Schedule Schedule HCHC Health Health Care Care Information.Information. YYou ou must must enclose enclose this this schedule schedule with with Form Form 1 1 or or Form Form 1-NR/PY1-NR/PY..YYYY20200909

c. Family size 3

11 a. Date of birth 3b. Spouse’s date of birth 3

(see instructions)

22 Federal adjusted gross income. If married filing separately, see instructions

(from U.S. Forms 1040, line 37; 1040A, line 21; or 1040EZ, line 4) . . . . . . . . . . . . . . . . . . . . . . . 3 2

33 Indicate the time period that you were enrolled in a Minimum Creditable Coverage (MCC) health insurance plan(s). The Form MA 1099-HC from

your insurer will indicate whether your insurance met MCC requirements. Note: MassHealth, Commonwealth Care, Commonwealth Care

Bridge, Medicare, and health coverage for U.S. Military, including Veterans Administration and Tri-Care, meet the MCC requirements. If you

did not receive a Form MA 1099-HC from your insurer, or you had insurance that did not meet MCC requirements, see the section on MCC

requirements in the instructions.3 3a You:YY Full-year MCC Part-year MCC No MCC/None

3 3b Spouse: Full-year MCC Part-year MCC No MCC/None

Note: See instructions if, during 2009, you turned 18, you were a part-year resident or a taxpayer was deceased.

If you filled in the full-year or part-year MCC oval, go to line 4. If you filled in No MCC/None, go to line 6.

44 Indicate the health insurance plan(s) that met the Minimum Creditable Coverage (MCC) requirements in which you were enrolled in 2009, as

shown on Form MA 1099-HC (check all that apply). If you did not receive this form, fill in the oval in line(s) 4f and/or 4g and see instructions.

If you were enrolled in private insurance and MassHealth, Commonwealth Care or Commonwealth Care Bridge, fill in the ovals, enter your

private insurance information in line(s) 4f and/or 4g and go to line 5.

4a Private insurance (complete lines 4f and/or 4g below). If more than two, complete Schedule HC-CS.You Spouse

4b MassHealth, Commonwealth Care or Commonwealth Care Bridge. Fill in oval(s) and go to line 5.You Spouse

4c Medicare (including a replacement or supplemental plan). Fill in oval(s) and go to line 5.You Spouse

4d U.S. Military (including Veterans Administration and Tri-Care). Fill in oval(s) and go to line 5.You Spouse

4e Other government program (enter the program name(s) only in lines 4f and/or 4g below). Note: HealthYou Spouse

Safety Net is not considered insurance or minimum creditable coverage.

4f4f YOUR HEALTH LL INSURANCE. Complete if you answered line(s) 4a or 4e and go to line 5. Fill in if you were not issued Form MA 1099-HC

1. NAME OF PRIVATE INSURANCE COMPANY, ADMINISTRATOR OR OTHER GOVERNMENT PROGRAM (from box 1 of Form MA 1099-HC)

FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SUBSCRIBER NUMBER (from Form MA 1099-HC)

2. NAME OF SECOND PRIVATE INSURANCE COMPANY, ADMINISTRATOR OR OTHER GOVERNMENT PROGRAM IF NECESSARY (from box 1 of Form MA 1099-HC)

FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SUBSCRIBER NUMBER (from Form MA 1099-HC)

4g4g SPOUSE’S HEALTH LL INSURANCE. Complete if you answered line(s) 4a or 4e and go to line 5. Fill in if you were not issued Form MA 1099-HC

1. NAME OF PRIVATE INSURANCE COMPANY, ADMINISTRATOR OR OTHER GOVERNMENT PROGRAM FOR SPOUSE (from box 1 of Form MA 1099-HC)

FEDERAL IDENTIFICATION NUMBER OF INSURANCE CO. (from box 2 of Form MA 1099-HC) SPOUSE’S SUBSCRIBER NUMBER (from Form MA 1099-HC)

OTHER GOVERNMENT PROGRAM IF NECESSARY FOR SPOUSE (from box 1 of Form MA 1099-HC)

FIRST NAME

M.I. LAST NAME

SOCIAL SECURITY NUMBER

00

FULL-YEAR RESIDENTS AND CERTAIN

PART-YEAR RESIDENTS MUST COMPLETE

AND ENCLOSE SCHEDULE HC WITH RETURN.

Massachusetts requires

that certain part-year

residents file the health

care schedule.

ScheduleHCSee inside for more details.

E-File through your See page 3tax preparer for details

Department of Revenue Commonwealth of Massachusetts

2009 MassachusettsNonresident or Part-YearResident Income TaxForm 1-NR/PYAll Schedules and Instructions Including Schedule HCNonresident or Part-Year Resident Residents Only

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)?ItÕ 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.

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 on the paperform that the filing be on paper and signs Form EFO, Personal IncomeTax Declaration of Paper Filing.

If you prefer to file using paper, you must use a DOR-approved tax prep-aration 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 telephoneand Web-based systems that allow you to check the status of your refundand perform other actions. If you did not get this booklet in the mail anddo not have a PIN, you will need the amount of your requested refundor 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 the en-velope found in this booklet. If you choose to pay by check, be sure toinclude 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.

1. Enter amount from Form 1-NR/PY, line 36 . . . . . . . . 2. Enter the total of Form 1-NR/PY, lines 41 through 43 and 45 through 47 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Amount due. Subtract line 2 from line 1, not less than “0” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

Who Must FileYou must file a Massachusetts Nonresident/Part-Year Resident Income Tax Return, MassachusettsForm 1-NR/PY, if you were not a resident of Mass-achusetts and you received Massachusetts sourceincome in excess of your personal exemption mul-tiplied by the ratio of your Massachusetts incometo your total income, or you were not a resident ofMassachusetts for the full year and your gross in-come was more than $8,000 — whether receivedfrom sources inside or outside of Massachusetts.

Check the following categories to make sure youare a nonresident/part-year resident.

1. You are a full-year Resident if your legal resi-dence (domicile) was in Massachusetts for theentire taxable year or if you maintained a perma-nent place of abode in Massachusetts and duringthe year spent more than 183 days, in the aggre-gate, in the state. If you fit this description, youshould file Form 1, Massachusetts Resident In-come Tax Return.

2. You are a Nonresident if you are not a residentof Massachusetts as defined above but receivedMassachusetts source income (e.g. from a job inMassachusetts). Fill in the “Nonresident” oval atthe top of the form if this category applies to you.You should fill in this bubble regardless ofwhether a composite return has also been filed onyour behalf.

3. You are a Part-Year Resident if, during the tax-able year, you moved to Massachusetts or estab-lished a permanent place of abode here and be-came a resident, or you terminated your status asa Massachusetts resident to establish a residenceoutside the state. Fill in the “Part-year resident”oval at the top of the form if this category appliesto you.

4. Complete the checklist below to determine ifyou are required to file Form 1-NR/PY as both aNonresident and Part-Year Resident.

Line 1. Were you a Massachusetts resident forpart of the 2009 tax year? Yes No.

Line 2. While you were not a resident of Mass-achusetts in tax year 2009, did you receiveMassachusetts source income (e.g., from a jobin Massachusetts)? Yes No.

If you answered “Yes” to line 1 only, you should fileas a Part-Year Resident.

If you answered “Yes” to line 2 only, you should fileas a Nonresident.

If you answered “Yes” to both line 1 and line 2,you must file both as a Nonresident and Part-Year Resident. Fill in the “Filing as both a non-resident and part-year resident” oval below theaddress section of the form if this category applies

to you. Complete Schedule R/NR, Resident/Non-resident Worksheet, to calculate the portion of in-come earned while a Nonresident and the portionof income earned while a Part-Year Resident.Schedule R/NR is included in this booklet.

5. Fill in the “Nonresident composite return” bub-ble if this return is being filed as a composite returnon behalf of nonresident professional athletic teammembers. See the instructions on page 10.

For more information on Massachusetts source in-come, refer to the section “Filing Your Massachu-setts Return.”

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-NR/PYChecklist✔ 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-NR/PY?

✔ Have you completed and enclosed all fourpages of Form 1-NR/PY and applicable schedules?

✔ Have you completed and enclosed ScheduleHC, Health Care Information? Certain part-year resi-dents must complete Schedule HC; see the spe-cial Health Care section in this booklet for moreinformation about Schedule HC. Be sure to attachForm MA 1099-HC to Schedule HC.

✔ If you changed your name, did you enclosea copy of your Social Security card or driver’s li-cense showing your new name and fill in thename/address change bubble on Form 1-NR/PY?

✔ If you moved, did you leave a forwarding ad-dress with your local post office and file a Changeof Address Form with the Massachusetts Depart-ment of Revenue and fill in the name/addresschange bubble on Form 1-NR/PY?

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

✔ Have you printed all dollar amounts com-pletely within the boxes?

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

✔ Have you completed Schedule DI, Depen-dent Information, if claiming a dependent exemp-tion on Form 1-NR/PY, line 4b or taking adeduction/credit(s) on Form 1-NR/PY, lines 16,17 or 45 (if applicable)?

✔ Have you attached with a single staple yourForm(s) W-2 or 1099 to the return whereindicated?

✔ If requesting direct deposit of your refund,did you fill in the appropriate oval (checking orsavings account)?

✔ If making a payment, have you enclosedyour check and Form PV with your return? Besure to put your Social Security number on yourcheck. Form PV is attached to the back of the en-velope found in this booklet. Also, be sure to usethe light blue mailing label when mailing yourForm 1-NR/PY with the Form PV.

✔ See page 3 for the correct PO boxes if youare using a tax software product.

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 in

4 Before You Begin

coverage 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 beage 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.

Nonresident Composite ReturnMassachusetts allows a partnership, an S corpora-tion, or a trust or estate to file an electronic compos-ite return on Form MA NRCR and make estimatedtax payments as an agent on behalf of two or morequalified electing nonresident members. (Profes-sional athletic teams who may file a return on be-half of two or more qualified electing nonresident

team members must file a composite return on theForm 1-NR/PY, not the Form MA NRCR.)

Eligible members of a composite return must meetthe following requirements:

◗ must be an individual or the estate or trust of adeceased nonresident member;

◗ must be nonresidents for the entire taxable year;

◗ must elect to be included in the composite re-turn by signing a statement;

◗ must agree to be subject to Massachusetts taxjurisdiction; and

◗ must waive the right to claim deductions, ex-emptions and credits allowable under Ch. 62,secs. 3, 5 and 6.

The composite return is filed on MassachusettsForm MA NRCR along with Schedules B, D, and Eas needed. The total Massachusetts gross incomereported on the composite Form MA NRCR mustbe the sum of all the qualified electing nonresidentmembers’ Massachusetts source income from thefiling entity and any other upper-tier entities thatare included in the return.

The filing entity must file an electronic 2K-1, 3K-1,or SK-1 on behalf of each nonresident memberelecting to participate in this composite return. In atiered structure, if the filing entity is filing on behalfof members of an upper-tier entity, it should issuethe 2K-1, 3K-1, or SK-1 to that upper-tier entity,which will in turn file the appropriate K-1 on behalfof its members reflecting estimated paymentsmade by the lower-tier entity. Each entity in thetiered structure will issue the appropriate K-1 toeach of its members showing estimated paymentsallocated to that member that were made bylower-tier entities in the tiered structure.

A tiered structure is a pass-through entity that hasa pass-through entity as a member. As betweentwo entities, the pass-through entity that is a mem-ber is the upper-tier entity, and the entity of which itis a member is the lower-tier entity. A tiered pass-through entity arrangement may have two or moretiers; in such cases, a single entity can be both alower-tier and an upper-tier entity.

Required information on separate tax return:Beginning in 2009, individuals may be included onone or more composite returns if they have otherMassachusetts-source income. Individuals forwhom a composite return has been filed have aseparate filing obligation for Massachusetts-sourceincome not included on the composite return.Items included on the composite return must notbe included on the separate return, or used to cal-culate any items on the separate return.

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.

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 that

52009 Form 1-NR/PY Instructions — Before You Begin

Massachusetts will allow a larger credit for 2009and 2010 due to the ARRA and its increases to thefederal earned income tax credit for those years.Note: Nonresidents must multiply this result byForm 1-NR/PY, line 14g; part-year residents mustmultiply this result by Form 1-NR/PY, line 2. Theeffect is that Massachusetts will allow a largercredit for 2009 and 2010 due to the ARRA and itsincreases to the federal earned income tax creditfor 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 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.

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 sec382(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.

6 2009 Form 1-NR/PY Instructions — 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 MGL c. 62C, sec. 5, the Department of Rev-enue has the right to require an individual to furnishhis or her Social Security number on a state taxreturn. This information is mandatory. The Depart-ment of Revenue uses Social Security numbersfor taxpayer identification to assist in processingand keeping track of returns and in determiningand collecting the proper amount of tax due. UnderMGL c. 62C, sec. 40, the taxpayer’s identifyingnumber is required to process a refund of overpaidtaxes. Although tax return information is generallyconfidential pursuant to MGL c. 62C, sec. 21, theDepartment of Revenue may disclose return infor-mation to other taxing authorities and those enti-ties specified in MGL c. 62C, secs. 21, 22 or 23,and as otherwise authorized by law.

Common MistakesAn incomplete or incorrect return can delay theprocessing of your return. The following are anumber of tips to help us process your return asquickly as possible.

Note: You should not staple any items, other thanany required Form(s) W-2 or 1099s, to Form1-NR/PY. Any enclosures such as schedules,

statements, Form PV, Schedule R/NR, etc. shouldsimply be placed in the envelope along with Form1-NR/PY 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. Certain part-year resi-dents must have completed and enclosed ScheduleHC, Health Care Information and Form MA 1099-HC. We cannot process your return without thisschedule. See the special Health Care section in thisbooklet for more information about Schedule HC.

◗ 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 correctoval in line 1, Filing Status. This line is frequentlyoverlooked.

◗ Exemptions. Be sure that you specify the num-ber of exemptions you are claiming in line 4, itemsb, c and d. Enter the appropriate number(s) in thesmall white box. Note: You must completeSchedule DI, Dependent Information, if claiming adependent exemption in line 4b.

◗ Missing Pages of Form 1-NR/PY. Form1-NR/PY is four pages. Be sure to include allfour pages of the return when mailing.

◗ Missing Withholding Statement(s). Be surethe state copy of all Forms W-2 (Wages), W-2G(Winnings), PWH-WA (Promoter Withholding),2G, K-1, 2K-1, 3K-1 and SK-1 and any Forms 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-NR/PY. These includeMassachusetts Schedules HC, X, Y, Z, B, C, C-2, D,DI, E, E-1, E-2, E-3, CB, R/NR and NTS-L-NR/PY.We cannot process your return without theseforms.

◗ 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 reporton your U.S. return. Report your total state wagesfrom your Form(s) W-2 on Form 1-NR/PY.

