin 2009 included in line 1 . . . . . . . . 7. Taxable IRA/Keogh distributions or RothIRA conversion distributions. Subtract line 6from line 5 and enter result here and inSchedule X, line 2. Not less than “0”

Note: You must complete separate worksheetsif married filing a joint return and both you andyour spouse received IRA/Keogh Plan, qualifiedcharitable IRA distributions, and/or Roth IRAconversion distributions.

Line 3. Other Gambling WinningsEnter in Schedule X, line 3 all gambling winningsfrom casinos, raffles, races, beano or other eventsof chance, wherever held, and winnings from non-Massachusetts lotteries. Do not enter less than“0.” You may only deduct the price of the winningticket. Gambling losses are not deductible underMassachusetts law. Gambling losses claimed asitemized deductions on U.S. Form 1040, ScheduleA are not allowed on your Massachusetts return.

Note: Do not report Massachusetts state lotterywinnings in Schedule X, line 3. Instead, report themon Form 1, line 8b.

18 Schedule Instructions

Line 4. Fees and Other 5.3% IncomeThe following items should be reported on line 4 ofSchedule X. Do not enter less than “0.” Encloseadditional statements if more space is needed.

◗ All fee income, such as payments for jury duty,election worker payments, director’s fees, compen-sation received as executor or administrator of anestate, and commission income or tips not reportedin line 3 of Form 1 are taxable. Also, report allbartering income not reported on Schedule C (thefair market value of goods or services received inpayment for your services).

◗ All prizes and awards won in a quiz program,drawing, beauty contest, etc. are taxable at fairmarket value. Awards and bonuses received fromyour employer for performance of services notpart of a qualified award plan are also taxable.

◗ Forgiveness of debt and mortgage forgiveness.

◗ Other Massachusetts 5.3% income reportedon U.S. Form 1040, line 21 and not reported else-where in Form 1, lines 3 through 8 or Schedule X,lines 1 through 3 must be reported in line 4 ofSchedule X.

◗ Pre-1996 installment sales classified as ordinaryincome for Massachusetts purposes (from Mass-achusetts Schedule D, line 9) are taxed as 5.3%income and must be reported on line 4 of Sched-ule X.

◗ Embezzled or other income from illegal activi-ties is taxable and should be reported on Sched-ule X, line 4.

The following items should not be reported on yourMassachusetts return:

◗ Any “net operating loss” reported as a negativeamount on U.S. Form 1040, line 21 cannot be en-tered on Schedule X. A net operating loss from abusiness or profession cannot be carried forwardor backward to offset individual income in anyother year under Massachusetts law.

◗ Refunds of U.S. and Massachusetts incometaxes are not considered income under Massachu-setts law. If you received interest on refunds, re-port such interest on Massachusetts Schedule B.

Schedule YOther DeductionsBe sure to enclose with Form 1.

Line 1. Allowable EmployeeBusiness ExpensesGenerally, reimbursed employee business ex-penses are not included in your wages or salaryand therefore are not allowed as deductions.However, there are unreimbursed and certain re-imbursed expenses for which you are allowed a

deduction. Complete the following worksheet inorder to calculate your Massachusetts employeebusiness expense deduction. The expenses mustrelate to income reported in lines 3 or 9 on Form 1.

Employees may deduct the following:

◗ unreimbursed travel and transportation ex-penses including lodging and meals away fromhome incurred by an employee; and

◗ all federally deductible unreimbursed employeebusiness expenses, if the employee is a sales-person who solicits business for an employer awayfrom the employer’s place of business.

Unreimbursed expenses are only deductible if allof the following conditions are met:

◗ you itemize deductions;

◗ if you filed a joint U.S. return, you must file ajoint Massachusetts return; and

◗ your unreimbursed business expenses takentogether with the other miscellaneous itemized de-ductions reported on U.S. Form 1040, Schedule A,lines 21, 22 and 23 exceed 2% of your federal ad-justed gross income reported on U.S. Form 1040,Schedule A, line 26. See the following worksheetfor Schedule Y, line 1.

If you are a qualified performing artist or a fee-basisstate or local government official, do not completethe worksheet. Enter on Schedule Y, line 9 your fed-erally deductible business expenses included onU.S. Form 1040, line 24 and fill in the appropriateoval in Schedule Y, line 9.

Note: Same-sex joint filers must recalculate theirU.S. Form 1040, Schedule A by combining allow-able expenses as reported on U.S. Form 1040,Schedule A, lines 24 and 28 and their adjustedgross incomes as reported on U.S. Form 1040,Schedule A, line 25 in calculating U.S. Form 1040,Schedule A, line 27. Same-sex joint filers mustalso recalculate their US. Form 2106 or 2106-EZby combining allowable expenses as reported onU.S. Form 2106, lines 4, 9b and 10 or U.S. Form2106-EZ, lines 4, 5 and 6. See TIR 04-17 for moreinformation.

Schedule Y, Line 1 — Massachusetts EmployeeBusiness Expense Deduction Worksheet

1. Enter the amount from U.S. Form 2106,line 10, or 2106-EZ, line 6 . . . . . . . . 2. If you are an employee other than an outsidesalesperson, enter the amount of unreimbursedexpenses included in U.S. Form 2106 or2106-EZ, line 4 . . . . . . . . . . . . . . . . 3. If you are an employee other than an outsidesalesperson, enter the amount of unreimbursedmeals and entertainment expenses included inU.S. Form 2106, line 9, column B or 2106-EZ,line 5, except for meals incurred while awayfrom home. . . . . . . . . . . . . . . . . . . .

4. If you are an individual with a disability,enter the amount of impairment-relatedexpenses included in line 1 and claimedon line 28 of U.S. Schedule A . . . . . 5. Add lines 2 through 4. Enter the result here . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 1. Enter theresult here . . . . . . . . . . . . . . . . . . . . 7. Enter the amount from U.S. Schedule A,line 27 . . . . . . . . . . . . . . . . . . . . . . . 8. Enter the smaller amount of line 6 or line 7here and on Schedule Y, line 1 . . . .

Line 2. Penalty on Early SavingsWithdrawalIf you were charged a penalty because of earlywithdrawal of savings, and interest on the savingsthat such a penalty relates to income reported inline 5a or line 20 of this return or on a prior yearMassachusetts return, you may deduct the penalty.This deduction is the same as the amount allow-able on U.S. Form 1040, line 30. Enter this amountin line 2 of Schedule Y.

Line 3. Alimony PaidEnter in Schedule Y, line 3 the total amount thatyou paid to your former spouse during 2009 foralimony or separate maintenance under court de-cree, or for excess alimony amounts recaptured,as reported on U.S. Form 1040, line 31a.

Note: Alimony payments specified as child sup-port are not deductible.

Line 4. Amounts Excludible UnderMGL Ch. 41, Sec. 111F or U.S. TaxTreaty Included in Form 1, Line 3.Massachusetts allows an exclusion from incomeof amounts received by a firefighter or police offi-cer incapacitated in the line of duty, per MGL Ch.41, sec. 111F, and an exclusion from income ofamounts received by qualifying students exemptunder a U.S. tax treaty.

Enter any excludible amount of income receivedwhile you were a firefighter or police officer inca-pacitated in the line of duty in line 4 of Schedule Ythat was included in Form 1, line 3, and fill in theappropriate oval.

If you were a qualifying student or a taxpayer withincome exempt under a U.S. tax treaty, enter anyexcludible amount of income received that was ex-empt under a U.S. tax treaty in line 4 of Schedule Ythat was included in Form 1, line 3, and fill in theappropriate oval.

Line 5. Moving ExpensesEnter in Schedule Y, line 5 the amount from U.S.Form 1040, line 26.

192009 Form 1 — Schedule Instructions

Line 6. Medical Savings AccountEnter in Schedule Y, line 6 the amount of the Med-ical Savings Account deduction included in U.S.Form 1040, line 36 “MSA Write-In Adjustment.”

Line 7. Self-Employed HealthInsurance Enter in Schedule Y, line 7 the amount from U.S.Form 1040, line 29.

Note: If you elected to claim the federal credit undersec. 35 and had to reduce the amount on U.S. Form1040, line 29 by the amount of the federal credit,you may add back the amount of the credit to theamount entered on U.S Form 1040, line 29.

Line 8. Health Savings AccountsEnter in Schedule Y, line 8 the amount from U.S.Form 1040, line 25.

Line 9. Other Qualified DeductionsYou may claim only the deductions listed below forSchedule Y, line 9. If you are entitled to claim anyof the deductions in line 9, fill in the appropriateoval(s) and enter the total amount of deductionsclaimed in line 9.

◗ Certain qualified deductions from U.S. Form1040. Do not include any amounts reported onU.S. Form 1040, lines 23 through 35 that are in-cluded in Form 1040, line 36 total. Enter onlyamounts included in U.S. Form 1040, line 36 as awrite-in adjustment, except amounts contributedto sec. 501(c)(18) pension plans. For Massachu-setts purposes, contributions to sec. 501(c)(18)pension plans are not deductible. Also, the IRCsec. 404 deduction for contributions on behalf ofIRC sec. 401(c)(1) employees (sole proprietorsand partners) is disallowed. See TIR 02-18 (I)(D)and DOR Directive 01-7 for more information.

On the dotted line next to line 9, be sure to indicatethe type of deduction being taken, as identified onU.S. Form 1040, line 36. Identify jury duty paygiven to your employer as “Jury pay”; reforesta-tion amortization as “RFST”; repayment of supple-mental unemployment benefits under the TradeAct of 1974 as “Sub-Pay TRA”; attorney fees andcourt costs involving certain unlawful discrimina-tion claims as “UDC”; and deductible expenses re-lated to income reported on U.S. Form 1040, line21 and Massachusetts Schedule X, line 4 from therental of personal property engaged in for profitas “PPR.” Fill in the appropriate oval in line 9 ofSchedule Y.

◗ Business Expenses of National Guard andReserve Members, Performing Artists and Fee-Based Government Officials: Enter the amountfrom U.S. Form 1040, line 24 and fill in the appro-priate oval in line 9 of Schedule Y.

Line 10. Student Loan InterestDeductionEnter the amount from U.S. Form 1040, line 33 or1040A, line 18. This deduction is only allowed ifnot claiming the same expenses in line 12 ofSchedule Y, Undergraduate Student Loan InterestDeduction.

Note: Same-sex joint filers must use the “StudentLoan Interest Deduction” worksheet in the instruc-tions to U.S. Form 1040 or 1040A making sure tocombine their income figures, and performing thecalculation as though they were filing a joint fed-eral return. See TIR 04-17 for more information.

Line 11. College Tuition DeductionA deduction is allowed for tuition payments paidby you, for yourself or a dependent, to a qualifyingtwo- or four-year college leading to an undergrad-uate or associate’s degree, diploma or certificate.Tuition payments for students pursuing graduatedegrees at such a college or university are not eli-gible for the college tuition deduction. The deduc-tion is equal to the amount by which the tuitionpayments, less any scholarships, grants or finan-cial aid received, exceed 25% of MassachusettsAGI. Qualified tuition expenses include only thoseexpenses designated as tuition or mandatory feesrequired for the enrollment or attendance of thetaxpayer or any dependent of the taxpayer at aneligible educational institution. No deduction is al-lowed for any amount paid for room and board,books, supplies, equipment, personal living ex-penses, meals, lodging, travel or research, athleticfees, insurance expenses or other expenses unre-lated to an individual’s academic course of instruc-tion. Complete the Massachusetts AGI Worksheetand the Schedule Y, line 11 worksheet to see ifyou may qualify for this deduction. See TIR 97-13for more information.

