Boston

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Taxes

Sections

1. Types of Taxes in Boston

Residents and visitors in Boston are subject to several types of taxes, including:

A. Federal Taxes

  • Income Tax: The U.S. federal government imposes income tax on individuals and businesses. The rates are progressive, ranging from 10% to 37%, depending on your income bracket.
  • Social Security and Medicare Taxes: These are payroll taxes deducted from your paycheck if you are employed in the U.S. The combined rate is 7.65% for employees (6.2% for Social Security and 1.45% for Medicare).

B. Massachusetts State Taxes

  • Income Tax: Massachusetts has a flat income tax rate of 5% on most types of income, including wages, salaries, and investment income.
  • Sales Tax: The state imposes a 6.25% sales tax on most goods and some services. However, there is no additional local sales tax in Boston.
  • Capital Gains Tax: Short-term capital gains (assets held for less than a year) are taxed at 12%, while long-term capital gains are taxed at the standard 5% rate.

C. Local Taxes

Boston does not impose a local income tax or additional sales tax. However, there are specific local taxes and fees to be aware of:

  • Property Tax: If you own property in Boston, youโ€™ll pay property taxes based on the assessed value of your property. The residential property tax rate for 2023 is $10.88 per $1,000 of assessed value.
  • Hotel/Short-Term Rental Tax: Visitors staying in hotels, motels, or short-term rentals (e.g., Airbnb) are subject to a combined tax rate of 14.95% (5.7% state tax, 6% local tax, and 2.75% convention center tax for Boston).

D. Other Taxes

  • Excise Tax: Vehicle owners in Boston must pay an annual excise tax of $25 per $1,000 of the vehicleโ€™s value.
  • Meals Tax: Restaurants in Boston charge a 7% meals tax (6.25% state tax + 0.75% local tax) on prepared food and beverages.

2. General Tax Rates Overview

| Tax Type | Rate | Notes | |--------------------------|------------------------------------|---------------------------------------------------------------------------| | Federal Income Tax | 10%โ€“37% | Progressive rates based on income brackets. | | Massachusetts Income Tax | 5% | Flat rate for all income types. | | Sales Tax | 6.25% | Applies to most goods and some services. | | Property Tax | $10.88 per $1,000 of assessed value | Applies to property owners in Boston. | | Hotel/Short-Term Rental | 14.95% | Includes state, local, and convention center taxes. | | Meals Tax | 7% | Applies to prepared food and beverages. | | Vehicle Excise Tax | $25 per $1,000 of vehicle value | Annual tax for vehicle owners. |

3. Filing Taxes in Boston

If you are a resident, immigrant, or worker in Boston, youโ€™ll need to file taxes annually. Hereโ€™s a step-by-step guide:

A. Federal Tax Filing

  1. Determine Your Filing Status: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Widow(er).
  2. Collect Necessary Documents:
    • W-2 forms (for employees).
    • 1099 forms (for freelancers or contractors).
    • Other income statements (e.g., investment income, rental income).
    • Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN).
  3. File Your Federal Taxes:
    • Use IRS Form 1040.
    • File online via the IRS website or through tax software like TurboTax or H&R Block.
    • Deadline: April 15 (or the next business day if it falls on a weekend/holiday).

B. Massachusetts State Tax Filing

  1. Determine Your Residency Status:
    • Resident: You live in Massachusetts for more than 183 days in a year.
    • Non-Resident: You earn income in Massachusetts but live elsewhere.
    • Part-Year Resident: You moved into or out of Massachusetts during the tax year.
  2. File Your State Taxes:
    • Use Form 1 (Resident) or Form 1-NR/PY (Non-Resident/Part-Year Resident).
    • File online via the Massachusetts Department of Revenue (DOR) website or through tax software.
    • Deadline: April 15.

C. Local Taxes

  • Property taxes are billed quarterly in Boston. Payments can be made online through the City of Boston website or in person at City Hall.
  • Excise taxes for vehicles are billed annually and can also be paid online.

4. Boston-Specific Considerations

  • Tax-Free Weekend: Massachusetts typically offers a tax-free weekend in August, during which most retail items under $2,500 are exempt from sales tax.
  • Student Tax Obligations: Boston is home to many universities. Students who work part-time or earn income in Massachusetts must file state and federal taxes, even if they are international students.
  • Immigrants and Non-Residents: If you are a non-resident or new immigrant, you may need to file Form 1040-NR for federal taxes and Form 1-NR/PY for Massachusetts state taxes.
  • Property Tax Exemptions: Boston offers property tax exemptions for certain groups, such as seniors, veterans, and low-income residents. Check with the Boston Assessing Department for eligibility.

5. Resources for Tax Assistance

If you need help with taxes in Boston, the following resources are available:

  • IRS Free File: For individuals earning less than $73,000 annually, the IRS offers free tax preparation software.
  • Volunteer Income Tax Assistance (VITA): Free tax help for low-income individuals, seniors, and non-English speakers. Locations are available throughout Boston.
  • Massachusetts Department of Revenue (DOR): Visit mass.gov/dor for state tax forms, filing instructions, and payment options.
  • City of Boston Assessing Department: For property tax inquiries, visit boston.gov or call 311.
  • Tax Professionals: Consider hiring a Certified Public Accountant (CPA) or Enrolled Agent (EA) for complex tax situations.

6. Tips for Visitors and Immigrants

  • Visitors: Sales tax is automatically included at the point of sale, so thereโ€™s no need to file taxes unless you earn income in the U.S.
  • Immigrants: If you are new to the U.S., familiarize yourself with the tax system. You may need to file taxes even if you are on a visa, depending on your income and residency status.
  • Keep Records: Maintain copies of all tax-related documents for at least three years in case of an audit.

By understanding these tax obligations and resources, you can navigate Bostonโ€™s tax system with confidence. If you have specific questions or need further assistance, feel free to ask!