◗ Earned Income Credit. You must have yourfederal earned income credit amount from yourU.S. return or as computed by the IRS if youwish to claim the Earned Income Credit on Form1-NR/PY.

◗ Circuit Breaker Credit. Be sure to complete andenclose Schedule CB, Circuit Breaker Credit, if youqualify to claim this credit.

◗ Missing Signatures. Thousands of unsignedreturns are received by the Department everyyear. These returns must be returned to the tax-payers for signatures. If a joint return is filed,both spouses must sign the return. Make suresignatures are on the correct lines. Remember tosign your return at the bottom of page 1 of Form1-NR/PY.

◗ Missing Form PV. If you are making a pay-ment, make certain you fill out Form PV, Mass-achusetts Income Tax Payment Voucher. Form PVis attached to the back of the envelope found inthis booklet. Enclose Form PV and your checkwith your return. Be sure to use the light bluemailing label when mailing your Form 1-NR/PYwith the Form PV.

Note: Go to www.mass.gov/dor and click on WebServices for Income for online payment options.

Filing YourMassachusettsReturnAs a nonresident, you must file Form 1-NR/PY ifyour Massachusetts source income for 2009 ex-ceeded the smaller of your apportioned personalexemption, or $8,000.

What Is Massachusetts SourceIncome for Nonresidents?The term “Massachusetts source income” is usedthroughout this booklet to describe the types ofincome which are taxable to a nonresident.

A nonresident is only subject to tax on items of in-come derived from or effectively connected with:

◗ any trade, business, or employment carried onin Massachusetts (see the following section);

◗ participation in any lottery or wagering transac-tion in Massachusetts; or

◗ ownership of any interest in real or tangible per-sonal property located in Massachusetts.

Some examples of the types of income taxable toa nonresident include:

◗ all wages, salaries, tips, bonuses, fees and othercompensation which relate to activities carried onin Massachusetts, regardless of where or when thecompensation is paid;

◗ unemployment compensation related to previ-ous Massachusetts employment;

72009 Form 1-NR/PY Instructions — Before You Begin

◗ profit from a business, trade, profession, partner-ship or S corporation conducted in Massachusetts;

◗ rents and royalties from real and tangible per-sonal property located in Massachusetts or fromother business activities in Massachusetts;

◗ gain from the sale of real or tangible personalproperty located in Massachusetts;

◗ interest and dividends, only if derived from orconnected with Massachusetts business activity,or the ownership of Massachusetts real estate ortangible personal property; and

◗ the definition of Massachusetts source incomenow includes gain from the sale of a business oran interest in a business, separation, sick or vaca-tion pay, deferred compensation, income fromcovenants not to compete, and nonqualified pen-sion income that federal law allows states to tax.

Income from Massachusetts sources which is nottaxed to residents is not taxed to nonresidents,e.g., interest on debt obligations of the U.S. andamounts received as Social Security and certainworker’s compensation.

In general, the same exemptions and deductionsallowed to residents are available to nonresidentsto determine taxable income. These items are al-lowed, however, only to the extent they relate to,or are allocable to, Massachusetts source income.

Am I Carrying on a Trade, Businessor Employment in Massachusettsas a Nonresident?A nonresident generally does not have a trade,business or employment carried on in Massachu-setts if his/her presence for business in Mass-achusetts is casual, isolated and inconsequential.A nonresident’s presence for business will be con-sidered casual, isolated and inconsequential if thenonresident’s business presence in Massachu-setts is ancillary to the nonresident’s primary busi-ness or employment duties performed at a base ofoperations outside Massachusetts — for example,an occasional presence in Massachusetts formanagement functions, and other similar activi-ties which are secondary to the individual’s pri-mary out-of-state duties.

Are Military Personnel Required toFile?If you enlisted in the service as a Massachusettsresident and have not established a new domicile(legal residence) elsewhere (refer to militaryguidelines) 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“domicile” are used to denote that place where you

have your permanent home and to which, when-ever you are absent, you have the intention of re-turning. Nonresident military personnel stationedin Massachusetts may be subject to Massachu-setts taxes and should file Form 1-NR/PY if theyearn income from outside military sources.

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 servicemem-ber’s spouse from either losing or acquiring a resi-dence or domicile for purposes of taxation becauseof being absent or present in any U.S. tax juris-diction solely to be with the servicemember incompliance with the servicemember’s military or-ders. In general, for Massachusetts tax purposes,the new law will affect only servicemembers andtheir spouses who are domiciled in a state otherthan Massachusetts. In general, income for serv-ices performed by a nonresident spouse of a non-resident servicemember will not be deemed to beincome for services performed (or from sources)within Massachusetts if the spouse is in Mass-achusetts solely to be with the servicememberserving in compliance with military orders. Formore information see TIR 09-23.

Note: Massachusetts excludes from gross incomecompensation earned by members of the armedforces for service in a combat zone, to the sameextent it is excluded under federal law.

No guidance is intended on the tax treatment ofsuch pay under the laws of other states. Gener-ally, when income is taxable in two jurisdictions,a credit for taxes paid to the other jurisdiction isallowed on the taxpayer’s return in the state ofhis/her residence.

How Do I Determine MyLegal Residence (Domicile)?Your legal residence is determined by all the factsand circumstances in your case. If you have twoor more residences, your legal residence is theone you regard as your true home or principal res-idence. You cannot choose to make your home inone place for the general purposes of life and inanother for tax purposes. Your legal residence isusually the place where you maintain your mostimportant family, social, economic, political andreligious ties. A change of legal residence will notbe accomplished by a temporary or protracted ab-sence from a place; you must not intend to return.

Note: A person is also considered a resident if theymaintain a permanent place of abode in Massachu-setts and spend more than 183 days, in the aggre-gate, in the state. See Technical Information Release(TIR) 95-7 for a further explanation.

What is Gross Income for aPart-Year Resident?As a part-year resident, you must file Form1-NR/PY if your gross income was more than$8,000 — whether received from sources insideor outside of Massachusetts. Gross income for apart-year resident includes the following:◗ all wages, salaries, tips, bonuses, fees and othercompensation;◗ taxable pensions and annuities;◗ alimony;◗ income from a business, trade, profession,partnership, 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 fellow-ships; and◗ any other income not specifically exempt.

Massachusetts gross income also includes thefollowing which are not subject to the 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).

What Adjustments Must I Makeas a Part-Year Resident?Part-year residents must adjust income, deduc-tions and exemptions when completing Form1-NR/PY. In general, these items are reduced be-cause all of your income may not be subject toMassachusetts tax. Your deductions and exemp-tions are based on the number of days you were aMassachusetts resident or the amount of incomethat is subject to Massachusetts tax.

8 2009 Form 1-NR/PY Instructions — Before You Begin

Income: Lines 5 through 11, 24, 27 and 28If you earned only a portion of the income you re-ported on your U.S. return while you were a Mass-achusetts legal resident, subtract from your U.S.income the amount earned and received whileyou were legally domiciled in another state orcountry. However, you may be required to includeall income derived from Massachusetts sourcesearned while you were a nonresident, such asfrom rental property or from a trade or business,including employment, on Schedule R/NR, Resi-dent/Nonresident Worksheet. Such income nowincludes gains from the sale of a business or aninterest in a business, separation, sick or vacationpay, deferred compensation, income from cove-nants not to compete, and nonqualified pensionincome that federal law allows states to tax.

Deductions: Lines 15 through 19Most deductions are based on the actual amountspaid by you associated with the deduction for theperiod of time you were in Massachusetts.

Line 17 (the deduction for a dependent under age12, or dependents age 65 or over as of December31, 2009, or disabled dependent(s)), Schedule Y,lines 6 (Archer medical savings account (MSA) de-duction), 8 (health savings account deduction), 10(student loan interest deduction), 11 (college tuitiondeduction), 12 (undergraduate student loan inter-est deduction) and 15 (commuter deduction) arethe only deductions based on the proration of thenumber of days you were a Massachusetts resi-dent. For example, if you are entitled to claim onedependent under age 12, and if you lived in Mass-achusetts for only four months, you can claim adeduction equal to $1,200 (one-third of the $3,600to which you are otherwise entitled). See line 2 onForm 1-NR/PY for the proration formula.

Lines 15, 16 and 18 and Schedule Y, lines 1through 4, lines 5 (moving expenses), 7 (self-employed health insurance deduction), 9 (quali-fied performing arts-related expenses, jury dutypay given to your employer, reforestation amorti-zation, repayment of supplemental unemploymentbenefits under the Trade Act of 1974, employeebusiness expenses of fee-basis state or local gov-ernment officials, business expenses of NationalGuard Reserve members, the deduction for attor-ney’s fees and court costs involving certain un-lawful discrimination suits and deductibleexpenses related to income reported on U.S.Form 1040, line 21 and Massachusetts ScheduleX, line 4) and line 13 are based on the actualamounts paid or received for the period of timeyou were in Massachusetts. For example, youmay only deduct the amount of alimony paid(Schedule Y, line 3) while you were a Massachu-setts resident. Similarly, the deduction for attor-ney’s fees and court costs involving certain

unlawful discrimination suits (Schedule Y, line 9)must be directly related to Massachusetts incomeas reported on Form 1-NR/PY, line 12.

Exemptions: Lines 4a through 4fYour total exemptions (line 4f) must be proratedbased upon the ratio of days you were a Mass-achusetts resident. To adjust your exemptions, usethe formula in line 2 and see line 22 instructions.

Earned Income Credit: Line 45Your earned income credit (line 45) must be pro-rated based upon the ratio of days you were aMassachusetts resident. To adjust this credit, usethe formula in line 2 and see line 45 instructions.

Should I Make Estimated TaxPayments in 2010?Every taxpayer (whether a resident or nonresi-dent) who expects to pay more than $400 inMassachusetts income taxes on income which isnot covered by Massachusetts withholding mustpay Massachusetts estimated taxes. See line 43instructions for more information.

How Do I File a DecedentÕs Return?A final income tax return must be filed for a tax-payer who died during the taxable year. It must besigned and filed by his/her executor, administratoror surviving spouse for the portion of the year be-fore the taxpayer’s death. Be sure to fill in oval 1 ifthe taxpayer who was listed first on last year’s in-come tax return is deceased, or oval 2 if the tax-payer who was listed second on last year’s incometax return is deceased. Also, enclose Form M-1310with the refund claimant’s name and Social Secu-rity number 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 forsucceeding taxable years until the estate is com-pleted, must be reported each year on Massachu-setts Form 2, Massachusetts Fiduciary IncomeTax Return.

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, Statement of Claimant to Re-fund Due on Behalf of Deceased Taxpayer, must beenclosed with the return so the refund check maybe made payable to the proper person.

When to FileYour ReturnForm 1-NR/PY is due on or before April 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 toFile Massachusetts Income Tax Return. However,if you do choose to file Form M-4868 in this in-stance, you must do so electronically, via DOR’swebsite. 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 theoption of filing your extension electronically. Ifthere is a tax due with your extension, paymentcan be made through Electronic Funds With-drawal.

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 yearbasis, you must file on or before the fifteenth dayof the fourth month after the end of your fiscalyear. Taxpayers filing on a fiscal year basis mustcomplete and file Form 13, Notice of Designationof Fiscal Year, available at www.mass.gov/dor orby calling (617) 887-MDOR or toll-free in Mass-achusetts 1-800-392-6089.

92009 Form 1-NR/PY Instructions — Before You Begin

What Should I Do If I Make aMistake or Leave SomethingOff 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 mailedto 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.

Social Security Number(s)Be sure to enter your Social Security number onyour return. Also, enter your Social Security num-ber on pages 2 through 4 of Form 1-NR/PY and onpage 2 of Schedules B or C, if filed. Failure to showthe correct Social Security number in the spaceprovided will delay the processing of your return.If filing jointly, list your numbers in the order theyappear on your federal return. Also, be sure youremployer has listed the correct Social Securitynumber on your Form W-2. If you are married, youmust list your spouse’s Social Security numbereven if you are filing a separate return.

Beginning January 1, 1997, each foreign personmust use an identification number on any U.S. orMassachusetts tax return or refund claim filed.Certain aliens who cannot obtain Social Securitynumbers (SSNs) must obtain an IRS-issued indi-vidual taxpayer identification number (ITINs). Thisnumber can be obtained by filing Form W-7 withthe IRS. The ITIN is not available for U.S. citizensor persons legally permitted to reside permanentlyor to work in the United States. These taxpayersqualify for SSNs and should obtain them from theSocial Security Administration by filing Form SS-5.You may obtain Form SS-5 from your local SocialSecurity Administration (SSA) or call the SSA at1-800-772-1213.

Residency StatusFill in the “Nonresident” oval if you were not a res-ident of Massachusetts and you received Mass-achusetts source income. See the section “Whatis Massachusetts Source Income for Nonresi-dents?” for an explanation of Massachusettssource income.

Fill in the “Part-year resident” oval if you were aresident of Massachusetts for less than the fullyear, you received Massachusetts gross income inexcess of $8,000 and you did not receive Mass-achusetts source income while a nonresident.

Fill in the “Filing both as a nonresident and part-year resident” oval if both categories apply to youin the same tax year. See the section “Who MustFile.” You must also complete and enclose withyour return Schedule R/NR, Resident/Nonresi-dent Worksheet.

Nonresident Composite Returnfor Professional Athletic TeamMembersMassachusetts allows professional athletic teamsto file a composite return and make estimated taxpayments as an agent on behalf of two or morequalified electing nonresident team members. El-igible members of a composite return must meetthe following requirements:

◗ must be nonresidents for the entire taxable year;

◗ must elect to be included in the composite re-turn by signing a statement;

◗ must agree to be subject to Massachusetts taxjurisdiction; and

◗ must waive the right to claim deductions, ex-emptions and credits allowable under Ch. 62, secs.3, 5 and 6. Taxpayers filing a nonresident compos-ite return should enter “0” on Form 1-NR/PY, lines20 (total deductions), 22 (exemption amount) and35 (total credits).

Each electing nonresident team member must signunder penalties of perjury a statement affirmativelystating such team member’s qualifications andelection to file a composite return. The compositereturn is filed on Massachusetts Form 1-NR/PYalong with the applicable schedules and attach-ments. The total Massachusetts gross income re-ported on the composite Form 1-NR/PY must bethe sum of all the qualified electing nonresidentmembers’ Massachusetts source income.

Be sure to fill in the “Nonresident composite re-turn” oval if this category applies to you.

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?” in the instructions.

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 or dri-ver’s license showing your new name. Failure toinclude this documentation could delay process-ing of your return. If you move after filing, be sureto leave a forwarding address with your local postoffice 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 in Mass-achusetts 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 to StateElection Campaign Fund (part-year residents only)You, and your spouse if filing jointly, may volun-tarily contribute $1 each to the state Election Cam-paign Fund. The purpose of the fund is to providelimited public financing for campaigns of eligiblecandidates for statewide and elective office. Thiscontribution will not change your tax or reduceyour refund.