Schedule Y, Line 11 Worksheet —College Tuition Deduction

1. Enter total tuition payments paid by you, foryourself or a dependent, to a qualifying two-or four-year college in 2009 . . . . . . 2. Enter amount of scholarships, grants orfinancial aid received in 2009 for amountsshown in line 1 . . . . . . . . . . . . . . . . 3. Subtract line 2 from line 1. If “0” or less,you do not qualify for this deduction4. Enter amount from line 7 of theMassachusetts AGI Worksheet . . . 5. Multiply line 4 by .25. . . . . . . . . . 6. If line 3 is smaller than line 5, you are noteligible for this deduction. Enter “0.” If line 3is larger than line 5, subtract line 5 from line 3and enter the result here and in line 11 onSchedule Y . . . . . . . . . . . . . . . . . . .

Line 12. Undergraduate StudentLoan Interest DeductionA deduction is allowed for interest paid on a qual-ified undergraduate student loan. To be eligible forthe deduction, the “education debt” must be a loanthat is administered by the financial aid office of atwo-year or four-year college at which you, or aqualified dependent, were enrolled as an under-graduate student. Additionally, the loan must havebeen secured through a state student loan pro-gram, a federal student loan program, or a com-mercial lender, and must have been spent solelyfor the purposes of paying tuition and other ex-penses directly related to the school enrollment.Enter the amount of such interest paid in Sched-ule Y, line 12. This deduction is only allowed if notclaiming the same expenses in line 10 of Sched-ule Y, Student Loan Interest Deduction.

Line 13. Deductible Amount ofQualified Contributory PensionIncome from Another State orPolitical Subdivision Included inForm 1, Line 4Massachusetts allows a deduction for contribu-tory pension income received from another stateor one of its political subdivisions which does nottax such income from Massachusetts or its politi-cal subdivisions. For guidelines to determine whichstate’s pensions are exempt in Massachusetts, seeTIR 95-9. Enter any deductible amount of such in-come in line 13 of Schedule Y that was included inForm 1, line 4.

Line 14. Claim of Right DeductionFor tax years beginning on or after January 1, 2005,taxpayers who have paid Massachusetts personalincome taxes in a prior year on income attributedto them under a “claim of right” may deduct theamount of that income from their gross income if itlater develops that they were not in fact entitled tothe income, and have repaid the amounts in ques-tion. The deduction is allowed in the year of repay-ment, provided that the repayment is not otherwisedeductible in determining Massachusetts incometaxable under M.G.L. ch. 62. Some examples inwhich the claim of right may be applied for are:

◗ Stock under claim of ownership. Gains fromsales of stock under a claim of ownership must beincluded, regardless of whether the taxpayer actu-ally owned it;

◗ Employment contracts. Amounts in settlementof employment contracts must be included not-withstanding the prospect of eventual repaymentto the employer of an amount equivalent to orgreater than the amount received;

20 2009 Form 1 — Schedule Instructions

◗ Dividends. Where a taxpayer receives a dividendthat must be repaid in a later year (e.g., because itimpaired corporate capital), the dividend must beincluded in the year of receipt;

◗ Corporate notes. Where a taxpayer receives adistribution with respect to holding of notes, theincome must be included regardless of whether itcould be challenged by senior creditors;

◗ Mistake in validity of claim. The claim of rightdoctrine applies where a taxpayer merely mistakesthe validity of his claim; or

◗ Advanced insurance commissions.

If you are entitled to claim this deduction, enter theamount claimed in Schedule Y, line 14. For moreinformation, see TIR 06-4.

Line 15. Commuter DeductionA deduction is allowed for certain amounts paid byan individual for tolls paid for through a FastLaneaccount or for weekly or monthly transit commuterpasses for MBTA transit or commuter rail, not in-cluding amounts reimbursed or otherwise deduct-ible. In the case of a single person or a marriedperson filing a separate return or a head of house-hold, this deduction applies only to the portion ofsuch expended amount that exceeds $150, andthe total amount deducted cannot exceed $750. Inthe case of a married couple filing a joint return,this deduction applies only to the portion of suchamount expended by each individual that exceeds$150, and the total amount deducted cannot ex-ceed $750 for each individual. Also, one spousecannot transfer his or her excess deduction to theother spouse; separate worksheets must be com-pleted to calculate the deduction. See TIR 06-14for additional information. Complete the followingworksheet to calculate the commuter deduction.

Dependents Claimed on Taxpayers’ Income TaxReturns: The deduction is allowed where an indi-vidual purchases an MBTA pass for a dependentwho is claimed on that individual’s tax return,provided the dependent does not also claim thededuction. However, the total amount deductedcannot exceed $750 for each individual taxpayerwho is filing a return. In the case of married tax-payers filing a joint return, the total amount de-ducted cannot exceed $750 per taxpayer; thus, themaximum deduction for a joint return is $1,500.

Schedule Y, Line 15 Worksheet —Commuter Deduction

1. Enter amount paid in 2009 for tolls througha FastLane account . . . . . . . . . . . . . 2. Enter amount paid in 2009 for weekly ormonthly transit commuter passes for MBTAtransit or commuter rail. (Do not include amountsreimbursed or otherwise deductible)

3. Add lines 1 and 2. If $150 or less, you do notqualify for this deduction. Omit remainder ofthis worksheet. Otherwise, complete lines 4through 6. . . . . . . . . . . . . . . . . . . . . 4. Enter $150 . . . . . . . . . . . . . . . . . 5. Subtract line 4 from line 3. . . . . . 6. Enter the lesser of line 5 or $750 here andon Schedule Y, line 15 . . . . . . . . . . .

Schedule ZOther CreditsBe sure to enclose with Form 1.

Part 1 CreditsLine 1. Lead PaintIf you incurred expenses for covering or remov-ing lead paint on residential premises in Mass-achusetts, you may claim a credit for expenses upto $1,500 for each residential unit. The basic rulesare explained on Massachusetts Schedule LP,Credit for Removing or Covering Lead Paint onResidential Premises. If you qualify for the credit,complete Schedule LP and enter the amount ofcredit in line 1.

Line 2. Economic Opportunity AreaMassachusetts allows a credit equal to 5% of thecost of qualifying property purchased for businessuse within an Economic Opportunity Area (EOA).If you qualify for the credit, complete ScheduleEOAC and enter the amount of credit in line 2.

Line 3. Full EmploymentEvery employer who participates in the Full Em-ployment Program and continues to employ a par-ticipant for at least one full month after any FullEmployment Program subsidy for that participanthas expired may claim the Full Employment Credit.A qualified employer may claim a credit equal to$100 per month of eligible employment per partic-ipant, with a maximum credit of $1,200 per partic-ipant. Qualified participants and employers arethose who participate in the Full Employment Pro-gram under the rules of the Department of Transi-tional Assistance (DTA). A five-year carryover ofany unused credit is allowed. If you qualify for thiscredit, complete Massachusetts Schedule FEC, FullEmployment Credit, and enter the amount of creditin line 3.

Line 4. SepticAn owner of residential property located in Mass-achusetts who occupies the property as his or herprincipal residence is allowed a credit of a maxi-mum of $1,500 per taxable year for expenses in-curred to comply with the sewer system require-ments of Title V as promulgated by the Departmentof Environmental Protection or to connect to a mu-

nicipal sewer system pursuant to a federal courtorder, administrative consent order, state courtorder, consent decree or similar mandate. Theamount of the credit is 40% of the cost, up to$15,000, for design and construction expenses forrepair or replacement of a failed cesspool or sep-tic system. The maximum aggregate amount ofthe credit is $6,000. A five-year carryover of anyunused credit is allowed. See TIRs 97-12, 98-8,99-5, 99-20 and DOR Directive 01-6 for more in-formation. If you qualify for this credit, completeMassachusetts Schedule SC, Septic Credit, andenter the amount of credit in line 4.

Note: Betterment assessments do not qualify forthis credit.

Line 5. BrownfieldsRecent legislation extends the Brownfields creditto nonprofit organizations, extends the time framefor eligibility for the credit, and permits the credit tobe transferred, sold, or assigned. Under prior law,net response and removal costs incurred by a tax-payer between August 1, 1998 and August 5,2005, were eligible for the credit provided that theenvironmental response action before August 5,2005. As a result of the recent legislation, the envi-ronmental response action commencement cut-offdate is changed from August 5, 2005 to August 5,2011, and the time for incurring eligible costs thatqualify for the credit is extended to January 1, 2012.See TIR 06-16 for more information. If you qualifyfor this credit, complete Massachusetts ScheduleBC, Brownfields Credit, and enter the amount ofcredit in line 5. Also, be sure to enter the DOR-issued certificate number in the space provided online 5. Certificate application forms and additionalinformation are available at www.mass.gov/dor.

Line 6. Low-Income HousingA low-income housing credit is available to indi-vidual taxpayers. The Department of Housing andCommunity Development will allocate the low-in-come housing credit from a pool of availablecredits granted under section 42 of the InternalRevenue Code among qualified low-income hous-ing projects. A taxpayer allocated a federal low-in-come housing credit may also be eligible for a statecredit based on the credit amount allocated to alow-income housing project that the taxpayer owns.A five-year carryforward of unused credit is al-lowed. See TIR 99-19 for more information. If youqualify for the credit, enter the amount in line 6.

Line 7. Historic RehabilitationEffective for tax years beginning on January 1,2005 and ending on or before December 31, 2011,taxpayers may be eligible for the Historic Rehabili-tation Credit (HRC). To claim this credit, a historicrehabilitation project must be complete and havebeen certified by the Massachusetts Historical

212009 Form 1 — Schedule Instructions

Commission. Unused portions of the credit may becarried forward for 5 years. The credit may betransferred or sold to another taxpayer. The HRC isnot subject to the 50% limitation rule for corporatetaxpayers. If the taxpayer disposes of the propertygenerating the HRC, a portion of the credit may besubject to recapture. For further information, seeTIR 06-16 and 830 CMR 63.38R.1, MassachusettsHistoric Rehabilitation Credit. If you qualify forthis credit, enter the amount in line 7.

Line 8. Film IncentiveFor tax years beginning on or after January 1,2006 and before January 1, 2023, motion pictureproduction companies may claim (1) a credit equalto 25% of the total qualifying aggregate payroll foremploying persons within the Commonwealth inconnection with the filming and production of amotion picture and (2) a credit equal to 25% of theirMassachusetts production expenses. Each credithas its own qualification requirements and a tax-payer is allowed to qualify for and claim bothcredits. The credits are also transferable. For moreinformation, see TIR 06-1. If you qualify for thiscredit, enter the amount of credit in line 8. Also, besure to enter the DOR-issued certificate numberin the space provided on line 8. Certificate applica-tion forms and additional information are availableat www.mass.gov/dor.

