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Recent Changes to Massachusetts tax law

Recent Changes to Massachusetts tax law

On October 4 2023, Massachusetts Governor Maura Healy signed H. 4104 which enacted significant tax reform legislation for both businesses and individuals.  Some of the more notable changes are outlined below:   Effective for Tax year 2023 The income tax rate for short-term capital gains (e.g. gains from the sale of capital assets held for 1 year or less) is reduced from 12% to 8.5. This is...

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IRS Releases Additional Guidance on the Treatment of Research and Experimental Expenditures Under Section 174

With the passage of the 2017 Tax Cuts & Jobs Act, IRC Sec. 174(a) was amended requiring taxpayers to charge specified research or experimental expenditures including software development costs to a capital account and amortize them over five years (15 years for expenditures attributable to research performed outside the United States).  The law was effective for tax years beginning on or...

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Tax Court Adjusts Rent deduction for S corporation whose sole shareholder attempted to take Advantage of the Masters Rule

  IRC Sec 280A(g) allows taxpayers to exclude from income any compensation obtained by renting the taxpayer’s residence as long as the residence is rented for 14 days or less in a calendar year.  This rule has been dubbed the “Master’s rule” in reference to the famous Augusta National Golf Club in Georgia.  During the tournament, there would be a high demand for dwellings and local residents...

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Recent Changes to Massachusetts tax law

IRS Provides Relief for New RMD Changes

This past month, the IRS published Notice 2023-54 which provides transition relief for plan administrators, payors, plan participants, IRA owners, and beneficiaries in connection with the change in the required beginning date for required minimum distributions.  The required beginning date for RMDs was changed under Sec. 401(a)(9), pursuant to Section 107 of the SECURE 2.0 Act, enacted on Dec....

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Final Regulations: Recapture of Certain Excess Employment Tax Credits under Covid-19

On July 24, 2023, the U.S. Treasury Department and IRS released T.D. 9978, the final regulations under sections 3111, 3131, 3132, 3134 and 3221 of the Internal Revenue Code (Code) issued under the authority granted by the Families First Coronavirus Response Act, the Coronavirus Aid, Relief, and Economic Security Act, and the American Rescue Plan Act of 2021.  These Final regulations authorize...

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Chapter 62 Conformity to Select Provisions of the 2022 Internal Revenue Code

Chapter 62 Conformity to Select Provisions of the 2022 Internal Revenue Code

Prior to 2022, Massachusetts personal income tax was based on fixed date conformity, meaning it started with federal gross income as defined by the Internal Revenue code as of 1/1/2005.  This differed from Massachusetts corporate tax which had rolling conformity, meaning the starting point was the Internal Revenue Code as currently in effect.  As part of the FY23 Budget, Massachusetts updated...

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Recent Changes to Massachusetts tax law

The Fair Share Amendment – Massachusetts Millionaires Tax

A constitutional amendment to add a 4% surtax for Massachusetts taxpayers with over $1,000,000 of taxable income was passed with a 52% vote this past Tuesday and is expected to go into effect for the 2023 tax year. The current 5% tax rate will still apply to the first $1,000,000 of ordinary income and long-term capital gains, and the 12% tax rate on short term capital gains remains untouched,...

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Recent Changes to Massachusetts tax law

2022 Changes to the Tax Treatment of Research and Development Costs

Beginning in 2022, amendments made by the Tax Cuts and Jobs Act require taxpayers to amortize research and experimentation expenditures over five years or 15 years, for research and development performed outside the U.S.  Attempts were made to delay the adoption of these changes to 2026 with the Build Back Better Bill, but since the BBB stalled in congress, taxpayers should prepare their...

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Employee vs Independent Contractor Misclassification

Employee vs Independent Contractor Misclassification

Employee vs Independent Contractor Misclassification Companies sometimes look to hire independent contractors instead of employees for a number of different reasons.  A company may choose to classify a worker as an independent contractor for legitimate business reasons but may also do so to avoid any number of the following: Avoid paying/offering required & voluntary benefits such as health...

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