10 Line by Line Instructions

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 toyou. If so, you may wish to figure your taxesbased upon more than one filing status to seewhich status is to your benefit.

SingleFill in the “Single” oval if you were single as ofDecember 31, 2009. This status applies to you if,at the close of the taxable year, you fit into any ofthe following categories:◗ you were unmarried;◗ you were a widow or a 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,and you elect to file a joint return. A joint return isallowed even if only one spouse had income. Bothspouses are responsible for the accuracy of all in-formation entered on a joint return, and both mustsign. If your spouse died during 2009, you maystill choose to file a joint return.

Please note that a joint Form 1-NR/PY is not al-lowed unless each spouse is reporting income forthe same resident or nonresident period. For ex-ample, John (a Massachusetts resident) and Jane(a New Hampshire resident) both work in Mass-achusetts. After they were married in June 2009,John moved to New Hampshire to live with Jane.They cannot file a joint return because their non-resident tax years are different. (Jane lived in NewHampshire during the entire year, but John onlylived there for six months.)

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,but you elect to file separately. Enter your spouse’sSocial Security 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 apartfrom their spouse for the last six months of 2009may also be able to use this status. See IRS Publi-cation 501, Exemptions, Standard Deduction, andFiling Information, for more information.

Line 2. Part-Year ResidentProration FormulaPart-year residents must fill out the proration for-mula in line 2. Enter the dates you were a Mass-achusetts resident in the spaces provided. Then,enter the total days you were a Massachusetts res-ident and divide this number by 365 and carry thisdivision out to four decimal places. Failure to do so

may delay the processing of your return. This fig-ure is used to determine the portion of certain de-ductions, exemptions and the earned income credita part-year resident may be eligible for.

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 3. Total U.S. IncomeEnter the amount of your total income before ad-justments from your U.S. return — U.S. 1040, line22; 1040A, line 15; 1040EZ, line 4; 1040NR, line23; or 1040NR-EZ, line 7. This item is requestedfor administrative reasons; it is not used in thecalculation of your tax.

Note: If you are filing Form 1-NR/PY as “marriedfiling separate return” and you filed your U.S. re-turn jointly, the amount entered in line 3 shouldonly be the amount attributable to your portion oftotal U.S. income.

Line 4. ExemptionsLine 4a: 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 separatereturn, enter $4,400 in item a.◗ If filing as head of household, enter $6,800 initem a.◗ If married filing a joint return, enter $8,800 initem a.

Line 4b: Number of DependentsYou may claim a $1,000 exemption for each ofyour dependents if you claimed them on yourU.S. return. Enter in the box in item b the numberof dependents you listed on U.S. Form 1040 or1040A, line 6c or U.S. Form 1040NR, line 7c. Donot include yourself or your spouse. Then, multiplythat total by $1,000 and enter the total amount inline 4b. Be sure to fill out Schedule DI, Depen-dent Information, if you are claiming a dependentexemption(s). Failure to do so will delay the proc-essing of your return.

112009 Form 1-NR/PY Instructions — Line by Line Instructions

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 4c: Age 65 or Over Before 2010You are allowed an additional $700 exemption ifyou were age 65 or over before January 1, 2010. Ifyour spouse was age 65 or over and you are filinga joint return, you may also claim a $700 exemp-tion for your spouse. Fill in the appropriate oval(s)and enter the total number of persons age 65 orover in the small box. Then, multiply that total by$700 and enter the total amount in line 4c.

Line 4d: 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 mayalso claim a $2,200 exemption for your spouse.Fill in the appropriate oval(s) and enter the totalnumber of blindness exemptions in the small box.Then, multiply that total by $2,200 and enter thetotal amount in line 4d.

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 periph-eral field of vision has been contracted to a 10-de-gree radius or less, regardless of visual acuity.

Line 4e: Other: Medical and DentalExpenses/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 Form1-NR/PY to claim this exemption. Enter in line 4e,item 1 the amount reported on your U.S. Form1040, Schedule A, line 4.

If you paid adoption fees to a licensed adoptionagency during 2009, you are eligible for an exemp-tion of the total amount of the fees paid during theyear. Fees paid during 2009 to an agency licensedto place children for adoption on account of theadoption process of a minor child regardless ofwhether an adoption actually took place during2009 should also be included for this exemption.Enter this amount in line 4e, item 2.

Enclose a statement showing the name and ad-dress of the licensed adoption agency and theagency fees. Add item 1 and item 2 and enter thetotal in line 4e.

Line 4f: Total ExemptionsAdd lines 4a through 4e and enter the total in line4f. This amount should also be entered on line 22aof Form 1-NR/PY.

Lines 5 through 11◗ Income received by nonresidents is taxed onlywhen it is from Massachusetts sources. Refer tothe general instructions in this booklet for a defin-ition of Massachusetts source income. The in-structions for each of these lines will describeMassachusetts source income in more detail. Forpart-year residents, income received while a resi-dent, whether from sources inside or outside ofMassachusetts, is taxable.

◗ Your entries must agree with the appropriateamounts on your copies of Forms W-2 and 1099,and/or required schedules for lines 8 and 9. Nonres-idents, if your actual Massachusetts income is notknown, see the Nonresident Apportionment Work-sheet in line 13 and accompanying instructions.

Note: You cannot apportion Massachusetts wagesas shown on Form W-2.

5.3% IncomeDOR and the IRS maintain an extensive exchangeprogram, routinely sharing computer tapes andaudit results. Discrepancies between income, de-ductions, and schedules reported federally and onthis return, except those allowed under state law,will be identified and may result in a state audit orfurther investigation.

Note: If filing as both a nonresident and part-yearresident, you must complete Schedule R/NR, Res-ident/Nonresident Worksheet, before proceeding.

Line 5. Wages, Salaries, Tips andOther Employee CompensationReport in line 5 total state wages from Form(s)W-2. Enter the amount(s) stated as Massachu-setts wages.

Note: Part-year residents, income earned while aMassachusetts resident in another state is subjectto taxation in Massachusetts.

In most cases your total wages will be the sameamount reported on your U.S. 1040 or 1040A,line 7; U.S. 1040EZ, line 1; U.S. 1040NR, line 8;or U.S. 1040NR-EZ, line 3 unless:

◗ you or your spouse earned income from em-ployment outside Massachusetts (nonresidentsonly);

◗ you were a Massachusetts legal resident work-ing in a foreign country (part-year residents only);

◗ you were a legal resident of Massachusetts foronly a part of 2009; or

◗ you were a state or local employee and madecontributions to a Massachusetts state or localpension plan.

Differences Between Wages forMassachusetts Tax Purposes andThose Reported on Your U.S. Return◗ Nonresidents earning a portion of incomefrom employment outside Massachusetts. If aportion of the wage income reported on your U.S.return was earned outside Massachusetts, theamount in line 5 should not include wages earnedin another state or country.

◗ Massachusetts legal residents working in aforeign country while a Massachusetts resident.Income earned in a foreign country is subject totaxation in Massachusetts. If you excluded part orall of the compensation earned in a foreign coun-try on your U.S. return (under sec. 911 of the U.S.IRC), you must include any such amount in line 5for Massachusetts tax purposes.

◗ Part-year residents of Massachusetts. If youearned only a portion of the income you reportedon your U.S. return while you were a Massachu-setts legal resident, subtract from your U.S. wagesthe amount earned and received while you werelegally domiciled in another state or country.

◗ State or local employees contributing to pen-sion plans. If you are a Massachusetts state, city,town or county employee and contributed to yourpension plan, enter in line 5 the Form W-2 statewage amount. This amount will be greater thanthe U.S. amount because your pension contribu-tions are excluded from your income for U.S. taxpurposes. Contributions up to $2,000 may still bededucted in line 15a or 15b for Massachusetts taxpurposes.

12 2009 Form 1-NR/PY Instructions — Line by Line Instructions

Line 6. Taxable Pensionsand AnnuitiesNonresidents. Under Title 4 of the United StatesCode, section 114, payments to nonresidentsfrom certain qualified pension plans are not sub-ject to tax.

Qualified plans include: a qualified trust under IRCsec. 401(a) exempt from taxation under IRC sec.501(a); simplified IRC sec. 408(k) plans; IRC sec.403(a) annuity plans; IRC sec. 403(b) annuitycontracts; IRC sec. 7701(a) (37) individual retire-ment plans; eligible deferred compensation plansof state and local governments and tax exemptorganizations as defined by IRC sec. 457; IRCsec. 414(d) government plans; a trust or trustsdescribed in IRC sec. 501(c) (18); and any plan,program or arrangement described in IRC sec.3121(v)(2)(C) or any plan, program, or arrange-ment that is in writing, that provides for retirementpayments in recognition of prior service to bemade to a retired partner, and that is in effect im-mediately before retirement begins if payments aremade at least annually and spread over the actu-arial life expectancy of the beneficiaries, or if pay-ments are spread over at least a ten-year period.Such income is also protected from state taxationif the plans are trusts under IRC sec. 401(a), butexceed limits laid down in IRC secs. 401(k),401(m), 402(g), 403(b), 408(k) or 415 or anyother limitation on contributions or benefits whichmay apply in the Code.

Retirement or retainer pay of a member or formermember of a uniformed service computed under10 U.S.C. chapter 71 (military pensions) receivedby a nonresident is also exempt.

Any income from pensions related to a Massachu-setts trade, business or employment that is notderived from one of the qualified pension planslisted above is taxable. Enter in line 6 the portionof those pensions reported on your U.S. Form1040, line 16a or U.S. Form 1040A, line 12a, thatare taxable to Massachusetts nonresidents.

Part-year residents. Income from most privatepensions or annuity plans is taxable in Massachu-setts. You must report the taxable pension incomeyou received while a resident of Massachusetts.Certain government pensions, however, are ex-empt under Massachusetts law. In general, ex-empt pensions include contributory pensionsfrom the U.S. government or the Commonwealthof Massachusetts and its political subdivisions,and noncontributory military pensions. The fol-lowing section describes some specific pensionswhich are exempt. If your pension is not exempt,you should generally enter in line 6 the taxableamount reported on your U.S. Form 1040, line16b or U.S. Form 1040A, line 12b. In some cases,

however, Massachusetts law requires an adjust-ment to the federal amount. Distributions fromannuity, stock bonus, pension, profit-sharing ordeferred payment plans or contracts described insecs. 403(b) and 404 of the U.S. IRC must be ad-justed to account for your contributions that havebeen previously taxed. Subtract from such income(as reported on your U.S. Form 1040, line 16a orU.S. Form 1040A, line 12a) the amount of yourcontributions which were previously taxed byMassachusetts until the total of your taxed contri-butions is received. If your pension falls into thiscategory, enter the adjusted amount in line 6 andexplain briefly (in an enclosed statement) why thisamount is different than the amount reported onyour U.S. return. If you are receiving distributionsfrom an IRA or Keogh plan, do not report the in-come here; instead, see to the instructions forSchedule X, line 2.

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.

◗ Pensions from other states or its political sub-divisions which do not tax such income fromMassachusetts or its political subdivisions maybe eligible to be deducted from Massachusettstaxable income. This pension income, however,should be reported in line 6. Refer to Schedule Y,line 13 instructions to determine eligibility for thisdeduction.

◗ Noncontributory pension income or survivor-ship benefits received from the U.S. uniformedservices (Army, Navy, Marine Corps, Air Force,Coast Guard, commissioned corps of the PublicHealth Service and National Oceanic and Atmos-pheric Administration) is exempt from taxation inMassachusetts.

◗ Massachusetts state court judges who were ap-pointed on or after January 2, 1975 are partici-pants in the Massachusetts contributory retirementsystem and their pensions are nontaxable. Statecourt judges who were appointed prior to January2, 1975 receive taxable noncontributory pensions.

If you retired under Chapter 32, Sections 56through 60 of Massachusetts General Laws andare a veteran who began Massachusetts stateservice prior to July 1, 1939, all or part of yourpension income may be subject to tax. If youelected to receive your proceeds from contribu-tions in one lump-sum distribution, your originalcontributions to the retirement system are not tax-able. Noncontributory pension income receivedafter a lump-sum distribution is fully taxable andshould be reported in line 6.

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 employeebenefit plans in excess of the employee’s contri-butions which were previously subject to Mass-achusetts tax (or not previously excluded fromMassachusetts tax) must be reported in line 6.Generally, qualified rollovers are not taxable inMassachusetts to the extent they are not taxable onyour U.S. return. Lump-sum distributions relatedto IRA/Keogh distributions should be reported onSchedule X, line 2.

Rollover from a Traditional IRA to a Roth IRA(Part-Year Residents Only). Taxpayers with$100,000 or less in federal adjusted gross incomeare allowed to make partial or complete rolloversfrom existing IRAs to Roth IRAs. Any taxable por-tion of these rollovers included in federal gross in-come received while a resident of Massachusettsis also included in Massachusetts gross income,except for amounts previously subject to Mass-achusetts personal income tax. See Schedule X,line 2 instructions for further details.

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

Line 7. Interest from MassachusettsBanksNonresidents. Interest income is only taxable if itis related to a Massachusetts trade, business, pro-fession, partnership or S corporation, or to theownership of real estate or tangible personalproperty located in Massachusetts.

Part-year residents. While a resident of Mass-achusetts, interest received from any savingsbanks, cooperative banks, national banks, trustcompanies, savings and loan associations orcredit unions located in Massachusetts is taxable.

Nonresidents/part-year residents, report in line 7asuch interest taxable by Massachusetts.

To report interest taxable to a nonresident/part-yearresident from banks located in Massachusetts,enter in line 7a all amounts of interest received orcredited to these deposit accounts (term and timedeposits, including certificates of deposit, savingsaccounts, savings shares, and NOW accounts).Combine all accounts at the same bank. Enclose astatement listing names of all savings banks, coop-erative banks, national banks, trust companies,savings and loan associations or credit unions inwhich you have deposit accounts. In line 7b, enter

132009 Form 1-NR/PY Instructions — Line by Line Instructions

the exemption amount ($200 if married filing ajoint return; otherwise enter $100) and subtractthis amount from line 7a. Enter the result in line 7,but not less 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. Youmay be allowed to deduct these amounts onSchedule Y, line 2. All other interest, unless ex-empt, should be entered on Massachusetts Sched-ule B. The return on an IRA/Keogh is not taxableuntil distributed.

Lines 8, 9 and 12. If showing a loss in lines 8, 9or 12, be sure to mark over the “X” in the box tothe left. Do not use parentheses or negative signsto indicate losses.

Line 8. Business/Professionor Farm Income or LossNonresidents engaged in a business or professionin Massachusetts must complete and enclose aMassachusetts Schedule C, Profit or Loss from aBusiness or Profession, and enter the amount ofincome or loss in line 8.