Note: Motion picture production companies qual-ify to elect a refundable film credit if they have nottransferred or carried forward a portion of the filmcredit for the production/certificate number to berefunded. If you qualify this election, enter theamount from line 5 of Schedule RFC, RefundableFilm Credit, in Schedule RF, line 1.

Line 9. Medical DeviceMedical device companies that develop or manu-facture medical devices in Massachusetts canclaim a credit equal to 100% of the user fees paidby them when submitting certain medical deviceapplications and supplements to the United StatesFood and Drug Administration. The credit is alsotransferable. For more information, see TIR 06-22.If you qualify for this credit, enter the amount ofcredit in line 9. Also, be sure to enter the DOR-is-sued certificate number in the space provided online 9. Certificate application forms and additionalinformation are available at www.mass.gov/dor.

Part 2 Credits for Residents andPart-Year Residents OnlyLine 11. Income Tax Paid toAnother StateIf any of the income reported on this return is sub-ject to taxation in another state or jurisdiction andyou have filed a return and paid taxes in the other

state or jurisdiction, complete the Schedule Z, Part2, line 11 worksheet and enter the amount of creditline 11. Do not include taxes paid to the U.S. gov-ernment. (This credit does not apply to city or localtaxes.) You are allowed to claim a credit for taxespaid to the following jurisdictions: (a) other states inthe U.S.; (b) any territory or dependency of the U.S.(including Puerto Rico, the Virgin Islands, Guam,the District of Columbia); or (c) the Dominion ofCanada or any of its provinces (less any U.S. creditamount allowable from U.S. Form 1116).

The total credit which you calculate on thisworksheet is the smaller of the amount of taxesdue to other jurisdictions (net of certain adjust-ments) or the portion of your Massachusetts taxdue on your gross income that is taxed in suchother jurisdictions.

Credit is not given for a property tax due to an-other jurisdiction on account of capital stock orproperty. This does not refer to a tax on gain orincome from the sale of capital stock or property,as included on Schedule B or D. Credit is also notgiven for any interest and penalties paid on a taxdue to another jurisdiction.

You must complete separate worksheets if you had5.3% and interest income (other than interest fromMassachusetts banks), dividends or capital gain in-come taxed by another jurisdiction. If you use thisworksheet to calculate a credit for interest income(other than interest from Massachusetts banks),dividends or capital gain income, substitute inter-est income (other than interest from Massachu-setts banks), dividends or capital gain income for5.3% income in line 1. You must also substituteSchedule B, line 7 (interest and dividend income)and Schedule B, line 13 (taxable 12% capital gains)or Schedule D, line 12, (gross long-term capitalgains and losses), but not less than “0,” for Form1, line 10 in line 2 of the worksheet, and the total ofForm 1, line 20 multiplied by .053 (tax on interestand dividend income) and Form 1, line 23 (12%tax) or line 24 (tax on long-term capital gains) forForm 1, line 19 in line 4 of the worksheet.

◗ When using this worksheet to calculate creditfor interest income (other than interest fromMassachusetts banks), dividends or capital gainincome, enter in line 1 such income taxed in an-other jurisdiction calculated as if it was earned inMassachusetts.

◗ If you choose to pay the optional 5.85% taxrate, substitute .0585 for .053 in line 4 of theworksheet.

Note: Be sure to enter the two-letter state or ju-risdictional postal code for each state or juris-diction for which you are taking the credit. Visitthe United States Postal Service’s website atwww.usps.com and click on “Service Guides”for a list of these codes.

Schedule Z, Part 2, Line 11 Worksheet —Income Tax Paid to Another Jurisdiction

Note: If you have income other than fromForm 1, line 10 taxed by other jurisdictions,see instructions.

1. Enter the total 5.3% income included inForm 1, line 10 on which you paid taxesto another jurisdiction . . . . . . . . . . . 2. Enter the total of Form 1, line 10 and the totalMassachusetts bank interest or the interestexemption amount, whichever is smaller,from Form 1, line 5a or line 5b . . . . 3. Divide line 1 by line 2. Not greater than “1” . . . . . . . . . . . . . . . . . . . . . . 4. Multiply Form 1, line 19 by .0535. Enter any Limited Income Credit fromForm 1, line 28 . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 4. . . . . . 7. Multiply line 6 by line 3 . . . . . . . . 8. Enter the total tax paid to other jurisdictionson income also reported on this return unlessthe tax was paid to Canada. If the tax was paid toCanada, the amount reported in this line must bereduced by the amount claimed as a foreign taxcredit on U.S. Form 1040, line 47. Credit is onlyallowable for amount of tax paid . . . 9. Enter the smaller of lines 7 or 8 here and onSchedule Z, line 11 . . . . . . . . . . . . .

Line 12. Solar and Wind EnergyIf you had expenditures for certain renewable en-ergy source items, such as equipment which usesor transmits solar or wind energy to heat, cool, orprovide hot water for your principal residence inMassachusetts, you may qualify for a credit. If youqualify for the credit, complete Schedule EC, Res-idential Energy Credit, and enter the amount ofcredit in line 12.

Schedule RFOther Refundable Credits

Line 1. Refundable Film CreditMotion picture production companies qualify toelect a refundable film credit if they have not trans-ferred or carried forward a portion of the film creditfor the production/certificate number to be re-funded. Transferees of the film credit do not qualifyfor the refundable film credit. Transferees shouldclaim their film credit on Schedule Z, line 8.

If an election to refund the film credit for a produc-tion/certificate number is made, the entire filmcredit remaining after reducing tax liability and othercredits will be refunded at 90%. A motion pictureproduction company that elects to claim a refundof the film credit is not permitted to seek a partialrefund and a partial transfer or carryover of thecredit. However, the refund can be applied as anestimated payment for the subsequent tax year.

22 2009 Form 1 — Schedule Instructions

Enter in line 1 any amount of refundable film creditfrom Schedule RFC, Refundable Film Credit, line 5.

Line 2. Refundable Dairy CreditThe Massachusetts dairy farmer tax credit was es-tablished to offset the cyclical downturns in milkprices paid to dairy farmers and is based on theU.S. Federal Milk Marketing Order for the applica-ble market. A taxpayer who holds a certificate ofregistration as a dairy farmer pursuant to G.L. c.94, s. 16A is allowed a refundable tax credit basedon the amount of milk produced and sold. Thedairy farmer tax credit as originally enacted was90% refundable. Under recent legislation, the dairyfarmer tax credit is now 100% refundable.

Enter the amount of refundable dairy credit fromthe Department of Agricultural Resources’ DairyFarmer Certified Tax Credit Statement.

Also, be sure to enter the Department of Agricul-tural Resources-issued certificate number in thespace provided on line 2 of Schedule RF.

Line 3. Total Refundable CreditsAdd lines 1 and 2. Enter the result here and onForm 1, line 42.

Schedule BNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

Interest, Dividends and CertainCapital Gains and LossesYou must file Massachusetts Schedule B if you had:◗ dividend income in excess of $1,500;◗ any interest income other than from Mass-achusetts banks taxed at 5.3%;◗ short-term capital gains or losses;◗ carryover short-term losses from prior years;◗ long-term gains on collectibles and pre-1996installment sales classified as capital gain incomefor Massachusetts purposes;◗ gains or losses from the sale, exchange or in-voluntary conversion of property used in a tradeor business;◗ net long-term capital gains and losses; or◗ excess exemptions.

Collectibles are defined as any capital asset that is acollectible within the meaning of Internal RevenueCode section 408(m), as amended and in effect forthe taxable year, including works of art, rugs, an-tiques, metals, gems, stamps, alcoholic beverages,certain coins, and any other items treated as col-lectibles for federal tax purposes.

◗ You need not file Massachusetts Schedule B if allinterest income you had was from Massachusettsbanks (reportable in Form 1, line 5a), and yourgross dividend income was $1,500 or less (divi-

dend income of $1,500 or less is reportable onForm 1, line 20), and you have no short-term cap-ital gains or losses, long-term gains on collectiblesand pre-1996 installment sales, gains or lossesfrom the sale, exchange or involuntary conversionof property used in a trade or business, allowabledeductions from your trade or business, carryovershort-term losses from prior years, net long-termcapital gains or losses, or excess exemptions.◗ You must complete Massachusetts Schedule Bif your interest or dividend income includes: divi-dends taxed directly to trusts or estates on aMassachusetts Fiduciary Return, Form 2; or dis-tributions that are returns of capital.

Part 1. Interest and Dividend IncomeLine 1. Total Interest IncomeEnter your total interest income from your U.S.Form 1040 or 1040A, lines 8a and 8b, or U.S.Form 1040EZ, line 2.

Line 2. Total Ordinary DividendsEnter your total ordinary dividends from your U.S.Schedule B, Part II, line 6 (Form 1040) or U.S.Schedule 1, Part II, line 6 (Form 1040A). If you didnot file U.S. Schedule B or U.S. Schedule 1, enterthe amount from U.S. Form 1040 or 1040A, line 9a.

Line 3. Other Interest andDividendsEnter the following amounts and their sources(enclose additional statement if more space isnecessary):

◗ Interest from obligations of other states and theirpolitical subdivisions (including your share, if any,from a partnership, an S corporation and a grantor-type trust or non-Massachusetts trust). Do not in-clude exempt interest already included in line 1;

◗ Taxable distributions from Massachusetts S cor-porations not reported in Schedule B, line 2. Dis-tributions in excess of the Massachusetts accu-mulated adjustments account are dividends to theextent of the corporation’s Massachusetts accumu-lated earnings and profits. For more information,see Regulation 830 CMR 62.17A.1;

◗ Interest and dividends from a partnership, Scorporation, grantor-type trust, or non-Massachu-setts estate or trust from Massachusetts ScheduleE. Generally, portfolio interest and dividend incomefrom partnerships and S corporations should al-ready be included in the Schedule B, line 1 and line2 amounts;

◗ Interest from a trade or business that is reportedon Massachusetts Schedule C, line 32; or

◗ Interest or dividends from a mutual fund, if suchdistributions are not included in line 1 or line 2.See line 6.

Lines 5 and 6Enter only amounts related to income that youhave already included in lines 1, 2, and 3.

Line 5. Total Interest fromMassachusetts BanksEnter the total interest included in Form 1, line 5a(prior to the exemption amount being subtracted)only if it has been included in lines 1 or 3 of thisschedule.

Line 6. Other Interest andDividends to Be ExcludedEnter the total interest and dividends from the fol-lowing sources (enclose an additional statement,if necessary) only if it has been included in lines 1or 3 of this schedule:

◗ Interest on U.S. debt obligations. Enter interestreceived on U.S. Treasury bills, notes and bonds,savings bonds or other obligations of the UnitedStates, including its territories or dependencies.Such interest is tax-exempt in Massachusetts. Forfurther information concerning exempt obliga-tions of the United States, see TIR 89-8;

◗ Interest and dividends taxed directly to Mass-achusetts estates and trusts. Enter the interest anddividends that are taxed directly to a Massachu-setts estate or trust (reportable on a Massachu-setts Fiduciary Return, Form 2);

◗ Any distribution which is a return of capital in-cluded in total gross dividends, line 2;

◗ Any interest or dividends from obligations of theCommonwealth of Massachusetts or its politicalsubdivisions held by you;

◗ Any exempt portion of interest or dividendsfrom a mutual fund included in lines 1, 2 or 3 ofthis schedule. Enter only the exempt portion of in-terest or dividends derived from obligations of theU.S. government or the Commonwealth of Mass-achusetts or its political subdivisions; or

◗ Any interest on pre-retirement distributions fromstate and municipal contributory pension plans.

