Inclusion of Credit in Massachusetts Gross Income

A refund of the credit is includable in Massachusetts gross income to the extent it is includable in federal gross income. Generally a refund of a state credit is includable in federal gross income if it is received by the taxpayer as an actual or constructive payment from the state, after reduction for such portion of the credit, if any, that is used to reduce the taxpayer’s current tax liability. The amount of refunded credit that is includable in income would include any offset of the otherwise available credit that is made to cover other applicable obligations owed by the taxpayer under 830 CMR 62.6M.1(9). That portion of a refundable state credit, if any, that is applied to reduce the taxpayer’s current state tax liability, in contrast, is generally treated for federal tax purposes as a reduction in tax and is not included in the taxpayer’s federal gross income, or otherwise treated as a payment from the state.