Part-year residents must report the income orloss from a business or profession received whilea resident of Massachusetts, whether derivedfrom sources inside or outside of Massachusetts.

Enter the amount of such income or loss thatwould be reported on Massachusetts Schedule C,line 31. You must enclose Massachusetts Sched-ule C with this return. Also, enclose a copy ofyour U.S. Schedule C-EZ if substituting U.S.Schedule C-EZ for Massachusetts Schedule C.Nonresidents, if your business or profession de-rived income from both inside and outside Mass-achusetts, see the Nonresident ApportionmentWorksheet instructions in line 13.

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. Schedule Fto report Massachusetts differences, such as bo-nus depreciation.

Line 9. 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 10a. 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.

Nonresidents. Enter in line 10a the portion of yourunemployment compensation reported on box 1 ofForm(s) 1099-G, Certain Government Payments,related to previous Massachusetts employment.Only unemployment compensation related to pre-vious Massachusetts employment is taxable tononresidents. If you elected voluntary withhold-ing of Massachusetts state income taxes on yourunemployment compensation, be sure to includethe amount of Massachusetts state income taxwithheld as reported on Form 1099-G on Form1-NR/PY, line 41 and attach with a single staple,where indicated on the return, Form 1099-G.

Part-year residents. Enter in line 10a the portion ofunemployment compensation reported on box 1 ofForm(s) 1099-G, Certain Government Payments,received while you were a resident of Massachu-setts, whether related to employment inside or out-

side of Massachusetts. If you elected voluntarywithholding of Massachusetts state income taxeson your unemployment compensation, be sure toinclude the amount of Massachusetts state incometax withheld as reported on Form 1099-G on Form1-NR/PY, line 41 and attach with a single staple,where indicated on the return, Form 1099-G.

If filing as both a part-year resident and nonresi-dent, refer to Schedule R/NR.

Note: DOR routinely matches the amounts in line10a with files from the Division of UnemploymentAssistance.

Line 10b. Massachusetts StateLottery WinningsEnter in line 10b 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 line10b with files from the Lottery Commission.

Line 11. Other Income(from Schedule X)Alimony Received, Taxable IRA/Keoghand Roth IRA Distributions, OtherGambling Winnings, Fees and Other5.3% 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 re-turn. Enclose an additional statement if more spaceis needed. Failure to enclose this schedule willdelay the processing of your return. See ScheduleX instructions.

Line 12. Total 5.3% IncomeAdd lines 5 through 11 and enter the total in line12. Remember to subtract any losses markedwith an “X” when calculating the total.

Apportionment —Nonresidents OnlySometimes your business or employment re-quires you to work both inside and outside Mass-achusetts, but you do not know the actual amountof income you earned from working in Massachu-setts. In this case, you must apportion your in-come so that only the correct portion (the amountattributable to Massachusetts) will be taxed byMassachusetts. Some nonresidents must use theNonresident Apportionment Worksheet in line 13for this purpose.

14 2009 Form 1-NR/PY Instructions — Line by Line Instructions

Who Cannot Apportion Income?If you know the actual amount of your Massachu-setts source income, do not apportion. Reportyour income taxable in Massachusetts on yourMassachusetts return. Examples of nonresidentswho cannot apportion include:

◗ an employee whose actual Massachusetts in-come is shown on Form W-2;

◗ an employee whose Form W-2 does not indicateinitially his/her actual Massachusetts income butwhose employer issues a corrected Form W-2 orother statement which breaks down this amount.Since your employer is required by law to withholdMassachusetts tax on your Massachusetts wages,this breakdown will be easy to obtain; and

◗ a self-employed person whose actual Mass-achusetts income is known, such as a surgeonwho comes to Massachusetts to perform a spe-cific operation for a set fee.

In the few cases when your employer fails to issuea separate Form W-2 that includes only Massachu-setts earnings, you may use the Nonresident Ap-portionment Worksheet to adjust your earnings.

Who Must Use the NonresidentApportionment Worksheet?If your employment or business took you both in-side and outside Massachusetts and you do notknow the actual amount of income you earned inMassachusetts, you must use the Nonresident Ap-portionment Worksheet if you are a self-employedperson or employee who is on an hourly, daily,weekly, monthly or mileage basis, or whose com-pensation depends upon sales, at least some ofwhich take place outside of Massachusetts.

Note: If both you and your spouse both qualify toapportion your income or you have more thanone job that is eligible for apportionment, you mustcomplete a separate apportionment worksheet forthe income that is eligible to be apportioned.

Who Can Apportion Income ButCannot Use the NonresidentApportionment Worksheet?If you do not know the actual amount of incomeyou earned in Massachusetts from one businessor employment, but you do not fit into any of thecategories listed in the preceding section, youshould not use the Nonresident ApportionmentWorksheet. See the section on “Special Apportion-ment Methods” for your apportionment method.

Examples of nonresidents who must apportion in-come using one of these special methods include:◗ an independent business or professional personwhose income does not depend on sales, days ormileage;

◗ an entertainer or athlete whose income does notdepend solely on receipts or winnings;◗ a general or limited partner in a partnership; and◗ a shareholder of an S corporation with Mass-achusetts source income.

Apportionment MethodsIf you use the Nonresident Apportionment Work-sheet, fill in the oval for the appropriate basis andthen follow the instructions. If you have more thanone business or employment requiring the use ofthe worksheet, complete and enclose one work-sheet for each business or employment.

◗ Working days basis. This basis should beused by employees or self-employed persons whoqualify to use the Nonresident ApportionmentWorksheet and who are compensated on anhourly, daily, weekly or monthly basis. The incomeof these taxpayers is to be allocated to Massachu-setts in the proportion that the amount of timespent working in Massachusetts bears to the totalworking time.

◗ Mileage basis. An employee or self-employedperson whose compensation depends on milestraveled is taxed on that portion of total compen-sation received in which the miles traveled withinMassachusetts bear to total miles traveled.

◗ Sales basis. For an employee or self-employedperson whose compensation depends upon salesor commissions, taxable income includes that por-tion of total compensation received which the salesmade inside Massachusetts bear to total sales. (Forthe purposes of making this allocation, all sales forwhich the taxpayer takes orders inside Massachu-setts are attributable to this state, regardless ofwhether the formal acceptance of the contract ofsale takes place inside or outside Massachusetts.)

Special Apportionment MethodsIf you earned income both inside and outsideMassachusetts from one business or employment,and your actual Massachusetts income is notknown and you cannot use the Nonresident Ap-portionment Worksheet in line 13, use the follow-ing appropriate apportionment method.

◗ Self-employed and professional persons. Ifyou earned income from both inside and outsideMassachusetts and your books do not accuratelyreflect your Massachusetts source income, youmust use a three-factor formula to apportion yourMassachusetts income. Instructions for thismethod of apportionment are in MassachusettsRegulation 830 CMR 62.5A.1.

◗ Entertainers and professional athletes. If youare a nonresident entertainer who performed inMassachusetts and you were not paid specificallyfor the performance in Massachusetts, or if youare a nonresident professional athlete who took

part in performances, bouts, meets, matches orgames that occurred in Massachusetts and youwere not paid for the specific event played inMassachusetts, you must use the apportionmentformula set forth in Massachusetts Regulation830 CMR 62.5A.1.

◗ Nonresident partners. If you are a nonresidentgeneral or limited partner, you are taxed on yourdistributive share of the income received by thepartnership to the extent that the partnership in-come is Massachusetts source income, deter-mined as if the partnership were a nonresidentindividual. If you are entitled to apportionment, thepartnership will apportion its income and notifyyou of your share on a 3K-1.

◗ Nonresident shareholders of an S corporation.If you are a nonresident shareholder in an S cor-poration, you are taxed on the distributive share ofincome received by the S corporation to the extentthat the S corporation income is Massachusettssource income. If you qualify for apportionment,the S corporation will apportion its income andnotify you of your share on an SK-1.

Line 13. NonresidentApportionment Worksheet13a. If your income is measured by workingdays, enter the number of days you worked out-side Massachusetts.

13b. Enter the number of days you worked insideMassachusetts. (If you spent a working day partlyinside and partly outside Massachusetts, treat theday as having been spent one-half inside the state.)

13c. Enter the total days worked both inside andoutside Massachusetts (the sum of lines 13aand 13b).

13d. Enter your nonworking days. Your nonwork-ing days are those days during the year (or duringthe period you worked, if your job lasted less thana year) that you were not required to work, suchas Saturdays, Sundays, holidays, sick days, vaca-tion and leave with or without pay. Complete theremainder of the Nonresident ApportionmentWorksheet as indicated, and enter your Massachu-setts income from line 13g in the appropriate lineon Form 1-NR/PY. For example, if you are appor-tioning your wages, enter the amount from line13g in line 5.

If you are using the mileage or sales basis, substi-tute mileage or sales for working days and com-plete all items in the worksheet, except line 13d.Indicate what basis you are using by filling in theappropriate oval, and enter your Massachusettsincome from line 13g in the appropriate line onForm 1-NR/PY.

152009 Form 1-NR/PY Instructions — Line by Line Instructions

NonresidentDeduction andExemption RatioSince nonresidents are only taxed on income fromMassachusetts sources, the deductions and ex-emptions allowed to them are limited by theamount of this income. This happens in two ways.The deductions in line 15 and Schedule Y, lines 1,2, 4, 5, 7, 9 (certain amounts only — see ScheduleY, line 9 instructions) and 13 must be matched tospecific items of income taxed on Form 1-NR/PY.Other deductions and all exemptions must be pro-rated by the ratio of a taxpayer’s Massachusettssource income to his/her total income.

Line 14. Nonresident Deductionand Exemption RatioAll nonresident taxpayers must complete lines14a to 14g to arrive at this ratio. The ratio will beused to determine what amounts, if any, you maydeduct in lines 16 and 17; Schedule Y, lines 3 (al-imony paid deduction), 6 (Archer medical savingsaccount (MSA) deduction), 8 (health care accountsdeduction), 10 (student loan interest deduction),11 (college tuition deduction), 12 (undergraduatestudent loan interest deduction), 15 (commuterdeduction); the amount of your exemptions in line22a; and the Earned Income Credit in line 45.

Nonresidents should use the line 14g ratio to de-termine the amount of the deduction for attorney’sfees and court costs involving certain unlawful dis-crimination suits (from Schedule Y, line 9) only if itis directly related to Massachusetts income as re-ported on Form 1-NR/PY, line 12. If it is not directlyrelated to income reported on Form 1-NR/PY, youare not allowed any deduction.

If married filing jointly, include in each line the in-come for both spouses. Enter any loss as “0.”

If filing as both a nonresident and a part-year res-ident, be sure to read the instructions for Sched-ule R/NR before completing line 14. Also, enter inline 14a only the portion of Massachusetts source5.3% income earned as a nonresident.

Note: If one or more composite returns are beingfiled on your behalf, you may not include amountsreported on any composite return in calculatingyour exemption and deduction ratios.

14a. Enter in line 14a total 5.3% income fromline 12.

Note: If filing as a both a nonresident and part-yearresident, enter the total of Schedule R/NR, Part 1,column D, lines 5 through 11.

14b. Enter in line 14b Massachusetts bank inter-est from the smaller of line 7a or line 7b.

14c. Read the instructions for lines 24, 27 and 28.If these items apply to you, combine Schedule B,Part 1, line 7 and Part 2, line 13 (but not less than“0”) and Schedule D, line 12 (but not less than “0”),and enter the total in line 14c. If there is no entry inSchedule B, Part 1, line 7, enter the amount fromForm 1-NR/PY, line 24.

Note: If filing as both a nonresident and part-yearresident, enter the total of Schedule R/NR, Part 1,column D, lines 24 (interest and dividends), 27(certain capital gains from Schedule B) and Sched-ule D (long-term capital gains and losses, exclud-ing collectibles).

14e. Enter in line 14e the total income from non-Massachusetts sources you received during the taxyear covered by this return. This is the additionalincome that would have been reported by you ifyou had been a Massachusetts resident that youreceived from non-Massachusetts sources. Thisamount is often not the same as the difference be-tween your total U.S. income reported in line 3 andyour Massachusetts source income reported in line14d, due to the differences between Massachu-setts and federal tax laws.

Note: Be certain not to include any amounts alreadyreported in line 14d.

To reconcile the two amounts, the following typesof income included in the U.S. total income (Form1-NR/PY, line 3), but not taxable in Massachusettsshould be subtracted from the U.S. total beforecompleting line 14e:◗ Social Security and Tier I Railroad Retirementbenefits;◗ pensions from contributory retirement plansof the U.S., or Massachusetts and its politicalsubdivisions;◗ pension income from the U.S. military;◗ U.S. bond interest;◗ state tax refunds; and◗ Keogh and 403(b) distributions related to con-tributions previously taxed by Massachusetts.

Income from the following categories which is notincluded in U.S. total income (Form 1-NR/PY, line3) must be added back to calculate the total in-come that would be reported as Massachusetts in-come had the taxpayer been a Massachusetts resi-dent in line 14e:◗ bond interest from other states;◗ up to $80,000 in foreign-earned income;◗ contributions to a pension plan by Massachu-setts state or local employees; and◗ net operating loss carryforward.

14f. Add line 14d and line 14e. If your total in-come in line 3 exceeds the amount reported in line14f by more than 10%, you should enclose a state-ment explaining the reasons for the difference.

Note: If filing as both a nonresident and part-year resident, enter Schedule R/NR, Part 1, col-umn C Total.

14g. Divide line 14d by line 14f. Carry this divisionout to four decimal places. Failure to do so maydelay the processing of your return. Enter the resultin line 14g. This is your ratio for deductions and ex-emptions. It represents the relationship of yourMassachusetts source income to your total income.

DeductionsLines 15 through 19Massachusetts allowable deductions differ from“Itemized Deductions” on Schedule A of U.S.Form 1040. You may claim only the deductionsspecified on Massachusetts Form 1-NR/PY, lines15 through 18 and Schedule Y.

Line 15. Amount Paid to SocialSecurity (FICA), Medicare,Railroad, U.S., MassachusettsRetirement SystemsNonresidents, if as a condition of Massachusettsbusiness or employment, you have paid into anyof the retirement systems listed above during2009, you may deduct those contributions, up toa maximum of $2,000. Part-year residents maydeduct contributions attributable to business oremployment while a Massachusetts resident, upto a maximum of $2,000.

Enter in lines 15a and 15b 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 that is directlyrelated to income taxable by Massachusetts in-cluded in line 12, but not more than $2,000 each.Payment amounts may not be combined or trans-ferred from one spouse to the other. Be sure to addany amount of Medicare tax withheld as shownon Form W-2 and any amount of self-employmenttax as reported on your U.S. Form 1040 to theamount of Social Security tax withheld, the total notto 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.