Do not enter in line 6 either of the following:

◗ Dividends from the earnings and profits accu-mulated prior to January 1, 1971 by any corporatetrust which was not taxed directly by Massachu-setts in prior years, even though such an entity istaxed directly now (obtain from the entity the tax-able status of dividends paid to you); or

◗ Dividends from any corporate trust which is nottaxed directly by Massachusetts. Such entities in-clude: those not doing business in Massachusetts;regulated investment companies or real estate in-vestment trusts (both as defined under the U.S.Internal Revenue Code, Sections 851 and 856); orholding companies (as defined in MassachusettsGeneral Laws, Chapter 62, section 8).

232009 Form 1 — Schedule Instructions

Line 8. Allowable Deductionsfrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 9. Subtotal Interest andDividend IncomeSubtract line 8 from line 7. If you have no short-term capital gains or losses, net long-term capitalgains or losses, carryover short-term losses fromprior years, long-term gains on collectibles andpre-1996 installment sales classified as capital gainincome for Massachusetts purposes, gains orlosses from the sale, exchange or involuntary con-version of property used in a trade or businessand held for one year or less, allowable deductionsfrom your trade or business, or excess exemp-tions, omit lines 10 through 37. Enter the amountfrom line 9 in line 38 of Schedule B and on Form1, line 20, and omit lines 39 and 40 of Sched-ule B. Otherwise, complete Parts 2, 3 and 4.

Part 2. Short-Term Capital Gainsand Losses and Long-Term Gainson Collectibles and Pre-1996Installment SalesIf there are any differences between U.S. andMassachusetts amounts reported in lines 10, 11,12, 16 and 17, be sure to enter the Massachu-setts amount. Possible differences include:

◗ Short-term capital gains taxed directly toMassachusetts estates and trusts (reportable on aMassachusetts Fiduciary Return, Form 2);

◗ Upon the sale of stock of an S corporation, thefederal basis must be modified according toMassachusetts Income Tax Regulation, 830 CMR62.17A.1; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences between Mass-achusetts and federal tax laws. For more informa-tion regarding basis adjustment rules, see TIR 88-7.

Line 10. Short-Term Capital GainsEnter the gross short-term capital gains includedin U.S. Schedule D, lines 1, 2, 4 and 5, column (f).

Line 11. Long-Term Capital Gainson Collectibles and Pre-1996Installment SalesEnter the amount of long-term capital gains on col-lectibles and pre-1996 installment sales classifiedas capital gain income for Massachusetts pur-poses, from Massachusetts Schedule D, line 11.

Line 12. Gain on Sale of BusinessPropertyEnter from U.S. Form 4797 the amount of gainfrom the sale, exchange or involuntary conversionof property used in a trade or business and heldfor one year or less.

Line 14. Allowable Deductionsfrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 16. Short-Term Capital LossesEnter the gross short-term capital losses includedin U.S. Schedule D, lines 1, 2, 4 and 5, column (f).

Line 17. Loss on Sale of BusinessPropertyEnter from U.S. Form 4797 the amount of lossfrom the sale, exchange or involuntary conversionof property used in a trade or business and heldfor one year or less.

Line 18. Prior Years Short-TermUnused LossesYou may use short-term losses accumulated in theprevious taxable years beginning after 1981 in thecomputation of short-term gain or loss for the cur-rent year. Enter here the amount from your 2008Massachusetts Schedule B, line 40.

Line 21. Available Short-Term LossesCombine lines 19 and 20. This amount should be“0” or less. If line 21 is less than “0,” go to line 22.If line 21 is “0,” omit lines 22 through 28 and goto Part 3.

If Schedule B, line 21 is a loss and Schedule D, line12 is a loss, omit line 22, enter the amount fromline 21 in line 23 and line 40, omit lines 24 through28 and complete Parts 3 and 4.

Line 22. Short-Term Losses AppliedAgainst Long-Term GainsIf Schedule B, line 21 is a loss and Schedule D, line12 is greater than “0,” enter the smaller of Sched-ule B, line 21 (considered as a positive amount)or Schedule D, line 12 in Schedule B, line 22 andin Schedule D, line 13.

Line 23. Short-Term Losses forCarryover in 2010Combine line 21 and line 22 and enter the resultin line 23 and in line 40, omit lines 24 through 28and complete Part 3 and Part 4.

Line 24. Short-Term Gains andLong-Term Gains on CollectiblesEnter the amount from Schedule B, line 19. IfSchedule D, line 12 is “0” or greater, omit line 25and enter the amount from line 24 in line 26. IfSchedule D, line 12 is a loss, go to Schedule B,line 25.

Line 25. Long-Term Losses AppliedAgainst Short-Term GainsIf Schedule B, line 24 is greater than “0,” andSchedule D, line 12 is a loss, enter the smaller ofSchedule B, line 24 or Schedule D, line 12 (con-sidered as a positive amount) in Schedule B, line25 and in Schedule D, line 13.

Line 27. Long-Term Gains DeductionComplete only if lines 11 and 26 are greater than“0.” If there is no entry in line 11, enter “0.” If line11 shows a gain, enter 50% of line 11 minus50% of losses in lines 16, 17, 18 and 25, but notless than “0.”

Example: Jack has a long-term capital gain oncollectibles of $1,000 entered in line 11 and line15. He does not have any other interest income(other than interest from Massachusetts banks)and dividend income. Jack also has a short-termcapital loss of $100 entered in line 16 and a prioryear short-term unused loss of $200 entered inline 18. Jack enters $350 in line 27: $500 (50% of$1,000) minus $150 (50% of $300) = $350.

24 2009 Form 1 — Schedule Instructions

Part 3. Adjusted Gross Interest,Dividends Short-Term Capital Gainsand Long-Term Gains on CollectiblesLine 31. Subtotal Interest andDividendsIf Schedule D, line 14 is “0” or greater, omit Sched-ule B, line 32 and enter the amount from Sched-ule B, line 31 in Schedule B, line 33. If ScheduleD, line 14 is a loss, go to Schedule B, line 32.

Line 32. Long-Term Losses AppliedAgainst Interest and DividendsIf Schedule B, line 31 is a positive amount andSchedule D, line 14 is a loss, complete the Long-Term Capital Losses Applied Against Interest andDividends Worksheet for Schedule B, Line 32and Schedule D, Line 15. When completing theworksheet, be sure to enter all losses as a posi-tive amount.

Part 4. Taxable Interest, Dividendsand Certain Capital GainsLine 36. Excess ExemptionsEnter the amount from line 5 of the Excess Ex-emption Worksheet (only if single, head of house-hold or married filing a joint return and Form 1,line 18 is greater than Form 1, line 17).

Long-Term Capital Losses Applied AgainstInterest and Dividends Worksheet for Sched-ule B, Line 32 and Schedule D, Line 15. Com-plete only if Schedule B, line 31 is a positiveamount and Schedule D, line 14 is a loss.Enter all losses as positive amounts.

1. Enter amount from Schedule B, line 29 . . . . . . . . . . . . . . . . . . . . . . . 2. Enter the lesser of line 1 or $2,0003. Enter the amount from Schedule B, line 30 . . . . . . . . . . . . . . . . . . . . . . . 4. Subtract line 3 from line 2. If “0” or lessomit the remainder of worksheet. Otherwise,complete lines 5 and 6 . . . . . . . . . . 5. Enter any loss from Schedule D, line 14as a positive amount. Otherwise, enter “0” . . . . . . . . . . . . . . . . . . . . . 6. If line 4 is less than or equal to line 5, enterline 4 here and in Schedule B, line 32 and inSchedule D, line 15. If line 4 is larger than line 5,enter line 5 here and in Schedule B, line 32 andin Schedule D, line 15 . . . . . . . . . . .

Schedule DNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

Long-Term Capital Gains andLosses Excluding CollectiblesYou must complete Massachusetts Schedule D ifyou had long-term gains or losses from the sale orexchange of capital assets or from similar transac-tions which are granted capital gain or loss treat-ment on your U.S. return, or if you had capitalgain distributions. If you did not file U.S. Sched-ule D but are reporting capital gain distributionson U.S. Form 1040, line 13 or 1040A, line 10, youmust complete Massachusetts Schedule D (seeline 5 instructions). Include gains from all prop-erty, wherever located. Long-term capital gains aregains on the sale or exchange of capital assetsthat have been held for more than one year on thedate of the sale or exchange. Long-term capitallosses are losses on the sale or exchange of cap-ital assets that have been held for more than oneyear on the date of the sale or exchange.

The law defines “capital gain income” as gain fromthe sale or exchange of a capital asset. The defini-tion of “capital asset” includes: (1) an asset whichis a capital asset under IRC sec. 1221, or (2) prop-erty that is used in a trade or business within themeaning of IRC sec. 1231(b) without regard to theholding period as defined in said sec. 1231(b).

DifferencesSignificant differences between the U.S. and Mass-achusetts capital gain provisions are:

◗ IRC sec. 1244 losses reported as ordinary losseson your U.S. return must be reported on Mass-achusetts Schedule D;

◗ If you made a federal election under sec. 311of the Tax Relief Act of 1997 to recognize gain onthe deemed sale of a capital asset held on Janu-ary 1, 2001, Massachusetts does not follow thefederal rules at sec. 311 for determining the basisof the asset. See TIR 02-3. If you sold a capitalasset in 2009 for which you made a federal sec.311 election, the Massachusetts initial basis willnot be the federal basis. The Massachusetts initialbasis will be determined as of the date the assetwas first acquired;

◗ Upon the sale of stock of an S corporation, thefederal basis must be modified according toMassachusetts Income Tax Regulation, 830 CMR62.17A.1; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences between Mass-achusetts and federal tax laws. For more informa-tion regarding basis adjustment rules, see TIR 88-7.

Net ordinary losses that are itemized deductionson U.S. Schedule A are not allowable.

Installment SalesIf a sale was treated as an installment sale for U.S.income tax purposes, it may be treated the sameway on your Massachusetts income tax return.Gains from pre-1996 installment sales are classi-fied as either capital gains or ordinary income underthe Massachusetts law in effect on the date the saleor exchange took place.

Gains from pre-1996 installment sales that are clas-sified as capital gains should be reported as 12%income on Massachusetts Schedule B. If the assetwas held for more than one year when it was sold,the gain will be eligible for a 50% long-term deduc-tion. Gains from pre-1996 installment sales thatare classified as capital gains included on Mass-achusetts Schedule D, line 3 should be reported onMassachusetts Schedule D, line 11 (“Long-termgains on collectibles and pre-1996 installmentsales”). The amount of such gain is then reportedon Massachusetts Schedule B, Part 2, line 11.

