Massachusetts Other Income (Schedule X)
Massachusetts Schedule X is used to report "Other Income" that is not included in the standard income categories on Form 1 or Form 1-NR/PY. This includes income that is not subject to the standard 5.0% tax rate, such as interest, dividends, and capital gains taxed at different rates. Schedule X helps taxpayers accurately calculate their Massachusetts income tax liability by separating income taxed at different rates.
What Constitutes "Other Income"?
- Interest income (other than from Massachusetts banks)
- Dividends received from corporations
- Capital gains taxed at 8.5% or 12% rates
- Long-term capital gains not taxed at the 8.5% or 12% rate
- Other taxable income not subject to the 5.0% rate
Reporting Requirements
Taxpayers must report other income on Schedule X if they have any of the following:
- Interest income from non-Massachusetts banks
- Dividend income
- Capital gains taxed at 8.5% or 12%
- Other income not included in the 5.0% category
For nonresidents, Schedule X is part of Form 1-NR/PY and must be completed if you have Massachusetts-source income from business, employment, or other activities. You must also complete the Nonresident Apportionment Worksheet (Line 13) if the exact Massachusetts amount is not known.
How to Calculate Tax on Other Income
The tax on other income is calculated using a worksheet that substitutes specific income types for the standard 5.0% income calculation:
- Substitute interest and dividend income (Schedule B, line 7) for Form 1, line 10 in the worksheet.
- Substitute capital gains (Schedule B, line 13c or Schedule D, line 13) for Form 1, line 10 in line 2 of the worksheet.
- Multiply the total of Form 1, line 20 by 0.05 to calculate tax on interest and dividend income.
For Form 2G filers, substitute Schedule B, line 9 and line 15c or Schedule D, line 12 for Form 2, line 7 in the worksheet. The tax is then calculated as the total of Form 2, line 20 multiplied by 0.05, plus any applicable tax from Form 2, line 30 or line 38.
Important Notes
- U.S. Schedule C cannot be substituted for Massachusetts Schedule C. Use Massachusetts Schedule C to report business income and expenses.
- Exclude interest and dividend income from Schedule C if it is not part of your business operations; instead, report it on Schedule B.
- Capital gains from business assets are reported on Form 4797 and should be included in Schedule B or Schedule D, not on Schedule C.
Source:
Form 1 Instructions
Form 1-NR/PY Instructions
Form 2 Instructions
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.