Lines 16 and 17Massachusetts law allows an option for deductingexpenses related to dependent children. Pleaseread instructions for both lines 16 and 17 to deter-mine if you qualify and to decide which deductionis better for you. You cannot claim a deduction inboth lines 16 and 17.

16 2009 Form 1-NR/PY Instructions — Line by Line Instructions

Line 16. 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 persons) inline 30 of U.S. Form 2441 or line 23 of U.S. Form1040A, Schedule 2. The amount from this proforma Form 2441, line 34 or U.S. Form 1040A,Schedule 2, line 27 should then be entered in line 1of 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.

◗ If you choose to take a deduction in line 16, youmay not take the deduction in line 17.

Line 16 Worksheet — Child Under 13 orDisabled Dependent/Spouse Care Deduction

Use this worksheet to calculate your Massachu-setts child under age 13 or disabled dependent/spouse care deduction.

Part-year residents, enter amounts paid whilea Massachusetts resident.

1. Enter the amount of qualified expenses youincurred and paid in 2009 for a qualifying per-son(s). This amount may exceed the federal limitof $3,000 for one qualifying person or $6,000for two or more persons. However, do not entermore than $4,800 for one qualifying person or$9,600 for two or more 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. . . . . . . . . . . . 7. Part-year residents, enter here the amountfrom line 6 and in Form 1-NR/PY, line 16;nonresidents, multiply line 6 by Form 1-NR/PY,line 14g and enter the result here andin Form 1-NR/PY, line 16. . . . . . . . .

Line 17. Dependent Member(s)of Household Under Age 12, orDependents Age 65 or Over (notyou or your spouse) as of December31, 2009, or Disabled DependentYou may deduct $3,600 for a dependent memberof household, or $7,200 for two or more depen-dents, under age 12, or dependent age 65 or over(not you or your spouse) as of December 31,2009, or disabled dependent. Enter the number ofqualified dependents in line 17a, not to exceed two,and multiply that amount by $3,600. Enter the re-sult in line 17. Only if single, head of household ormarried filing jointly. You cannot claim this deduc-tion if married filing a separate return.

Note: You may claim an amount in line 17 only ifthere is no entry in line 16.

◗ Nonresidents, multiply this amount by line 14gand enter the result in line 17 of Form 1-NR/PY.Part-year residents, multiply this amount by line 2and enter the result in line 17 of Form 1-NR/PY.

Line 18. Rental DeductionNonresidents are allowed a deduction equal to50% of the rent they pay, up to a maximum of$3,000, for their principal residence only if it is lo-cated in Massachusetts and is their sole residence.(Non-Massachusetts rent is never deductible.)Many nonresidents rent a house or apartment inMassachusetts, but few qualify for this deduction.This is because the house or apartment rentedhere is not their principal residence. Only thosenonresidents who rented a house or apartment inMassachusetts and have no family home or otherdwelling to which they normally return (or to whichthey could return in the future) in any other stateor country, can claim this deduction. Completeline 18 only if you filled in the “no” oval below line

18. Enter the total amount of qualified rent paid byyou during 2009 in line 18a. Divide line 18a by 2and enter the result, or $3,000 ($1,500 if marriedfiling a separate return) — whichever is smaller— in line 18. Part-year residents are entitled tothe rental deduction equal to 50% for the rent theypaid during 2009 (up to a maximum of $3,000 perreturn) for their principle residence while a residentof Massachusetts. Enter the total amount of qual-ified rent paid by you during 2009 in line 18a. Di-vide line 18a by 2 and enter the result, or $3,000($1,500 if married filing a separate return) —whichever is smaller — in line 18.

Note: This deduction does not apply to your U.S.tax return.

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 this results in onespouse claiming a deduction in excess of $1,500,that spouse must enclose with his/her return astatement signed by the other spouse indicatingconsent to the allocation. The statement must con-tain the name, address and Social Security numberof the consenting spouse and the amount of rentaldeduction taken by that spouse.

Line 19. Other Deductions(from Schedule Y)Enter the total from Schedule Y, line 16. Be sureto enclose Schedule Y with your return. Failure todo so will delay the processing of your return.

Line 22. Exemption AmountEnter amount from Exemption Section, line 4,item f in line 22a.

Nonresidents. Prorate your exemptions using theratio of your Massachusetts income to your totalincome by multiplying line 22a by line 14g and en-tering the result in line 22. This amount representsyour prorated exemptions.

Part-year residents. Prorate your total exemp-tions claimed on Form 1-NR/PY by multiplyingline 22a by line 2 and entering the result in line 22.This amount represents your prorated exemptionsas a part-year resident.

Filing as both nonresident and part-year resident.Enter the amount from Schedule R/NR, line 22,column e in line 22.

172009 Form 1-NR/PY Instructions — Line by Line Instructions

Line 23. 5.3% Income AfterExemptionsSubtract line 22 from line 21. Enter the result inline 23, but not less than “0.”

If line 22 exceeds line 21 and you received interestincome (other than interest from Massachusettsbanks), dividends or capital gain income, completethe worksheet for Schedule B, line 36 and Sched-ule D, line 19, if applicable. All others proceed toline 24.

Line 24. 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 of this booklet.

Enter in line 24 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 24.

Line 25. Total Taxable 5.3% IncomeAdd line 23 and line 24.

Tax on 5.3% IncomeLine 26. 5.3% TaxBased upon the amount in line 25, find the properamount of tax from the table at the back of thisbooklet. Enter the tax in line 26. If line 25 is morethan $24,000, multiply the amount in line 25 by.053 and enter the result in line 26. You must usethe tax table if line 25 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 25 and Schedule D, line 20 by .0585and fill in the oval.

12% Incomeand TaxLine 27. 12% Income from CertainCapital GainsEnter in line 27a the amount from Schedule B, line39. Multiply this amount by .12 (12%) and enter

the tax in line 27. Be sure to enclose Massachu-setts Schedule B. To determine if you need to fileSchedule B, refer to the Schedule B instructions ofthis booklet.

Long-TermCapital Gain TaxLine 28. Schedule D (Long-TermCapital Gains and Losses ExcludingCollectibles)Enter in line 28 the amount from Schedule D, line21, but not less than “0.” To determine if youneed to file Schedule D, refer to the Schedule D in-structions of this booklet.

Schedule B, Line 36 and Schedule D, Line 19Worksheet — Excess Exemptions fromInterest and Dividend Income, 12% Incomeand Long-Term Capital Gain Income (Only ifSingle, Head of Household, or Married FilingJointly)

If your total exemptions in line 22 are more thanthe amount of your 5.3% income after deduc-tions in line 21, the excess may be appliedagainst your interest and dividend income andincome taxed at 12%. Any remaining excessamount may then be applied against yourlong-term capital gain income. Complete thisworksheet only if line 21 is less than line 22to determine 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-NR/PY, line 22 . . . . . . . . . . . . . . . . . . . . . . . 3. Enter amount from Form 1-NR/PY, line 21 . . . . . . . . . . . . . . . . . . . . . . . 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 or largerthan line 1, enter line 1 here and in Schedule B,line 36. Complete lines 6 through 86. 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 calculatinglines 24, 27 or 28 (see Schedule B, line 36 and/orSchedule D, line 19), be sure to fill in the oval inline 28.

Line 29. Credit Recapture AmountIf any Brownfields Credit (BC), Economic Oppor-tunity Area Credit (EOA) or Low-Income HousingCredit (LIH) or Historic Rehabilitation Credit (HR)property is disposed of or ceases to be in quali-fied use prior to the end of its useful life, the dif-ference between the credit taken and the totalcredit allowed for actual use must be added backto your tax on Form 1-NR/PY. Complete and en-close Schedule H-2, Credit Recapture. ScheduleH-2 is available at www.mass.gov/dor or by call-ing (617) 887-MDOR or toll-free in Massachusetts1-800-392-6089.

Massachusetts AGINo Tax Status — Single, Married Filinga Joint Return or Head of Household OnlyIf your Massachusetts Adjusted Gross Income(Massachusetts AGI) was $8,000 or less if single,$14,400 or less plus $1,000 per dependent if headof household, or $16,400 or less plus $1,000 perdependent if married filing a joint return, you qual-ify for No Tax Status and are not required to payany Massachusetts income taxes.

To see if you may qualify for No Tax Status, com-plete Schedule NTS-L-NR/PY. See ScheduleNTS-L-NR/PY instructions.

Massachusetts Adjusted Gross Income forNo Tax Status and Limited Income CreditMassachusetts Adjusted Gross Income (Mass-achusetts AGI) is not the same as taxable income.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.

18 2009 Form 1-NR/PY Instructions — Line by Line Instructions

Line 30. No Tax StatusIf you qualify for No Tax Status, fill in the oval inline 30, enter “0” in line 31 and omit lines 32through 35. Also, enter “0” in line 36 and completeForm 1-NR/PY. However, if there is an amount en-tered in line 29, Credit Recapture Amount, enterthat amount in line 31 and complete lines 33through 35.

Note: If married filing separately you do not qual-ify for No Tax Status or the Limited Income Credit.

Line 32. Limited Income Credit —Single, Married Filing a JointReturn or 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 $16,400and $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. Be sure tocomplete Schedule NTS-L-NR/PY to see if youmay qualify for this credit.

Line 33. Other Credits(from Schedule Z, Part I)Lead Paint Credit, Economic OpportunityArea Credit, Full Employment Credit,Septic Credit, Brownfields Credit,Low-Income Housing Credit, HistoricRehabilitation Credit, Film IncentiveCredit and Medical Device Credit“Other credits” include the items listed above andmust be included on Schedule Z, Part I. Nonresi-dents and part-year residents, enter the total fromSchedule Z, line 10 on Form 1-NR/PY, line 33. Besure to enclose Schedule Z with your return. Failureto do so will delay the processing of your return.

Line 34. Credits for Part-Year Resi-dents Only (from Schedule Z, Part II)Credit for Income Tax Paid to AnotherState or Jurisdiction and Solar Windand Energy Credit“Credits for part-year residents only” include theitems listed above and must be included onSchedule Z, Part 2. Part-year residents, enter thetotal from Schedule Z, line 13 on Form 1-NR/PY,line 34. Be sure to enclose Schedule Z with yourreturn. Failure to do so will delay the processingof your return.

Line 37. Voluntary ContributionsYou may contribute any amount to the followingfunds. Remember, these amounts are added toyour tax. They increase the amount of your pay-ment 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 costsof medications without which they might losetheir transplanted organs. For information on howto become an organ donor, visit the Registry ofMotor Vehicle’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, maintenanceand operation of the United States Olympic Teamparticipating 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 MassachusettsNational Guard and Reserve Families. Contribu-tions to this fund are used to help members of theMassachusetts National Guard and Massachu-setts residents who are members of the reservesof the armed forces of the United States and whohave been called to active duty after the Septem-ber 11, 2001 terrorist attacks, and their families,to defray the costs of food, housing, utilities,medical services, and other expenses.

Add items a, b, c, d and e and enter the total inline 37.

Line 38. Massachusetts Use Tax DueOn Out-of-State Purchases Madein 2009 (part-year residents only)A Massachusetts use tax is due on your taxablepurchases, made while a Massachusetts resident,of tangible personal property purchased for use inMassachusetts on which you did not pay Mass-achusetts sales or use tax. These include, but arenot limited to, purchases made out-of-state, onthe Internet or from a catalog, where no Mass-achusetts sales tax was paid. The use tax doesnot apply to out-of-state purchases that are ex-empt 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.

Taxpayers may use the following table to self-reporta “safe-harbor” amount of use tax based on theirMassachusetts adjusted gross income. A taxpayermay pay this amount in lieu of the actual amountof use tax that would otherwise be due with re-spect 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 following table. 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

*Line 10 of Schedule NTS-L-NR/PY.

Prepare and retain with your records a list of yourout-of-state purchases in 2009 that are subject tothe Massachusetts use tax. Complete the followingworksheet to calculate your use tax if you are notself-reporting a safe-harbor amount. For more in-formation about use tax, visit DOR’s website atwww.mass.gov/dor.

2009 Form 1-NR/PY Instructions — Line by Line Instructions 19

Form 1-NR/PY, Line 38 Worksheet-Use TaxDue on Out-of-State Purchases (Part-YearResidents Only)

1. Total of purchases in 2009, made while aMassachusetts resident, subject to Massachu-setts use tax purchased between 1/1/09 and7/31/09 . . . . . . . . . . . . . . . . . . . . . . 2. Total of purchases in 2009, made while aMassachusetts resident, subject to Massachu-setts use tax purchased between 8/1/09 and12/31/09 . . . . . . . . . . . . . . . . . . . . . 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, made while a Massachu-setts resident, or 5% of the sales price which-ever is less, on each purchase reported in 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, made while a Massachu-setts resident, 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 Form1-NR/PY, line 38 . . . . . . . . . . . . . . .

Line 39. Health Care Penalty(part-year residents only)If 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 39afor you and/or line 39b 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 41. 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 41. Attach,with a single staple, state copies to your return;otherwise, your claim of amounts withheld will not

be allowed. If you have lost any state copy, askthe payer for a duplicate. Copies of 1099s needonly be attached if they show an amount for Mass-achusetts tax withheld.

Line 42. 2008 Overpayment Appliedto Your 2009 Estimated TaxInclude the exact amount of any 2008 overpay-ment you applied to your 2009 estimated taxes.This amount can be found on your 2008 Mass-achusetts Form 1-NR/PY, line 50 or Form 1, line45. Do not include any 2008 refund in this line.

Line 43. 2009 MassachusettsEstimated Tax PaymentsIf you paid Massachusetts estimated income taxesfor 2009, enter in line 43 the total of all Massachu-setts estimated tax payments, but do not includethe amount entered in line 42. Be sure to includeany last quarter (of 2009) payment made on or be-fore January 15, 2010.

Every taxpayer (whether a resident or nonresident)who expects to pay more than $400 in Massachu-setts income taxes on income which is not coveredby Massachusetts withholding must pay Mass-achusetts estimated taxes. Estimated tax paymentscan be made online by using Web Services for In-come by visiting www.mass.gov/dor or by FilingForm 1-ES.

Income which is not subject to withholdingincludes:◗ salaries or wages earned in Massachusettswhere the employer is not subject to Massachu-setts withholding;◗ unemployment compensation (if you did notelect voluntary Massachusetts withholding);◗ taxable REMIC income;◗ 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;◗ lottery or gambling winnings;◗ certain pensions;◗ taxable Keogh or IRA distributions (only if youelected not to have federal withholding);◗ rental income and royalty income;◗ alimony received (part-year residents only);◗ illegal income; and◗ any other income received taxable in Mass-achusetts from which Massachusetts tax will notbe withheld.