Gains from pre-1996 installment sales classifiedas ordinary income and that are included onMassachusetts Schedule D, line 3 should be re-ported on Massachusetts Schedule D, line 9 (“Dif-ferences”). The amount of such gain classified asordinary income should then be reported on Form1, line 9 (“Other income”) and included on Sched-ule X, line 4 and identified as “2009 gain from pre-1996 installment sale.”

Note: If you are reporting an installment sale occur-ring on or after January 1, 2003, report those gainson Schedule D. If you are reporting capital gainson installment sales that occurred during January1, 1996 through December 31, 2002, do not fileSchedule D. Instead, you must file Schedule D-IS,Installment Sales. Schedule D-IS can be obtainedon DOR’s website at www.mass.gov/dor.

Effective for sales on or after January 1, 2005, ifyou wish to report a sale on your Massachusettsreturn as an installment sale and the Massachusettsgain is $1 million or greater, you must apply in writ-ing to the Department of Revenue’s InstallmentSales Unit. See TIR 04-28. The Commissioner ofRevenue must approve your application to reportthe sale on the installment basis in Massachusettsbefore you file your return, and appropriate secu-rity must be posted. An explanatory statementmust be enclosed with each return for the life ofthe installment sale. For further information con-tact the Installment Sales Unit at (617) 887-6950.

252009 Form 1 — Schedule Instructions

Long-Term Capital Gains andLosses, Excluding CollectiblesLine 1. Long-Term Capital Gainsand LossesEnter the gain or loss included in U.S. Schedule D,line 8, column f.

Line 2. Additional Long-TermCapital Gains and LossesEnter the gain or loss included in U.S. Schedule D,line 9, column f.

Line 3. Gain from Sales of BusinessProperty and Other Long-TermGains and LossesEnter the gain or loss included in U.S. Schedule D,line 11, column f.

Line 4. Net Long-Term Gain or Lossfrom Partnerships, S Corporations,Estates and TrustsEnter the gain or loss included in U.S. Schedule D,line 12, column f.

Line 5. Capital Gain DistributionsIf you did not file U.S. Schedule D, enter the capi-tal gain distributions reported to you by a mutualfund or real estate investment trust included in theamount from U.S. Form 1040, line 13 or 1040A,line 10.

If you did file a U.S. Schedule D, enter the capitalgain distributions reported to you by a mutual fundor real estate investment trust included in U.S.Schedule D, line 13, column f.

Line 6. Massachusetts Long-TermCapital Gains and Losses Includedin U.S. Form 4797, Part IIEnter amounts included in U.S. Form 4797, Part IItreated as capital gains or losses for Massachu-setts purposes (not included in lines 1 through 5).These include ordinary gains from the sale of Sec-tion 1231 property, recapture amounts under Sec-tions 1245, 1250 and 1255, Section 1244 lossesand the loss on the sale, exchange or involuntaryconversion of property used in a trade or business.

Line 7. Carryover Losses fromPrevious YearsIf you have a carryover loss from a prior year, enterin line 7 the total amount of carryover losses fromyour 2008 Massachusetts Schedule D, line 22.

Line 9. DifferencesEnter any differences between the gains or lossesreportable for Massachusetts tax purposes and theU.S. gains or losses reported in MassachusettsSchedule D, lines 1 through 7. Differences include:

◗ Pre-1996 installment sales classified as ordi-nary income for Massachusetts purposes;

◗ Long-term capital gains or losses from transac-tions reported as installment sales for U.S. incometax purposes but not for Massachusetts; and

◗ Massachusetts has adopted basis adjustmentrules to take into account differences betweenMassachusetts and federal tax laws.

Line 10. Adjusted Capital Gains andLossesExclude/subtract line 9 from line 8 and enter theresult in line 10.

◗ If line 9 is a loss, add loss as a positive numberto the amount recorded in line 8. See the follow-ing examples:

Schedule D

Line ex. A ex. B ex. C ex. D18 $1,000 $1,000 *$0,700**$700*19 $1,500 *$1,300* $0,500 *$500*10 $1,500 $1,300 *$1,200**$200*

*denotes loss

◗ If in line 9 you entered amounts which increasethe amounts reported from U.S. to Massachusetts,for example, a long-term gain reported as install-ment sales for U.S. tax purposes but not for Mass-achusetts, add the amount in line 9 to the amountin line 8.

Line 11. Long-Term Gains onCollectibles and Pre-1996Installment SalesEnter in line 11 the amount of long-term gains oncollectibles and pre-1996 installment sales classi-fied as capital gain income for Massachusettspurposes that are included in line 10.

Long-term gains on collectibles and pre-1996 in-stallment sales classified as capital gain incomefor Massachusetts purposes are taxed at the 12%rate and should be entered on Schedule B, line 11.

Collectibles are defined as any capital asset that isa collectible within the meaning of Internal Rev-enue Code section 408(m), as amended and ineffect for the taxable year, including works of art,rugs, antiques, metals, gems, stamps, alcoholicbeverages, certain coins, and any other itemstreated as collectibles for federal tax purposes.

Line 12. SubtotalSubtract line 11 from line 10 and enter the resultin line 12.

If Schedule D, line 12 is a loss and Schedule B,line 21 is less than “0,” omit Schedule D, lines 13through 15, enter the amount from Schedule D,line 12 in Schedule D, line 16, omit Schedule D,

lines 17 through 21 and enter the amount fromSchedule D, line 16 in Schedule D, line 22, andenter “0” on Form 1, line 24.

If Schedule D, line 12 is a gain and Schedule B,line 21 is a loss, go to Schedule D, line 13.

If Schedule D, line 12 is a loss and Schedule B,line 24 is “0” or greater, go to Schedule D, line 13.

If Schedule D, line 12 is a gain, and Schedule B,line 24 is “0” or greater, omit Schedule D, lines 13through 15 and enter the amount from ScheduleD, line 12 in Schedule D, line 16.

Line 13. Capital Losses AppliedAgainst Capital GainsIf Schedule D, line 12 is a positive amount andSchedule B, line 21 is a loss, enter the smaller ofSchedule D, line 12 or Schedule B, line 21 (con-sidered as a positive amount) in Schedule D, line13 and in Schedule B, line 22.

If Schedule D, line 12 is a loss and Schedule B, line24 is a positive amount, enter the smaller of Sched-ule D, line 12 (considered as a positive amount) orSchedule B, line 24 in Schedule D, line 13 and inSchedule B, line 25.

Line 14. SubtotalIf line 12 is greater than “0,” subtract line 13 fromline 12. If line 12 is less than “0,” combine lines 12and 13.

If Schedule D, line 14 is a loss and Schedule B,line 24 is “0” or greater and Schedule B, line 31 isa positive amount, go to Schedule D, line 15.

If Schedule D, line 14 is a loss, and Schedule B, line21 is “0” or less, omit Schedule D, line 15, enter theamount from Schedule D, line 14 in Schedule D, line16, omit Schedule D, lines 17 through 21 and enterthe amount from Schedule D, line 16 in ScheduleD, line 22, and enter “0” on Form 1, line 24.

Line 15. Long-Term Capital LossesApplied Against Interest andDividendsIf Schedule D, line 14 is a loss, and Schedule B,line 24 is “0” or greater and Schedule B, line 31 isa positive amount, complete the Long-Term Capi-tal Losses Applied Against Interest and DividendsWorksheet for Schedule B, Line 32 and ScheduleD, Line 15.

Line 16. SubtotalCombine line 14 and line 15. If Schedule D, line 16is “0,” enter “0” in lines 17 through 20 and omitlines 21 and 22. If Schedule D, line 16 is a loss,omit lines 17 through 21 and enter the amountfrom line 16 in line 22.

26 2009 Form 1 — Schedule Instructions

Line 17. Allowable DeductionsFrom Your Trade or BusinessEnter the appropriate amount from Massachu-setts Schedule C-2 if you qualify for an excesstrade or business deduction. Generally, taxpayersmay not use excess 5.3% deductions to offsetother income. However, where the taxpayer files aMassachusetts Schedule C or Schedule E, Mass-achusetts law allows such offsets if the followingrequirements are met: the excess 5.3% deductionsmust be adjusted gross income deductions al-lowed under MGL Ch. 62, sec. 2(d); and these ex-cess deductions may only be used to offset otherincome which is effectively connected with theactive conduct of a trade or business or any otherincome allowed under IRC, sec. 469(d)(1)(B) tooffset losses from passive activities.

Line 19. Excess ExemptionsEnter in line 19 the amount from line 8 of the Ex-cess Exemption Worksheet (only if single, head ofhousehold or married filing joint return).

Line 21. Tax On Long-Term CapitalGainsMultiply line 20 by .053 (5.3%) and enter the resulthere and in Form 1, line 24.

Note: If choosing the optional 5.85% tax rate,multiply line 20 by .0585 and enter the result hereand in Form 1, line 24.

Line 22. Available Losses forCarryoverEnter the amount from Schedule D, line 16, only ifit is a loss.

Schedule CNote: If showing a loss, be sure to mark over the“X” in the box to the left. Also, be sure to enclosewith Form 1.

Substituting U.S. Schedule C-EZU.S. Schedule C is no longer allowed as a substi-tute for Massachusetts Schedule C. However, youmay substitute U.S. Schedule C-EZ for Mass-achusetts Schedule C if there are no differencesbetween the amounts reported on U.S. ScheduleC-EZ and amounts that would be reported onMassachusetts Schedule C. Be sure to write “NoMassachusetts Differences” on the top of the U.S.Schedule C-EZ.

Profit or Loss from Business orProfessionMassachusetts Schedule C is provided to report in-come and deductions from each business or pro-fession operated as a sole proprietorship.

If your business deductions, excluding the Aban-doned Building Renovation Deduction, exceedSchedule C income and any other income taxableat the 5.3% rate, such excess deductions may besubtracted from the other income that is effec-tively connected with the active conduct of yourtrade or business and any other income allowedunder IRC Section 469(d)(1)(B) to offset lossesfrom passive activities. To compute the excesstrade or business deductions use MassachusettsSchedule C-2. This form is available by visitingwww.mass.gov/dor, or you may have one mailedto you by calling (617) 887-MDOR.

Registration InformationIn the space provided, describe the business or pro-fessional activity that provided your principal sourceof income reported on line 1. If you owned morethan one business, you must complete a separateSchedule C for each business. Give the general fieldor activity and the type of product or service.

Employer Identification NumberYou need an Employer Identification number (EIN)only if you had a Keogh plan, were required to filean employment, excise, estate, trust, or alcohol, to-bacco and firearms tax return or employ contractlabor. If you do not have an EIN, leave the lineblank. Do not enter your Social Security number.

Small Business Energy ExemptionIf you are claiming the small business energy ex-emption from the sales tax on purchases of tax-able energy or heating fuel during 2009, you musthave five or fewer employees. You must enter thenumber of your employees in the space provided.

Accounting MethodIf you filed a return on the accrual basis last year,your return for this year must be on the same basis.If a taxpayer requesting permission to change anaccounting method for Massachusetts purposes iseligible for an automatic change of accountingmethod federally, and has correctly followed themost recently issued federal revenue procedure forrequesting an automatic change, then the taxpayershould file his/her annual return using the newmethod and write at the top, “Automatic Changeof Accounting Method — filed in compliance withDOR Directive 02-13.” The taxpayer should en-close a copy of federal Form 3115, together withany required statements. See DOR Directive 02-13 for further information.

Material ParticipationIndicate if you materially participated in the oper-ation of this business during 2009. If you did notmaterially participate and have a loss from thisbusiness, see line 33 for further instructions.

Line 1a. Gross Receipts or SalesIn the boxes provided, enter gross receipts or salesfrom your business. Be sure to include on this lineamounts you received in your trade or businessas shown on Form 1099-MISC, Miscellaneous In-come. If the nature of your business is such thatyou have gross or other income that is interest(other than from Massachusetts banks) and divi-dend income, exclude this income from lines 1 and4 on Massachusetts Schedule C and include it inline 32 and in Schedule B, line 3. Examples of in-terest (other than from Massachusetts banks) anddividend income are interest received on loans,notes receivable or charge accounts that you ac-cept in the ordinary course of business, and divi-dends on stocks received in payment for goodsand services. Capital gains from the sale or ex-change of assets used in your business are notreported on Schedule C. Use U.S. Form 4797 andreport the amount in Form 1, Schedule B and/orSchedule D. You must also exclude from Sched-ule C any income and expenses that pertain to ac-tivities for yourself as distinguished from thoseperformed for your customers. Such income mustbe reported by class of income in Schedules B andD. Personal expenses are not deductible.

If you received Form W-2 and the “Statutory em-ployee” box in item 13 of that form was checked,report your income and expenses related to thatincome on Schedule C. Enter your statutory em-ployee income from box 1 of Form W-2 on line 1of Schedule C and fill in the oval. Statutory em-ployees include full-time life insurance agents,certain agent or commission drivers and travelingsalespersons and certain homeworkers. If you hadboth self-employment income and statutory em-ployee income, do not combine these amountson a single Schedule C. In this case, you must filetwo Schedules C.

Line 4. Other IncomeIf you received bartering income, you must reportthe fair market value of goods or services receivedin payment for your goods and services in line 4. Donot include interest income (other than from Mass-achusetts banks) and dividends here (see line 32).

Line 7. Bad Debts From Sales orServicesInclude debts and partial debts from sales or serv-ices that were included in income and are definitelyknown to be worthless. If you later collect a debtthat you deducted as a bad debt, include it as in-come in the year collected.

Note: Cash method taxpayers cannot take a baddebt deduction unless the amount was previouslyincluded in income.

272009 Form 1 — Schedule Instructions

Line 11. Depreciation andSection 179 DeductionMassachusetts adopts the current federal rules atsection 179 for expensing certain depreciablebusiness assets. For property placed in service intax years beginning on or after January 1, 2009,the maximum section 179 expensing allowanceis $250,000.

Line 17. Pension and Profit-SharingPlansEnter your deduction for contributions to a pen-sion, profit-sharing or annuity plan, or plans for thebenefit of your employees. If the plan includes youas a self-employed person, do not include contri-butions made as an employer on your behalf. SeeDOR Directive 08-3 for more information.

Line 23. Meals and EntertainmentLine 23a. Enter your total business meal and en-tertainment expenses. Include meals while travel-ing away from home for business. Instead of theactual cost of your meals while traveling away fromhome, you may use the standard meal allowance.Business meal expenses are deductible only if theyare (a) directly related to or associated with theconduct of your trade or business, (b) not lavish orextravagant and (c) incurred while you or your em-ployee is present at the meal. Club dues are notallowed as a business deduction.

Line 23b. Generally, you may deduct only 50% ofyour business meal and entertainment expenses,including meals incurred while traveling away fromhome on business. However, you may fully deductmeals and entertainment furnished or reimbursedto an employee if you properly treat the expenseas wages subject to withholding. You may alsofully deduct meals and entertainment provided toa nonemployee to the extent the expenses are in-cludible in the gross income of that person and re-ported on Form 1099-MISC. Figure how much ofthe amount on line 23a is subject to the 50% limit.Then, enter 50% of that amount on line 23b. Thisamount should be subtracted from the amount inline 23a. Enter the result in line 23 of Massachu-setts Schedule C.

Line 30. Abandoned BuildingRenovation DeductionMassachusetts allows businesses to deduct 10%of the costs incurred in renovating certain build-ings located in an Economic Opportunity Area(EOA). The buildings must be designated as aban-doned by the Economic Assistance CoordinatingCouncil. The renovation deduction may be takenin addition to any other deduction for which therenovation costs may qualify. For more informa-tion, contact the Massachusetts Office of BusinessDevelopment.

In line 30 enter 10% of the costs of renovating aqualifying abandoned building.

Line 33. If You Have a LossFill in the oval in line 33a if all of your investmentis at risk. Enter your loss from line 31 on Form 1,line 6 unless you answered “no” to the questionon material participation on the front of ScheduleC. If you answered “no” to this question, completea pro forma copy of U.S. Form 8582 that reflectsonly income being reported on your Massachusettsreturn. Enter in Massachusetts Schedule C, line 31your allowable loss calculated on Form 8582.

Fill in the oval in line 33b if only some of your in-vestment is at risk. To determine the amount ofyour allowable loss, complete a pro forma copy ofU.S. Form 6198 that reflects only income beingreported on your Massachusetts return. Enter theamount calculated on U.S. Form 6198 in line 31 un-less you answered “no” to the question on mater-ial participation on the front of Schedule C. In thiscase, your loss is further limited. Use the amountscalculated on your pro forma U.S. Form 6198 tocomplete a pro forma U.S. Form 8582. If your at-risk amount is “0” or less, enter “0” in line 31.

Senior CircuitBreaker Tax CreditWhat Is It?For tax years beginning on or after January 1,2001, senior citizens in Massachusetts may be el-igible to claim a refundable credit on their stateincome taxes for the real estate taxes they paid onthe Massachusetts residential property they ownor rent and which they occupy as their principalresidence. The maximum credit allowed is $960 forthe tax year beginning January 1, 2009. See TIR09-16 for more information.

Eligible taxpayers who own their property mayclaim a credit equal to the amount by which theirproperty tax payments in tax year 2009 (exclud-ing any exemptions and/or abatements), includ-ing water and sewer debt charges, exceed 10% oftheir “total income” for the same current tax year.Taxpayers residing in communities that do not in-clude water and sewer debt service in their prop-erty tax assessments may claim, in addition totheir property tax payments, 50% of the waterand sewer use charges actually paid during thetax year when figuring their credit.

Renters may claim a credit in the amount by which25% of their annual rental payment is more than10% of their total income.

For purposes of the tax credit, a taxpayer’s “totalincome” includes taxable income as well as ex-empt income such as Social Security, Treasurybills and public pensions. For a complete list ofwhat constitutes “total income,” see TIR 01-19.

Who Is Eligible for the Credit?To be eligible for the credit for the 2009 tax year, ataxpayer must be 65 years of age or older beforeJanuary 1, 2010 (for joint filers, it is sufficient ifone taxpayer is 65 years of age or older), mustown or rent residential property in Massachusettsand occupy the property as his or her principal res-idence, and must not be the dependent of anothertaxpayer. The taxpayer’s total income cannot ex-ceed $51,000 for a single filer who is not the headof a household, $64,000 for a head of household,or $77,000 for taxpayers filing jointly. No credit isallowed for a married taxpayer unless a joint re-turn is filed. Moreover, the assessed valuation ofthe real estate cannot exceed $788,000.

No credit is allowed if the taxpayer claims the“married filing separate” status, receives a federalor state rent subsidy, rents from a tax-exempt en-tity, or is the dependent of another taxpayer.

Is the Tax Credit Considered Income?Tax credits received by eligible taxpayers are notconsidered income for the purpose of obtainingeligibility or benefits under other means-tested as-sistance programs including food, medical, hous-ing, energy and educational assistance programs.

How Does a Taxpayer Claimthe Credit?Taxpayers who are eligible for the tax credit in the2009 tax year can claim the credit by submitting acompleted Schedule CB, Circuit Breaker Credit,with their 2009 state income tax return. Eligibletaxpayers who do not normally file a state incometax return may obtain a refund by filing a returnwith Schedule CB. As with all claimed tax creditsand deductions, the taxpayer must keep all perti-nent records, receipts and other documentationsupporting his or her claim for the credit.

Line 1. Living Quarters StatusDuring 2009Be sure to fill in the appropriate oval. If you were arenter in 2009 and you received any federal and/orstate subsidy, or you rent from a tax-exempt entity,you do not qualify for the Circuit Breaker Credit.

28 2009 Form 1 — Schedule Instructions

Line 2. Assessed Value of PrincipalResidence as of January 1, 2009Enter the amount of the assessed value of yourprincipal residence as of January 1, 2009. If youown a multi-family home, mixed-use property, ormore than one acre of land, only the assessed valueof the principal residence, together with the landthat immediately surrounds and is associated withthat residence, not to exceed one acre, should beused. If the assessed value is over $788,000, youdo not qualify for the credit. Contact your localcity or town’s assessors’ office if you have anyquestions in determining the amount of the as-sessed value of your principal residence as ofJanuary 1, 2009.

Income CalculationQualifying income for the Circuit Breaker Credit(Schedule CB, lines 3 through 9) is the taxpayer’sMassachusetts AGI as defined in MGL Ch. 62,sec. 2 increased by various amounts that may havebeen excluded or subtracted when originally calcu-lating the taxpayer’s Massachusetts AGI, less cer-tain exemptions claimed by the taxpayer. Amountsadded back to Massachusetts AGI in computingqualifying income include income from Social Se-curity, retirement, pension or annuities, cash pub-lic assistance, tax-exempt interest and dividends,net capital losses, long-term capital losses, certaincapital gains, income from a partnership or trustnot otherwise included in the taxpayer’s Massachu-setts AGI, and gross receipts (for example, the re-turn of capital or gifts) from any other sourceexcept the tax credit itself. The exemptions allowedwhich decrease the total income amount are thoseallowed for blindness, dependents and taxpayerswho are at least age 65 by the end of the tax year.

Line 4. Total Social Security BenefitsEnter in line 4 the amount of Social Security benefitsreceived in 2009. Social Security benefits includeretirement, disability, dependent, survivorship andinsurance. Medicare premiums withheld from So-cial Security payments should not be excluded.

Line 5. Pension, Annuities,IRA/Keogh Distributions Not Taxedon Your Massachusetts Tax ReturnEnter in line 5 the amount of pension, annuities,IRA/Keogh distributions not taxed on your Mass-achusetts Form 1. See Form 1, line 4 instructions,Pension and Annuities, for a list of exempt itemsthat must be included in Schedule CB, line 5 as partof total income for the purposes of calculating theCircuit Breaker Credit.

Line 6. Misellaneous IncomeIncluding Cash Public AssistanceEnter the amount of miscellaneous income, includ-ing cash public assistance, received during 2009.This includes but is not limited to food stamps andwelfare payments, disability income, gifts, sick payand worker’s compensation.

Credit CalculationIf you filled in the “Homeowner” oval in line 1,complete lines 10 through 17, if you filled in the“Renter” oval in line 1, go to line 18.