Generally, the first payment must be filed on or be-fore April 15 of the taxable year. The estimated taxmay be paid in full with the first payment voucheror in four installments on or before April 15, June15, September 15 of the current taxable year andJanuary 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 amount of last year’s re-fund 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 44. Payments Made withExtensionIf you filed an Application for Automatic Six-Month Extension of Time to File MassachusettsIncome Tax Return, Massachusetts Form M-4868,for 2009 on or before April 15, 2010, enter in line44 the amount you paid with Form M-4868. En-close a copy of Massachusetts Form M-4868 withyour return.

Line 45. Earned Income CreditThe earned income credit is a tax credit for certaintaxpayers who work and/or 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.Enter in line 45a the federal earned income creditamount from your U.S. Form 1040, line 64a,1040A, line 41a; or 1040EZ, line 9a. Multiply thisamount by .15 (15%) and enter the result in theline provided. Nonresidents, multiply this amountby line 14g; part-year residents multiply thisamount by line 2. Enter the result in line 45.

If you choose to have the IRS compute your fed-eral earned income credit, wait until the IRS noti-fies you of that amount before making an entry inline 45. If you have not received your earned in-come credit amount as computed by the IRS byApril 15, 2010, you may file Massachusetts FormM-4868, Application for Automatic Six-Month Ex-tension of Time to File Massachusetts Income TaxReturn. See page 3 for information about filingyour extension via the Web. For more informationabout the federal earned income tax credit, see IRSPublication 596, available at www.irs.gov. Be sureto fill out Schedule DI, Dependent Information, ifyou are claiming this credit for one or more qualify-ing children/dependents. Failure to do so will delaythe processing of your return.

20 2009 Form 1-NR/PY Instructions — Line by Line Instructions

Line 46. Senior Circuit BreakerCredit (part-year residents only)Certain 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 res-idence. The maximum credit allowed is $960 forthe tax year beginning January 1, 2009. If the creditdue the taxpayer exceeds the amount of the totalincome 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 Schedule CB, SeniorCircuit Breaker Credit and instructions. ScheduleCB is available on DOR’s website at www.mass.gov/dor or by calling (617) 887-MDOR, or toll-freein Massachusetts 1-800-392-6089.

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,enter the amount from line 21. Be sure to com-plete and enclose Schedule CB with your return.

Line 47. Other Refundable CreditsEnter in line 47 the amount from Schedule RF,line 3.

Refund AmountLine 49. OverpaymentIf line 40 is smaller than line 48, subtract line 40from line 48 and enter the amount in line 49. Thisis the amount of your overpayment. If line 40 islarger than line 48, skip to line 52. If line 40 andline 48 are equal, enter “0” in line 51.

Line 50. Amount of OverpaymentYou Want Applied to Your 2010Massachusetts Estimated TaxesEnter the amount of your 2009 overpayment youwish to apply to your 2010 Massachusetts esti-mated taxes. 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 51. Refund AmountSubtract line 50 from line 49. Enter the result inline 51. 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 unusedboxes blank. You must enter the routing numberand the account number in the spaces provided inline 51 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 52. Tax DueIf line 40 is larger than line 48, subtract line 48from line 40, and enter the result in line 52. This isthe amount of tax you owe with your return. Pay infull with your return. Make your check or moneyorder payable to Commonwealth of Massachusettsand write your Social Security number on the frontof your check or money order in the lower left cor-ner. Complete and remove Form PV, Massachu-setts Income Tax Payment Voucher, attached to theback of the envelope found in this booklet. En-close the check and Form PV with your return.Form PV must be included with your check to en-sure proper crediting of your account. Be sure touse the light blue mailing label when mailingForm 1-NR/PY with Form 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 advantageous to filewhen your return is due even if you are unable tomake full payment.

If you owe any interest, penalty or addition for theunderpayment of estimated taxes, add thoseamounts to the tax you owe and enter the totalamount in line 52.

What Are the Interest and Penalties?Interest: If you fail to pay the tax when due, inter-est will be charged. For further information, seeTIR 92-6 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% of the tax due per month (or frac-tion thereof), 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% of the taxdue per month (or fraction thereof), up to a max-imum 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 penaltymay be added of $30 or the amount of the pay-ment, whichever is less.

Addition for Underpayment of Estimated Taxes:You will generally be subject to this addition to taxif you did not have withholding and/or estimatedtax payments equal to 80% of the total tax liabilityrequired to be paid and your 2009 tax due aftercredits and withholding is greater than $400. Ifyou failed to meet this requirement, you mustcomplete and attach Massachusetts Form M-2210to calculate the amount you must add to line 52.The 80% requirement is reduced to 662⁄3% for in-dividuals who receive two-thirds of their incomefrom fishing or farming.

Most taxpayers who qualify for an exception hadeither a tax due of $400 or less or withholdingand/or estimated payments equal to their tax lia-bility for the previous year. If you qualify for anexception, fill in the oval marked “EX” under line52 on Form 1-NR/PY and enclose MassachusettsForm M-2210. You do not have to complete FormM-2210 if the balance due with your return is$400 or less. Form M-2210 is available by visitingwww.mass.gov/dor or at any Massachusetts De-partment of Revenue location.

Penalty for Failure to Report Federal Change: Ifthe U.S. Internal Revenue Service changes your in-come for a prior year (generally through audit), filean online application for abatement/amended re-turn 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 changeindicates a refund, file an online application forabatement/amended return within one year, in-cluding acceptance of an amended federal returnby the Internal Revenue Service. Form CA-6, Ap-plication for Abatement, can also be downloadedfrom DOR’s website at www.mass.gov/dor.

212009 Form 1-NR/PY Instructions — Line by Line Instructions

Sign HereNow that you have completed Form 1-NR/PY,sign your name at the bottom of page 1 of Form1-NR/PY. Your spouse must also sign if this is ajoint return. Write the date you signed the return.

Note: Be sure to include all four pages of Form1-NR/PY and if applicable, Schedule HC.

Attach to your Form 1-NR/PY, with a single sta-ple, all state copies of your Forms W-2, W-2G,PWH-WA, 2G, K-1 and any Forms 1099 which in-cluded Massachusetts withholding. If making apayment, be sure to enclose Form PV with yourForm 1-NR/PY. Form PV is attached to the back ofthe envelope found in this booklet. Be sure to usethe light blue mailing label when mailing your Form1-NR/PY with the Form PV. Form PV must be in-cluded with your check to ensure proper creditingof your account. Make your check or money orderpayable to Commonwealth of Massachusetts, andbe sure to sign the check and write your SocialSecurity number on it. Be sure to include all fourpages of Form 1-NR/PY. Also, enclose all requiredMassachusetts forms and schedules. Do not sta-ple your forms together.

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 the firm,if any, shown in that section.

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.

The authorization cannot be revoked. However, theauthorization will automatically end no later thanthe due date (without regard to extensions) for fil-ing your 2010 tax return. This is April 15, 2011 formost 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 pre-vious 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 PaperFiling. Fill in oval if you do not want your preparerto file your return electronically. See TIR 04-30for more 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-NR/PY to: MassachusettsDepartment of Revenue, PO Box 7000, Boston,MA 02204.

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 Form1-NR/PY to: Massachusetts Department of Rev-enue, PO Box 7003, Boston, MA 02204

Note: If using a tax software product, be sure touse the correct PO box. See page 3.

Note: Schedule lines without specific instructionsare considered to be self-explanatory. Be sure tolist on each schedule the name and Social Securitynumber that appears first on Form 1-NR/PY. Donot cut or separate schedules.

ScheduleNTS-L-NR/PYMassachusetts Adjusted Gross Income forNo Tax StatusBe sure to enclose with Form 1-NR/PY.Massachusetts Adjusted Gross Income (Mass-achusetts AGI) is not the same as taxable income.Massachusetts AGI includes all:◗ wages, salaries, tips;◗ taxable pensions and annuities;◗ pension income from another state or jurisdic-tion before any deductions;◗ 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-emption; and◗ interest, dividends, and capital gains.

◗ The No Tax Status provision applies if yourMassachusetts AGI on Schedule NTS-L-NR/PY(line 8) is $8,000 or less if single; $14,400 or lessplus $1,000 per dependent if head of household,or $16,400 or less plus $1,000 per dependent ifmarried filing a joint return.

Note: If married, you must file a joint return inorder to qualify for No Tax Status. For purposesof computing No Tax Status all losses must beentered as “0.”

Line 6. Long-Term Capital GainIncomeIf filing Schedule D-IS, Installment Sales, see theSchedule D-IS instructions for the amount to enterin line 6. Schedule D-IS and instructions are avail-able on DOR’s website at www.mass.gov/dor.

Line 7. Additional Income/LossWhile a Nonresident/Part-YearResidentEnter in line 7 any income/loss not reported onForm 1-NR/PY because of your nonresidency orpart-year residency status but would have been re-ported on Form 1 if you were a full-year resident.

Note: Nonresidents, do not include any militarycompensation received during the taxable year asnon-Massachusetts source income. See TIR 04-6for more information.

22 Schedule Instructions

Line 9. Additional Adjustmentsto Income While a Nonresident/Part-Year ResidentEnter in line 9 any deductions not originally re-ported on Schedule Y, lines 1 to 10 because ofyour nonresidency or part-year residency statusbut would have been reported on Schedule Y if youwere a full-year resident.

Line 10. Massachusetts AdjustedGross IncomeSubtract line 9 from line 8. If you are single andthe total in line 10 is $8,000 or less, you qualify forNo Tax Status. Fill in the oval in Form 1-NR/PY,line 30, enter “0” in line 31 and omit lines 32through 35. Also, enter “0” on line 36 and con-tinue on Form 1-NR/PY. If you are single but donot qualify for No Tax Status and your total in line10 is $14,000 or less, go to line 13 to see if youqualify for the Limited Income Credit. If marriedfiling jointly or head of household, go to line 11.

If you paid tuition to a two- or four-year college foryourself or a dependent, you may be entitled to adeduction equal to the amount by which the tuitionpayments, less any scholarships, grants or finan-cial aid received, exceed 25% of line 10. SeeSchedule Y, line 11 worksheet in instructions.

Line 11. No Tax Status for MarriedFiling Jointly or Head of HouseholdIf married and filing a joint return, multiply thenumber of dependents (from Form 1-NR/PY, line4b) by $1,000 and add $16,400 to that amount. Ifhead of household, multiply the number of depen-dents (from Form 1-NR/PY, line 4b) by $1,000 andadd $14,400 to that amount. Enter the result here.If line 10 is less than or equal to line 11, you qualifyfor No Tax Status. Fill in the oval in Form 1-NR/PY,line 30, enter “0” in line 31 and omit lines 32through 35. Also, enter “0” on line 36 and continueon Form 1-NR/PY.

Line 12. Limited Income CreditThresholdIf you do not qualify for No Tax Status and you aremarried and filing a joint return, multiply the num-ber of dependents (from Form 1-NR/PY, line 4b) by$1,750 and add $28,700 to that amount. If headof household, multiply the number of dependents(from Form 1-NR/PY line 4b) by $1,750 and add$25,200 to that amount. Enter the result here. Ifline 10 is less than or equal to line 12, you mayqualify for the Limited Income Credit. Go to line 13.

Line 17. Limited Income CreditIf line 15 is smaller than line 16, you are not eligiblefor this credit. If line 15 is larger than line 16, sub-tract line 16 from line 15, and enter the result hereand in line 32 on Form 1-NR/PY.

Note: If married filing a separate return, you do notqualify for this credit.

Schedule DIDependent InformationBe sure to enclose with Form 1-NR/PY.

You must complete this schedule if you are claim-ing a dependent exemption(s) on Form 1-NR/PY,line 4b or taking a deduction/credit(s) on Form1-NR/PY, lines 16, 17 or 45 (if applicable). Failureto provide this information will delay the process-ing of your return. You must complete the infor-mation 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 ten 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-NR/PY.

Line 1. Alimony Received(part-year residents only)If you received alimony payments, you must reportthem as income in line 1 of Schedule X. Report theportion of all periodic payments of alimony or sep-arate maintenance received under a court judgmentor decree, or for excess alimony amounts recap-tured, as reported on U.S. Form 1040, line 11, re-ceived while you were a Massachusetts resident. Ifyou made alimony payments, you will be allowed todeduct these amounts on Form 1-NR/PY, line 19.

Line 2. Taxable IRA/Keogh andRoth IRA Conversion Distributions(part-year residents only)Complete 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 or Roth IRA conversion distributionwhile a resident of Massachusetts, whether de-rived from sources inside or outside of Massachu-setts. Since Massachusetts does not allow adeduction for amounts originally contributed toan IRA or Keogh, the distributions are not taxableuntil the full amount of your contributions whichwere previously subject to Massachusetts taxesare recovered.

◗ Contributions made to Keogh accounts prior to1975 were deductible when made. Therefore, nodeduction may be taken from a Keogh distributionfor 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.

Note: You must complete separate worksheets ifmarried filing a joint return and both you and yourspouse received IRA/Keogh Plan and/or Roth IRAconversion distributions.

232009 Form 1-NR/PY Instructions — Schedule Instructions

Line 3. Other Gambling WinningsEnter in Schedule X, line 3 all gambling winningsfrom casinos, raffles, races, beano or other eventsof chance held in Massachusetts (part-year resi-dents, whether held inside or outside of Mass-achusetts). Do not enter less than “0.” You mayonly deduct the price of the winning ticket. Gam-bling losses are not deductible under Massachu-setts law. Gambling losses claimed as itemized de-ductions on U.S. Form 1040, Schedule A are notallowed on your Massachusetts return.

Note: Do not report Massachusetts state lotterywinnings in Schedule X, line 3. Instead, reportthem on Form 1-NR/PY, line 10b.

Line 4. Fees and Other 5.3% Income“Other 5.3% income” includes the following items.Enter the amounts and sources of each item. Donot enter less than “0.” Enclose additional state-ments if more space is needed.

◗ All fee income, such as payments for jury duty,election worker payments, director’s fees, com-pensation received as executor or administratorof an estate, and commission income or tips notreported in line 5 of Form 1-NR/PY is taxable. Also,report all bartering income not reported on Sched-ule C (the fair market value of goods or servicesreceived in payment for your services).

◗ All prizes and awards won by a nonresident ina quiz program, drawing, beauty contest, etc. heldin Massachusetts (part-year residents, whetherheld inside or outside of Massachusetts) are tax-able at fair market value. Awards and bonuses re-ceived from your employer for performance ofservices in Massachusetts (part-year residents,whether received from sources inside or outsideof Massachusetts) are also taxable.

◗ Other 5.3% income from Massachusettssources or received while a part-year resident, re-ported on U.S. Form 1040, line 21, and not re-ported elsewhere in “5.3% Income” section onMassachusetts Form 1-NR/PY, must be reportedin line 4 of Schedule X.