Line 10. Real Estate Taxes Paidin Calendar Year 2009 for YourPrincipal ResidenceEnter the amount of real estate taxes paid in calen-dar year 2009. Be sure to include real estate taxpayments made pursuant to the Community Pres-ervation Act, the Cape Cod Open Space Land Acqui-sition Program and/or paid to a tax-levying district.

Note: Real estate taxes paid in a calendar or tax-able year generally reflect taxes assessed for twodifferent fiscal years. If a community collects taxesquarterly, a taxpayer may have made four paymentsduring a calendar year. These payments are billedas due on the following dates: February 1, May 1,August 1, and November 1. If a community col-lects taxes semi-annually, a taxpayer may havemade two payments during the calendar year. Thefirst payment is billed as due on May 1 and thesecond as due on November 1, or thirty days afterit is mailed, if the bill is mailed after October 1. Ifyou own a multi-family home, mixed-use property,or your principle residence has a land area in ex-cess of one acre, contact your local city or town’scollector’s office if you have any questions in de-termining the amount of real estate taxes paid incalendar year 2009 for your principal residence.

Line 11. Adjustments to Real EstateTaxes PaidEnter the amount from line 4 of the Adjustments toReal Estate Taxes Paid Worksheet for Schedule CB,line 11, on page 2 of Schedule CB. Adjustments toreal estate taxes paid include:

◗ Abatements granted by local assessors orearned through the Senior Work Program*;

◗ Exemptions granted by cities or towns to qual-ifying veterans, surviving spouses, blind personsand the elderly*;

◗ Interest charges assessed due to delinquentpayments; and

◗ Betterments or special assessments levied uponthe property.

*Do not exclude this amount if it was already re-flected on your tax bill and you did not pay it.

Line 13. Water and Sewer UseCharges Paid in 2009Contact your town official to determine if yourcommunity has elected to include water and sewerdebt charges in the property tax assessment. Tax-payers residing in communities that do not includewater and sewer debt charges in the property taxassessments may include 50% of the actual waterand sewer use charges paid during the taxable year.If they have elected to include those charges in theproperty tax assessment, enter “0” in line 13. If theyhave not elected to include those charges, enter50% of your actual water and sewer use chargespaid in 2009 in line 13.

If you own a multi-family home, mixed-use prop-erty, or your principal residence has a land area inexcess of one acre, see TIR 01-19 for informationon how to prorate water and sewer use charges.

Line 18. Rent Paid for YourPrincipal Residence in 2009Enter in line 18a the total amount of rent paid foryour principal Massachusetts residence in 2009.Divide that amount by 4 (25%) and enter the re-sult in line 18. In the space provided, be sure toenter your landlord’s name and address. If youreceived any federal and/or state rent subsidy, oryou rent from a tax-exempt entity, you do notqualify for the Circuit Breaker Credit.

292009 Form 1 — Schedule Instructions

30 2009 Massachusetts Income Tax Table at the 5.3% RateUse this table to calculate tax for taxable 5.3% income (line 21) of not more than $24,000.

Line 22 instructions: To find your tax on 5.3% Income (line 22), read down the tax table income column to the line containing the amount you en-tered in line 21. Then read across to the TAX column and enter this amount in line 22. If your taxable 5.3% income in line 21 is greater than $24,000,multiply the amount by .053. Enter the result in line 22.

Note: If choosing the optional 5.85% tax rate, multiply line 21 and the amount in Schedule D, line 20 by .0585.

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

INCOMEMore But notthan more than TAX

$ 1 – $ 50 $ 150 – 100 4

100 – 150 7150 – 200 9200 – 250 12250 – 300 15300 – 350 17350 – 400 20400 – 450 23450 – 500 25500 – 550 28550 – 600 30600 – 650 33650 – 700 36700 – 750 38750 – 800 41800 – 850 44850 – 900 46900 – 950 49950 – 1,000 52

1,000 – 1,050 541,050 – 1,100 571,100 – 1,150 601,150 – 1,200 621,200 – 1,250 651,250 – 1,300 681,300 – 1,350 701,350 – 1,400 731,400 – 1,450 761,450 – 1,500 781,500 – 1,550 811,550 – 1,600 831,600 – 1,650 861,650 – 1,700 891,700 – 1,750 911,750 – 1,800 941,800 – 1,850 971,850 – 1,900 991,900 – 1,950 1021,950 – 2,000 1052,000 – 2,050 1072,050 – 2,100 1102,100 – 2,150 1132,150 – 2,200 1152,200 – 2,250 1182,250 – 2,300 1212,300 – 2,350 1232,350 – 2,400 1262,400 – 2,450 1292,450 – 2,500 1312,500 – 2,550 1342,550 – 2,600 1362,600 – 2,650 1392,650 – 2,700 1422,700 – 2,750 1442,750 – 2,800 1472,800 – 2,850 1502,850 – 2,900 1522,900 – 2,950 1552,950 – 3,000 1583,000 – 3,050 1603,050 – 3,100 1633,100 – 3,150 1663,150 – 3,200 1683,200 – 3,250 1713,250 – 3,300 1743,300 – 3,350 1763,350 – 3,400 1793,400 – 3,450 1823,450 – 3,500 1843,500 – 3,550 1873,550 – 3,600 1893,600 – 3,650 1923,650 – 3,700 1953,700 – 3,750 1973,750 – 3,800 2003,800 – 3,850 2033,850 – 3,900 2053,900 – 3,950 2083,950 – 4,000 211

$ 4,000 – $ 4,050 $ 2134,050 – 4,100 2164,100 – 4,150 2194,150 – 4,200 2214,200 – 4,250 2244,250 – 4,300 2274,300 – 4,350 2294,350 – 4,400 2324,400 – 4,450 2354,450 – 4,500 2374,500 – 4,550 2404,550 – 4,600 2424,600 – 4,650 2454,650 – 4,700 2484,700 – 4,750 2504,750 – 4,800 2534,800 – 4,850 2564,850 – 4,900 2584,900 – 4,950 2614,950 – 5,000 2645,000 – 5,050 2665,050 – 5,100 2695,100 – 5,150 2725,150 – 5,200 2745,200 – 5,250 2775,250 – 5,300 2805,300 – 5,350 2825,350 – 5,400 2855,400 – 5,450 2885,450 – 5,500 2905,500 – 5,550 2935,550 – 5,600 2955,600 – 5,650 2985,650 – 5,700 3015,700 – 5,750 3035,750 – 5,800 3065,800 – 5,850 3095,850 – 5,900 3115,900 – 5,950 3145,950 – 6,000 3176,000 – 6,050 3196,050 – 6,100 3226,100 – 6,150 3256,150 – 6,200 3276,200 – 6,250 3306,250 – 6,300 3336,300 – 6,350 3356,350 – 6,400 3386,400 – 6,450 3416,450 – 6,500 3436,500 – 6,550 3466,550 – 6,600 3486,600 – 6,650 3516,650 – 6,700 3546,700 – 6,750 3566,750 – 6,800 3596,800 – 6,850 3626,850 – 6,900 3646,900 – 6,950 3676,950 – 7,000 3707,000 – 7,050 3727,050 – 7,100 3757,100 – 7,150 3787,150 – 7,200 3807,200 – 7,250 3837,250 – 7,300 3867,300 – 7,350 3887,350 – 7,400 3917,400 – 7,450 3947,450 – 7,500 3967,500 – 7,550 3997,550 – 7,600 4017,600 – 7,650 4047,650 – 7,700 4077,700 – 7,750 4097,750 – 7,800 4127,800 – 7,850 4157,850 – 7,900 4177,900 – 7,950 4207,950 – 8,000 423

$ 8,000 – $ 8,050 $ 4258,050 – 8,100 4288,100 – 8,150 4318,150 – 8,200 4338,200 – 8,250 4368,250 – 8,300 4398,300 – 8,350 4418,350 – 8,400 4448,400 – 8,450 4478,450 – 8,500 4498,500 – 8,550 4528,550 – 8,600 4548,600 – 8,650 4578,650 – 8,700 4608,700 – 8,750 4628,750 – 8,800 4658,800 – 8,850 4688,850 – 8,900 4708,900 – 8,950 4738,950 – 9,000 4769,000 – 9,050 4789,050 – 9,100 4819,100 – 9,150 4849,150 – 9,200 4869,200 – 9,250 4899,250 – 9,300 4929,300 – 9,350 4949,350 – 9,400 4979,400 – 9,450 5009,450 – 9,500 5029,500 – 9,550 5059,550 – 9,600 5079,600 – 9,650 5109,650 – 9,700 5139,700 – 9,750 5159,750 – 9,800 5189,800 – 9,850 5219,850 – 9,900 5239,900 – 9,950 5269,950 – 10,000 529

10,000 – 10,050 53110,050 – 10,100 53410,100 – 10,150 53710,150 – 10,200 53910,200 – 10,250 54210,250 – 10,300 54510,300 – 10,350 54710,350 – 10,400 55010,400 – 10,450 55310,450 – 10,500 55510,500 – 10,550 55810,550 – 10,600 56010,600 – 10,650 56310,650 – 10,700 56610,700 – 10,750 56810,750 – 10,800 57110,800 – 10,850 57410,850 – 10,900 57610,900 – 10,950 57910,950 – 11,000 58211,000 – 11,050 58411,050 – 11,100 58711,100 – 11,150 59011,150 – 11,200 59211,200 – 11,250 59511,250 – 11,300 59811,300 – 11,350 60011,350 – 11,400 60311,400 – 11,450 60611,450 – 11,500 60811,500 – 11,550 61111,550 – 11,600 61311,600 – 11,650 61611,650 – 11,700 61911,700 – 11,750 62111,750 – 11,800 62411,800 – 11,850 62711,850 – 11,900 62911,900 – 11,950 63211,950 – 12,000 635

$12,000 – $12,050 $ 63712,050 – 12,100 64012,100 – 12,150 64312,150 – 12,200 64512,200 – 12,250 64812,250 – 12,300 65112,300 – 12,350 65312,350 – 12,400 65612,400 – 12,450 65912,450 – 12,500 66112,500 – 12,550 66412,550 – 12,600 66612,600 – 12,650 66912,650 – 12,700 67212,700 – 12,750 67412,750 – 12,800 67712,800 – 12,850 68012,850 – 12,900 68212,900 – 12,950 68512,950 – 13,000 68813,000 – 13,050 69013,050 – 13,100 69313,100 – 13,150 69613,150 – 13,200 69813,200 – 13,250 70113,250 – 13,300 70413,300 – 13,350 70613,350 – 13,400 70913,400 – 13,450 71213,450 – 13,500 71413,500 – 13,550 71713,550 – 13,600 71913,600 – 13,650 72213,650 – 13,700 72513,700 – 13,750 72713,750 – 13,800 73013,800 – 13,850 73313,850 – 13,900 73513,900 – 13,950 73813,950 – 14,000 74114,000 – 14,050 74314,050 – 14,100 74614,100 – 14,150 74914,150 – 14,200 75114,200 – 14,250 75414,250 – 14,300 75714,300 – 14,350 75914,350 – 14,400 76214,400 – 14,450 76514,450 – 14,500 76714,500 – 14,550 77014,550 – 14,600 77214,600 – 14,650 77514,650 – 14,700 77814,700 – 14,750 78014,750 – 14,800 78314,800 – 14,850 78614,850 – 14,900 78814,900 – 14,950 79114,950 – 15,000 79415,000 – 15,050 79615,050 – 15,100 79915,100 – 15,150 80215,150 – 15,200 80415,200 – 15,250 80715,250 – 15,300 81015,300 – 15,350 81215,350 – 15,400 81515,400 – 15,450 81815,450 – 15,500 82015,500 – 15,550 82315,550 – 15,600 82515,600 – 15,650 82815,650 – 15,700 83115,700 – 15,750 83315,750 – 15,800 83615,800 – 15,850 83915,850 – 15,900 84115,900 – 15,950 84415,950 – 16,000 847

$16,000 – $16,050 $ 84916,050 – 16,100 85216,100 – 16,150 85516,150 – 16,200 85716,200 – 16,250 86016,250 – 16,300 86316,300 – 16,350 86516,350 – 16,400 86816,400 – 16,450 87116,450 – 16,500 87316,500 – 16,550 87616,550 – 16,600 87816,600 – 16,650 88116,650 – 16,700 88416,700 – 16,750 88616,750 – 16,800 88916,800 – 16,850 89216,850 – 16,900 89416,900 – 16,950 89716,950 – 17,000 90017,000 – 17,050 90217,050 – 17,100 90517,100 – 17,150 90817,150 – 17,200 91017,200 – 17,250 91317,250 – 17,300 91617,300 – 17,350 91817,350 – 17,400 92117,400 – 17,450 92417,450 – 17,500 92617,500 – 17,550 92917,550 – 17,600 93117,600 – 17,650 93417,650 – 17,700 93717,700 – 17,750 93917,750 – 17,800 94217,800 – 17,850 94517,850 – 17,900 94717,900 – 17,950 95017,950 – 18,000 95318,000 – 18,050 95518,050 – 18,100 95818,100 – 18,150 96118,150 – 18,200 96318,200 – 18,250 96618,250 – 18,300 96918,300 – 18,350 97118,350 – 18,400 97418,400 – 18,450 97718,450 – 18,500 97918,500 – 18,550 98218,550 – 18,600 98418,600 – 18,650 98718,650 – 18,700 99018,700 – 18,750 99218,750 – 18,800 99518,800 – 18,850 99818,850 – 18,900 1,00018,900 – 18,950 1,00318,950 – 19,000 1,00619,000 – 19,050 1,00819,050 – 19,100 1,01119,100 – 19,150 1,01419,150 – 19,200 1,01619,200 – 19,250 1,01919,250 – 19,300 1,02219,300 – 19,350 1,02419,350 – 19,400 1,02719,400 – 19,450 1,03019,450 – 19,500 1,03219,500 – 19,550 1,03519,550 – 19,600 1,03719,600 – 19,650 1,04019,650 – 19,700 1,04319,700 – 19,750 1,04519,750 – 19,800 1,04819,800 – 19,850 1,05119,850 – 19,900 1,05319,900 – 19,950 1,05619,950 – 20,000 1,059

$20,000 – $20,050 $1,06120,050 – 20,100 1,06420,100 – 20,150 1,06720,150 – 20,200 1,06920,200 – 20,250 1,07220,250 – 20,300 1,07520,300 – 20,350 1,07720,350 – 20,400 1,08020,400 – 20,450 1,08320,450 – 20,500 1,08520,500 – 20,550 1,08820,550 – 20,600 1,09020,600 – 20,650 1,09320,650 – 20,700 1,09620,700 – 20,750 1,09820,750 – 20,800 1,10120,800 – 20,850 1,10420,850 – 20,900 1,10620,900 – 20,950 1,10920,950 – 21,000 1,11221,000 – 21,050 1,11421,050 – 21,100 1,11721,100 – 21,150 1,12021,150 – 21,200 1,12221,200 – 21,250 1,12521,250 – 21,300 1,12821,300 – 21,350 1,13021,350 – 21,400 1,13321,400 – 21,450 1,13621,450 – 21,500 1,13821,500 – 21,550 1,14121,550 – 21,600 1,14321,600 – 21,650 1,14621,650 – 21,700 1,14921,700 – 21,750 1,15121,750 – 21,800 1,15421,800 – 21,850 1,15721,850 – 21,900 1,15921,900 – 21,950 1,16221,950 – 22,000 1,16522,000 – 22,050 1,16722,050 – 22,100 1,17022,100 – 22,150 1,17322,150 – 22,200 1,17522,200 – 22,250 1,17822,250 – 22,300 1,18122,300 – 22,350 1,18322,350 – 22,400 1,18622,400 – 22,450 1,18922,450 – 22,500 1,19122,500 – 22,550 1,19422,550 – 22,600 1,19622,600 – 22,650 1,19922,650 – 22,700 1,20222,700 – 22,750 1,20422,750 – 22,800 1,20722,800 – 22,850 1,21022,850 – 22,900 1,21222,900 – 22,950 1,21522,950 – 23,000 1,21823,000 – 23,050 1,22023,050 – 23,100 1,22323,100 – 23,150 1,22623,150 – 23,200 1,22823,200 – 23,250 1,23123,250 – 23,300 1,23423,300 – 23,350 1,23623,350 – 23,400 1,23923,400 – 23,450 1,24223,450 – 23,500 1,24423,500 – 23,550 1,24723,550 – 23,600 1,24923,600 – 23,650 1,25223,650 – 23,700 1,25523,700 – 23,750 1,25723,750 – 23,800 1,26023,800 – 23,850 1,26323,850 – 23,900 1,26523,900 – 23,950 1,26823,950 – 24,000 1,271

If your 5.3% income for the tax table is less than $10, your tax is “0.”

Department of Revenue Resources

What kind of help is availableThe instructions in the Department of Revenue’s tax forms should provide answers to most taxpayer questions.DOR’s website at www.mass.gov/dor is also a valuable resource for tax information 24 hours a day. Thousandsof tapayers use DOR’s website to e-mail and receive prompt answers to their general tax inquiries. Taxpayerscan also check the status of their refunds, make estimated tax payments and review their estimated tax pay-ment histories through the Web Services for Income section of our website.

Public libraries and DOR district offices (listed on this page) also offer access to DOR’s website for those tax-payers who don’t otherwise have computer access.

Where to get forms and publicationsMost Massachusetts tax forms and publications are available via the DOR website. The address for theDepartment’s website is www.mass.gov/dor.

To obtain Massachusetts forms and publications by phone, call the Department’s main information linesat (617) 887-MDOR or toll-free in Massachusetts at 1-800-392-6089. Please note that many forms and

publications are available 24 hours a day by calling the Department’s automated forms request system at thenumbers listed above.

During the income tax filing season, you can pick up Massachusetts personal income tax forms atyour local library or at IRS district offices across the state.

Note: To obtain federal tax information and forms via the Internet, go to www.irs.gov or call the IRS toll-freeat 1-800-829-1040.

For help in one of the following specific areas◗ Certificates of Good Standing (617) 887-6550 ◗ Installment Sales (617) 887-6950◗ Teletype (TTY) (617) 887-6140 ◗ Small Business Workshop (617) 887-5660◗ Vision-impaired taxpayers can contact DOR by calling one of the phone numbers listed above to receiveassistance.◗ Upon request, this publication is available in an alternative format. Please send your request to: Office ofDiversity and Equal Opportunity, PO Box 9557, Boston, MA 02114-9557.

To report allegations of suspected misconduct or impropriety involving Department of Revenue employees,call the Inspectional Services Division’s Integrity Hot Line at 1-800-568-0085 or write to PO Box 9568, Boston,MA 02114-9568.

Volunteer in Your CommunityBe sure to visit the Commonwealth’s new Connect and Serve website to learn about the wide variety of volunteeringopportunities available to Massachusetts residents. The site may be found at www.mass.gov/connectandserve.

DOR Locationsin MassachusettsBoston19 Staniford St.Boston, MA 02114(617) 887-MDOR

Fall River218 South Main St.Fall River, MA 02721(508) 678-2844

Hyannis60 Perseverance WayHyannis, MA 02601(508) 771-2414

Pittsfield333 East St.Pittsfield, MA 01201(413) 499-2206

Springfield436 Dwight St.Springfield, MA 01103(413) 784-1000

Worcester67 Millbrook St.Worcester, MA 01606(508) 792-7300

270M 12/09 2010JMBPRINTOFF150103 partially printed on recycled paper

Dear Taxpayer,Electronic filing of personal income tax returns in Massachusetts hit a record high of 66 percent last year —up from 63 percent the previous year. Electronic filing means quicker and more accurate processing ofreturns and faster deposit of refunds.

To provide even more assistance to taxpayers who seek the advantages of electronic filing, and buildingon the success of the WebFile for Income program introduced last filing season, DOR has developed a newenhanced version of this free web-based program for filing Massachusetts personal income tax returns inthe 2009 filing season. It is convenient, secure and available at the DOR website at www.mass.gov/webfile.

The new WebFile for Income has added all forms and schedules, making this application even more usefuland user-friendly. It may be used by all full-year residents who do not have to report installment sale income.At any step in the process of filling out the return you may access help and review a comprehensive sectionof FAQ’s and substantive tax links. The new WebFile also uses data entered onto the form to help preventsimple mistakes. For instance, it will prevent a taxpayer from filling out Schedule CB (the Circuit BreakerCredit) if the taxpayer or spouse were not age 65 before January 1, 2010.

Navigation tools allow you to complete, review and save sections of their return. As the return is filled outonline, you can see it in PDF form just as it will show on the printed tax form. WebFile has been designedto work well with third party screen readers and other disability software. Math is checked for you and thereturn can be saved and finished later. When your return is completed and filed, the refund can be wiredstraight to your bank account, the quickest way for you to receive your hard-earned money.

Tax year 2009 marks the third year of DOR’s implementation of the state’s landmark health care reform law.DOR’s website has an instructional video to assist and answer questions, while more information on obtain-ing affordable health insurance is available at www.mahealthconnector.org or from insurance providers.

Also, please check to see if your income level qualifies for the Earned Income Tax Credit, a refundable federaltax credit for low-income working individuals and families. The Massachusetts credit is 15% of the allowablefederal credit, and may be claimed even if no tax is due. And don’t forget the aforementioned Circuit BreakerTax Credit for homeowners and renters 65 and older.

Please see the enclosed instructions or visit our website www.mass.gov/dor for more information on allthese initiatives. Contact our Customer Service Bureau by phone (617) 887-6367, toll-free in Massachusettsat (800) 392-6089, or email websitefeedback@dor.state.ma.us with your questions, concerns or comments.

Sincerely,

Navjeet K. BalCommissioner

Massachusetts

Department of

Revenue

PO Box 7011

Boston, MA 02204

PRSRT STDU.S. POSTAGEPAIDCOMMONWEALTH OFMASSACHUSETTS

Important Mailing Information!

When mailing a return generated from

a 2-D software product, be sure to

use one of the special 2-D PO

boxes listed on page 3.