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

◗ Embezzled or other income from illegal activi-ties from Massachusetts sources or received whilea part-year resident is taxable.

The following items should not be reported onyour Massachusetts 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 forward

or 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-NR/PY.

Line 1. Allowable EmployeeBusiness ExpensesGenerally, reimbursed employee business expensesare not included in your wages or salary and there-fore are not allowed as deductions. However, thereare unreimbursed and certain reimbursed expensesfor which you are allowed a deduction. Completethe following worksheet in order to calculate yourMassachusetts employee business expense de-duction. The expenses must relate to income re-ported in lines 5 or 11 on Form 1-NR/PY.

Employees may deduct the following:

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

◗ all federally deductible unreimbursed employeebusiness expenses, if the employee is a salesper-son 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 Schedule Y,line 1 worksheet.

If you are a qualified performing artist or a fee-basis state or local government official, do notcomplete the worksheet. Enter on Schedule Y, line9 your federally deductible business expenses in-cluded on U.S. Form 1040, line 24 and fill in theappropriate oval 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 filersmust also recalculate their US. Form 2106 or 2106EZ by combining allowable expenses as reportedon U.S. Form 2106, lines 4, 9b and 10 or U.S.Form 2106-EZ, lines 4, 5 and 6. See TIR 04-17 formore information.

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 2106or 2106-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, enterthe amount of impairment-related expensesincluded in line 1 and claimed on line 28 ofU.S. Schedule A. . . . . . . . . . . . . . . . 5. Add lines 2 through 4. Enter the result here . . . . . . . . . . . . . . . . . . . . . . . . . 6. Subtract line 5 from line 1, and 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 7a or 24 of this return or on a prior year Mass-achusetts return, you may deduct the penalty. Thisdeduction is the same as the amount allowableon U.S. Form 1040, line 30. Enter this amount inline 2 of Schedule Y.

Line 3. Alimony PaidThis deduction includes only amounts paid by youto your former spouse during 2009 for alimony orseparate maintenance under court decree, or for ex-cess alimony amounts recaptured. Nonresidents,multiply the amount of alimony paid on your U.S.Form 1040, line 31a, by Form 1-NR/PY, line 14gto determine the amount you may claim againstMassachusetts income. Enter the result in line 3.Part-year residents, enter the amount of alimonypaid while a Massachusetts resident in line 3.

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

24 2009 Form 1-NR/PY Instructions — Schedule Instructions

Line 4. Amounts Excludible UnderMGL Ch. 41, Sec. 111F or U.S. TaxTreaty Included Line 5Massachusetts 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-NR/PY, line 5, and fillin the appropriate 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 ScheduleY that was included in Form 1-NR/PY, line 5, andfill in the appropriate oval.

Line 5. Moving ExpensesNonresidents and part-year residents, enter theamount from U.S. Form 1040, line 26 that is re-lated to Massachusetts employment.

Line 6. Medical Savings AccountNonresidents, multiply the amount of Medical Sav-ings Account included in U.S. Form 1040, line 36“MSA Write-In Adjustment” by line 14g and enterthe result in Schedule Y, line 6. Part-year resi-dents, multiply the amount of Medical Savings Ac-count included in U.S. Form 1040, line 36 “MSAWrite-In Adjustment” by line 2 and enter the resultin Schedule Y, line 6.

Line 7. Self-Employed HealthInsurance Enter in Schedule Y, line 7 the amount from U.S.Form 1040, line 29 that is related to Massachu-setts employment.

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 AccountsNonresidents, multiply the amount from U.S.Form 1040, line 25 by line 14g and enter the resultin Schedule Y, line 8. Part-year residents, multiplythe amount from U.S. Form 1040, line 25 by line2 and enter the result in Schedule Y, line 8.

Line 9. Other Qualified DeductionsYou may claim only the following deductions 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.

Nonresidents, if you are claiming a deduction forattorney’s fees and court costs involving certainunlawful discrimination suits (only if directly re-lated to Massachusetts income as included onForm 1-NR/PY, line 12), multiply that amount byForm 1-NR/PY, line 14g.

The following deductions may be claimed only ifthey are related to Massachusetts income as in-cluded on Form 1-NR/PY, line 12; jury duty paygiven to your employer; reforestation amortization;repayment of supplemental unemployment bene-fits under the Trade Act of 1974; attorney’s feesand court costs involving certain unlawful discrim-ination suits (part-year residents only); and deduct-ible expenses related to income reported on U.S.Form 1040, line 21 and Massachusetts ScheduleX, line 4 from the rental of personal property en-gaged in for profit. If you are entitled to claim anyof these deductions, fill in the appropriate oval inline 9 of Schedule Y.

On the dotted line next to line 9, be sure to indi-cate the type of deduction being taken, as identi-fied on U.S. Form 1040, line 36. Identify jury dutypay given to your employer as “Jury Pay”; refor-estation amortization as “RFST”; repayment ofsupplemental unemployment benefits under theTrade Act of 1974 as “Sub-Pay TRA”; attorney feesand court costs involving certain unlawful discrim-ination claims as “UDC”; and deductible expensesrelated to income reported on U.S. Form 1040,line 21 and Massachusetts Schedule X, line 4 fromthe rental 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: Nonresidents andpart-year residents, enter the amount from U.S.Form 1040, line 24 that is related to Massachusettsemployment and fill in the appropriate oval ofSchedule Y, line 9. Also, the IRC sec. 404 deduc-tion for contributions on behalf of IRC sec.401(c)(1) employees (sole proprietors and part-ners) is disallowed. See TIR 02-18 (I)(D) and DORDirective 01-7 for more information.

Line 10. Student Loan InterestDeductionNonresidents, multiply the amount from U.S.Form 1040, line 33 or 1040A, line 18 by line 14gand enter the result in Schedule Y, line 10. Part-year residents, multiply the amount from U.S.Form 1040, line 33 or 1040A, line 18 by line 2 andenter the result in Schedule Y, line 10. This deduc-tion is only allowed if not claiming the same ex-penses in line 12 of Schedule Y, UndergraduateStudent Loan Interest Deduction.

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.

252009 Form 1-NR/PY Instructions — Schedule Instructions

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 10 of ScheduleNTS-L-NR/PY, No Tax Status and LimitedIncome Credit . . . . . . . . . . . . . . . . . 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 . . . . . . . . . 7. Nonresidents, multiply line 6 by Form 1-NR/PY,line 14g. Enter the result here and in line 11 onSchedule Y. Part-year residents, multiply line 6by Form 1-NR/PY, line 2. Enter the result hereand in line 11 on Schedule Y. . . . . .

Line 12. Undergraduate StudentLoan Interest DeductionA deduction is allowed for interest paid on a qual-ified undergraduate student loan. To be eligiblefor the deduction, the “education debt” must be aloan that is administered by the financial aid officeof a two-year or four-year college at which you, ora qualified 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.

Nonresidents, multiply the amount of such inter-est paid by Form 1-NR/PY, line 14g and enter theresult in Schedule Y, line 12. Part-year residents,multiply the amount of such interest paid by Form1-NR/PY, line 2 and enter the result in Schedule Y,line 12.

Line 13. Deductible Amount ofQualified Contributory PensionIncome from Another State orPolitical Subdivision Includedin Form 1-NR/PY, Line 6Massachusetts 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 polit-ical subdivisions. For guidelines to determine

which state’s pensions are exempt in Massachu-setts, see TIR 95-9. Enter any deductible amountof such income in line 13 of Schedule Y that wasincluded in Form 1-NR/PY, line 6.

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;

◗ 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, and thetotal 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 exceed$750 for each individual. Also, one spouse cannottransfer his or her excess deduction to the otherspouse; separate worksheets must be completedto calculate the deduction. See TIR 06-14 for addi-tional information. Complete the following work-sheet to calculate the commuter deduction.

Dependents Claimed on Taxpayers’ Income TaxReturns: The deduction is allowed where an individ-ual purchases an MBTA pass for a dependent whois claimed on that individual’s tax return, providedthe dependent does not also claim the deduction.However, the total amount deducted cannot exceed$750 for each individual taxpayer who is filing a re-turn. In the case of married taxpayers filing a jointreturn, the total amount deducted cannot exceed$750 per taxpayer; thus, the maximum deductionfor 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 7. . . . . . . . . . . . . . . . . . . . . 4. Enter $150 . . . . . . . . . . . . . . . . . 5. Subtract line 4 from line 3. . . . . . 6. Enter the lesser of line 5 or $7507. Nonresidents, multiply line 6 by Form 1-NR/PY, line 14g. Enter the result here and in line15 on Schedule Y. Part-year residents, multiplyline 6 by Form 1-NR/PY, line 2. Enter the resulthere and in line 15 on Schedule Y. .

Schedule ZOther CreditsBe sure to enclose with Form 1-NR/PY.

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.

26 2009 Form 1-NR/PY Instructions — Schedule Instructions

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). Ifyou qualify for the credit, complete Schedule EOACand 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 aparticipant for at least one full month after anyFull Employment Program subsidy for that par-ticipant has expired may claim the Full Employ-ment Credit. A qualified employer may claim acredit equal to $100 per month of eligible em-ployment per participant, with a maximum creditof $1,200 per participant. Qualified participantsand employers are those who participate in theFull Employment Program under the rules of theDepartment of Transitional Assistance (DTA). Afive-year carryover of any unused credit is al-lowed. If you qualify for this credit, completeMassachusetts Schedule FEC, Full EmploymentCredit, and enter the amount of credit in 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 expensesincurred to comply with the sewer system re-quirements of Title V as promulgated by theDepartment of Environmental Protection or to con-nect to a municipal sewer system pursuant to afederal court order, administrative consent order,state court order, consent decree or similar man-date. The amount of the credit is 40% of the cost,up to $15,000, for design and construction ex-penses for repair or replacement of a failedcesspool or septic system. The maximum aggre-gate amount of the credit is $6,000. A five-yearcarryover of any unused credit is allowed. See TIRs97-12, 98-8, 99-5, 99-20 and DOR Directive 01-6for more information. If you qualify for this credit,complete Massachusetts Schedule SC, SepticCredit, and enter 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 commenced beforeAugust 5, 2005. As a result of the recent legisla-tion, the environmental response action com-

mencement cut-off date is changed from August5, 2005 to August 5, 2011, and the time for incur-ring eligible costs that qualify for the credit is ex-tended to January 1, 2012. See TIR 06-16 for moreinformation. If you qualify for this credit, completeMassachusetts Schedule BC, Brownfields Credit,and enter the amount of credit in line 5. Also, besure to enter the DOR-issued certificate numberin the space provided on line 5. Certificate appli-cation forms and additional information are avail-able 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 available cred-its granted under section 42 of the Internal Rev-enue Code among qualified low-income housingprojects. A taxpayer allocated a federal low-incomehousing credit may also be eligible for a state creditbased on the credit amount allocated to a low-in-come housing project that the taxpayer owns. Afive-year carryforward of unused credit is allowed.See TIR 99-19 for more information. If you qual-ify 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 HistoricalCommission. 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,be sure to enter the DOR-issued certificate num-

ber in the space provided on line 8. Certificate ap-plication forms and additional information areavailable at 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 for 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 can claima credit equal to 100% of the user fees paid bythem when submitting certain medical device ap-plications 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-issued certificate number in the space provided online 9. Certificate application forms and additionalinformation are available at www.mass.gov/dor.

Line 10. Total Part 1 CreditsAdd lines 1 through 9 and enter the result in line10 and on Form 1-NR/PY, line 33. Part-year resi-dents, complete lines 11 through 13.

Part 2 Credits for Residents andPart-Year Residents OnlyLine 11. Income Tax Paid toAnother State or JurisdictionIncome Tax Paid to Another State: If all or part ofthe income reported on this return is subject totaxation in another state or specified jurisdictionand you have filed a return and paid taxes in theother state or jurisdiction, complete the followingworksheet to calculate the credit. Do not includetaxes paid to the U.S. government. (This creditdoes not apply to city or local taxes or corporateexcise tax.) You are allowed to claim a credit fortaxes paid to the following jurisdictions: (a) otherstates in the United States; (b) any territory or de-pendency of the United States (including PuertoRico, the Virgin Islands, Guam, the District of Co-lumbia); or (c) the Dominion of Canada or any ofits provinces (less any U.S. credit amount allow-able from U.S. Form 1116).

Note: Canada is the only foreign country for whichyou may claim a tax credit for income tax paid toanother state or jurisdiction on this worksheet.

The total credit which you calculate on this work-sheet is the smaller of the amount of taxes due toother jurisdictions (net of certain adjustments) orthe portion of your Massachusetts tax due onyour gross income that is taxed in such otherjurisdictions.

272009 Form 1-NR/PY Instructions — Schedule Instructions

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 youhad 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 interestincome (other than interest from Massachusettsbanks), dividends or capital gain income for 5.3%income in line 1. You must also substitute Sched-ule B, line 7 (interest and dividend income) andSchedule B, line 13 (taxable 12% capital gains) orSchedule D, line 12 (gross long-term capitalgains and losses), but not less than “0,” for Form1-NR/PY, line 12 in line 2 of the worksheet, andthe total of Form 1-NR/PY, line 24 multiplied by.053 (tax on interest and dividend income) andForm 1-NR/PY, line 27 (12% tax) or line 28 (taxon long-term capital gains) for Form 1-NR/PY,line 23 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% tax rate,substitute .0585 for .053 in line 4 of the worksheet.

Note: Be sure to enter the two-letter state or juris-dictional postal code for each state or jurisdictionfor which you are taking the credit. Visit theUnited States Postal Service’s website at www.usps.com and click on “Service Guides” for a listof these codes.

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

Note: If you have income other than from Form1-NR/PY, line 12 taxed by other jurisdictions,see instructions.

1. Enter the total 5.3% income included inForm 1-NR/PY, line 12 on which you paid taxesto another jurisdiction . . . . . . . . . . . 2. Enter the total of Form 1-NR/PY, line 12 andthe total Massachusetts bank interest or theinterest exemption amount, whichever is smaller,from Form 1-NR/PY, line 7a or line 7b3. Divide line 1 by line 2. Not greater than “1” . . . . . . . . . . . . . . . . . . . . . . 4. Multiply Form 1-NR/PY, line 23 by .053 . . . . . . . . . . . . . . . . . . . . . .

5. Enter any Limited Income Credit fromForm 1-NR/PY, line 32. . . . . . . . . . . 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. Ifyou qualify for the credit, complete Schedule EC,Residential Energy Credit, and enter the amountof credit in line 12.

Line 13. TotalsAdd lines 11 and 12. Part-year residents, enterthe result here and on Form 1-NR/PY, line 34.

Schedule RFOther Refundable Credits

Line 1. Refundable Film CreditMotion picture production companies qualify toelect a refundable film credit if they have nottransferred or carried forward a portion of the filmcredit for the production/certificate number to berefunded. Transferees of the film credit do notqualify for the refundable film credit. Transfereesshould claim their film credit on Schedule Z, line8.

If an election to refund the film credit for a pro-duction/certificate number is made, the entire filmcredit remaining after reducing tax liability andother credits will be refunded at 90%. A motionpicture production company that elects to claim arefund of the film credit is not permitted to seek apartial refund and a partial transfer or carryover ofthe credit. However, the refund can be applied asan estimated payment for the subsequent taxyear.

Enter in line 1 any amount of refundable filmcredit from Schedule RFC, Refundable FilmCredit, line 5.

Line 2. Refundable Dairy CreditThe Massachusetts dairy farmer tax credit wasestablished to offset the cyclical downturns inmilk prices paid to dairy farmers and is based onthe U.S. Federal Milk Marketing Order for the ap-plicable market. A taxpayer who holds a certifi-cate of registration as a dairy farmer pursuant toG.L. c. 94, s. 16A is allowed a refundable taxcredit based on the amount of milk produced andsold. The dairy farmer tax credit as originally en-acted was 90% refundable. Under recent legisla-tion, the dairy farmer 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-NR/PY, line 47.

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

12% Interest, Dividend and CertainCapital Gains and LossesNonresidents and part-year residents must fileMassachusetts Schedule B if you had:

◗ dividend income in excess of $1,500;◗ any interest income other than from Massachu-setts 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-1996 in-stallment sales classified as capital gain incomefor Massachusetts purposes;◗ gains or losses from the sale, exchange or invol-untary conversion of property used in a trade orbusiness;◗ net long-term capital gains and losses; or◗ excess exemptions.

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.

Nonresidents, interest and dividends are fromMassachusetts sources if they are directly con-nected with your trade or business activity inMassachusetts. Also, report on Massachusetts

28 2009 Form 1-NR/PY Instructions — Schedule Instructions

Schedule B, Part 2 the short-term gain or loss re-alized from the transaction of assets being sold orexchanged which are considered to be fromMassachusetts sources. Massachusetts sourceassets are (1) real or tangible personal propertylocated in Massachusetts and (2) property con-nected with a Massachusetts trade, business oremployment.

Nonresidents need not file Massachusetts Sched-ule B if:

◗ all your interest and dividend income and cer-tain capital gains was from non-Massachusettssources;

◗ all Massachusetts source interest income youhad was from Massachusetts banks and is taxedat 5.3% (reportable on Form 1-NR/PY, line 7a); or

◗ your Massachusetts source gross dividendincome was $1,500 or less (reportable on Form1-NR/PY, line 24).

Part-year residents, dividend income in excessof $1,500 or any interest income other than fromMassachusetts banks (reportable on Form1-NR/PY, line 7a) received while you were a resi-dent of Massachusetts, whether received fromsources inside or outside of Massachusetts, mustbe reported on Massachusetts Schedule B. Also,short-term gains or losses realized while you werea resident of Massachusetts, whether receivedfrom sources inside or outside of Massachusetts,from the sale or exchange of capital assets orfrom similar transactions which are granted capi-tal gain or loss treatment on your U.S. return mustbe reported on Schedule B. Include gains from allproperty, wherever located.

Part-year residents need not file MassachusettsSchedule B if all interest income you had that is tax-able by Massachusetts was from Massachusettsbanks (reportable on Form 1-NR/PY, line 7a), andyour gross dividend income was $1,500 or less (re-portable on Form 1-NR/PY, line 24), and you haveno short-term capital gains or losses, long-termgains on collectibles and pre-1996 installmentsales, gains or losses from the sale, exchange orinvoluntary conversion of property used in a tradeor business, allowable deductions from your tradeor business, carryover short-term losses fromprior years, net long-term capital gains or losses,or excess exemptions.

◗ Nonresidents and part-year residents mustcomplete Massachusetts Schedule B if your inter-est or dividend income includes: dividends taxeddirectly to trusts or estates on a MassachusettsFiduciary Return, Form 2; or distributions that arereturns of capital.

◗ You need not complete Schedule B, Part 2, Part3 and Part 4 if you do not have any of the follow-ing: short-term capital gains or losses; carryover

short-term losses from prior years; long-termgains on collectibles and pre-1996 installmentsales classified as capital gain income for Mass-achusetts purposes; gains or losses from the sale,exchange or involuntary conversion of propertyused in a trade or business and held for one yearor less; allowable deductions from your trade orbusiness; net long-term capital gains or losses; orexcess exemptions (see line 9 instructions).

Part 1. 12% Interest and DividendIncomeLine 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 and DividendsEnter 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 Scorporations not reported in Schedule B, line 2.Distributions in excess of the Massachusetts ac-cumulated adjustments account are dividends tothe extent of the corporation’s Massachusetts ac-cumulated earnings and profits. For more infor-mation, 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-NR/PY,line 7a (prior to the exemption amount being sub-tracted) only if it has been included in lines 1 or 3of this schedule.

Line 6. Other Interest and Dividendsto 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 obligationsof 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;

◗ Any interest on pre-retirement distributionsfrom state and municipal contributory pensionplans.

◗ Nonresidents. Any amounts included in lines 1,2 and 3 which you received from sources otherthan Massachusetts; or

◗ Part-year residents. Any amounts included inlines 1, 2 or 3 which you received while legallydomiciled in another state or country.

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;

292009 Form 1-NR/PY Instructions — Schedule Instructions

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).

Line 8. Allowable Deductionsfrom Your Trade or BusinessEnter the appropriate amount from MassachusettsSchedule C-2 if you qualify for an excess trade orbusiness deduction. Generally, taxpayers may notuse excess 5.3% deductions to offset other income.However, where the taxpayer files a MassachusettsSchedule C or Schedule E, Massachusetts law al-lows such offsets if the following requirements aremet: the excess 5.3% deductions must be adjustedgross income deductions allowed under MGL Ch.62, sec. 2(d); and these excess deductions mayonly be used to offset other income which is effec-tively connected with the active conduct of a tradeor business or any other income allowed underIRC, sec. 469(d)(1)(B) to offset losses from pas-sive activities.

Line 9. Subtotal Interest andDividend IncomeSubtract line 8 from line 7. If you have no short-term capital gains or losses, carryover short-termlosses from prior years, long-term gains on col-lectibles and pre-1996 installment sales classifiedas capital gain income for Massachusetts pur-poses, gains or losses from the sale, exchange orinvoluntary conversion of property used in a tradeor business and held for one year or less, allow-able deductions from your trade or business, netlong-term capital gains or losses, or excess ex-emptions, omit lines 10 through 37. Enter theamount from line 9 in line 38 of Schedule B and onForm 1-NR/PY, line 24, and omit lines 39 and 40 ofSchedule B. Otherwise, complete Parts 2, 3 and 4.

Part 2. Short-Term Capital Gainsand Losses and Long-Term Gains onCollectibles 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 Massachusettsamount. Possible differences include:

◗ Part-year residents, transactions conductedwhile you were legally domiciled in another stateor country;

◗ Nonresidents, transactions that were not asso-ciated with a trade or business in Massachusetts;

◗ 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 betweenMassachusetts and federal tax laws. For more in-formation regarding basis adjustment rules, seeTIR 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 oncollectibles and pre-1996 installment sales classi-fied as 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 MassachusettsSchedule C-2 if you qualify for an excess trade orbusiness deduction. Generally, taxpayers may notuse excess 5.3% deductions to offset other income.However, where the taxpayer files a MassachusettsSchedule C or Schedule E, Massachusetts law al-lows such offsets if the following requirements aremet: the excess 5.3% deductions must be adjustedgross income deductions allowed under MGL Ch.62, sec. 2(d); and these excess deductions mayonly be used to offset other income which is effec-tively connected with the active conduct of a tradeor business or any other income allowed underIRC, sec. 469(d)(1)(B) to offset losses from pas-sive 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 conver-sion of property used in a trade or business andheld for 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 19. Subtotal Interest andDividends and Certain CapitalGains and LossesCombine lines 15 through 18. If “0” or greater,omit lines 20 through 23 and enter the amountfrom line 19 in line 24. If less than “0,” completeline 20.

Line 20. Short-Term Losses AppliedAgainst Interest and DividendsEnter the smaller of line 9 or line 19 (consideredas a positive amount). Not more than $2,000.

Line 21. Available Short-TermLossesCombine 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) orSchedule D, line 12 in Schedule B, line 22 and inSchedule 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.

30 2009 Form 1-NR/PY Instructions — Schedule Instructions

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 (consid-ered as a positive amount) in Schedule B, line 25and 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 minus 50%of losses in lines 16, 17, 18 and 25, but not lessthan “0.”

Example: Jack has a long-term capital gain on col-lectibles of $1,000 entered in line 11 and line 15.He does not have any other interest income (otherthan interest from Massachusetts banks) and div-idend income. Jack also has a short-term capitalloss of $100 entered in line 16 and a prior yearshort-term unused loss of $200 entered in line 18.Jack enters $350 in line 27: $500 (50% of $1,000)minus $150 (50% of $300) = $350.

Part 3. Adjusted Gross Interest,Dividends Short-Term Capital Gainsand Long-Term Gainson CollectiblesLine 31. Subtotal Interest andDividendsIf Schedule D, line 14 is “0” or greater, omit Sched-ule B, line 32 and enter the amount from ScheduleB, line 31 in Schedule B, line 33. If Schedule D,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 32 andSchedule D, Line 15. When completing the work-sheet, be sure to enter all losses as a positiveamount.

Part 4. Taxable Interest, Dividendsand Certain Capital GainsLine 36. Excess ExemptionsEnter the amount from line 5 of the Excess Exemp-tion Worksheet. Complete only if single, head ofhousehold or married filing a joint return andForm 1-NR/PY, line 22 is greater than Form1-NR/PY, line 21.

Long-Term Capital Losses Applied AgainstInterest and Dividends Worksheet for Sched-ule B, Line 32 and Schedule D, Line 15.Complete only if Schedule B, line 31 is apositive amount and Schedule D, line 14 isa 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 theX in the box to the left. Also, be sure to enclosewith Form 1-NR/PY.

Long-Term Capital Gains andLosses Excluding CollectiblesNonresidents. The long-term gain or loss realizedfrom the transaction of assets being sold or ex-changed which are considered to be from Mass-achusetts sources must be reported on Massachu-setts Schedule D. Long-term capital gains aregains on the sale or exchange or capital assets thathave been held for more than one year on the dateof sale or exchange. Long-term capital losses arelosses on the sale or exchange of capital assetsthat have been held for more than one year on thedate of sale or exchange. Massachusetts sourceassets are (1) real or tangible personal propertylocated in Massachusetts and (2) property con-nected with a Massachusetts trade, business oremployment.

Part-year residents. The long-term gains or lossesrealized while you were a resident of Massachu-setts, whether received from sources inside or out-side of Massachusetts, from the sale or exchangeof capital assets or from similar transactionswhich are granted capital gain or loss treatmenton your U.S. return, or any capital gains distribu-tions received, must be reported on Massachu-setts Schedule D. Include gains from all property,wherever located. Long-term capital gains aregains on the sale or exchange or capital assetsthat have been held for more than one year on thedate of sale or exchange. Long-term capital losses

are losses on the sale or exchange of capital as-sets that have been held for more than one yearon the date of 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).For a detailed explanation of the new law, see theDepartment’s Regulation on Capital Gains andLosses at 830 CMR 62.4.1.

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

◗ IRC sec. 1244 losses reported as ordinarylosses on your U.S. return must be reported onMassachusetts Schedule D;

◗ If you made a federal election under sec. 311 ofthe Tax Relief Act of 1997 to recognize gain on thedeemed sale of a capital asset held on January 1,2001, Massachusetts does not follow the federalrules at sec. 311 for determining the basis of theasset. See TIR 02-3. If you sold a capital asset in2009 for which you made a federal sec. 311 elec-tion, the Massachusetts initial basis will not be thefederal basis. The Massachusetts initial basis willbe determined as of the date the asset was firstacquired;

◗ 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 betweenMassachusetts and federal tax laws. For more in-formation regarding basis adjustment rules, seeTIR 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 forU.S. income tax purposes, it may be treated thesame way on your Massachusetts income tax re-turn. Gains from pre-1996 installment sales areclassified as either capital gains or ordinary incomeunder the Massachusetts law in effect on the datethe sale or exchange took place.

Gains from pre-1996 installment sales that areclassified as capital gains should be reported as12% income on Massachusetts Schedule B. If theasset was held for more than one year when itwas sold, the gain will be eligible for a 50% long-term deduction. Gains from pre-1996 installmentsales that are classified as capital gains included

312009 Form 1-NR/PY Instructions — Schedule Instructions

on Massachusetts Schedule D, line 3 should bereported on Massachusetts Schedule D, line 11(“Long-term gains on collectibles and pre-1996installment sales”). The amount of such gain isthen reported on Massachusetts Schedule B, Part2, 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-NR/PY, line 11 (“Other income”) and includedon Schedule X, line 4 and identified as “2009 gainfrom pre-1996 installment sale.”

Note: If you are reporting an installment sale oc-curring on or after January 1, 2003, report thosegains on Schedule D. If you are reporting capitalgains on installment sales that occurred duringJanuary 1, 1996 through December 31, 2002, donot file Schedule D. Instead, you must file Sched-ule D-IS, Installment Sales. Schedule D-IS can beobtained on 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 Massachu-setts gain is $1 million or greater, you must applyin writing to the Department of Revenue’s Install-ment Sales Unit. See TIR 04-28. The Commis-sioner of Revenue must approve your applicationto report the sale on the installment basis inMassachusetts before you file your return, andappropriate security must be posted. An explana-tory statement must be enclosed with each returnfor the life of the installment sale. For further in-formation contact the Installment Sales Unit at(617) 887-6950.

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

Line 2. Additional Long-TermCapital Gains and LossesEnter the gain or loss included in U.S. ScheduleD, 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. ScheduleD, 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. ScheduleD, 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 mutualfund or real estate investment trust included inU.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, PartII treated as capital gains or losses for Massachu-setts purposes (not included in lines 1 through 5above). These include ordinary gains from the saleof Section 1231 property, recapture amounts underSections 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. DifferencesNonresidents. Enter in line 9 any long-term capi-tal gains and losses included on Schedule D, lines1 through 7 which are not Massachusetts sourceincome and thus not taxable to you as a nonresi-dent. A nonresident’s capital gains and losses aresubject to tax if the gain or loss resulted from thesale or exchange of property connected with aMassachusetts trade or business or from theownership of real or tangible personal propertylocated in Massachusetts.

Part-year residents. Enter in line 9 any long-termcapital gains or losses included on Schedule D,lines 1 through 7 that occurred while you werelegally domiciled in another state or country duringthe taxable year.

Nonresidents and part-year residents. Enter hereany other differences between the gains or lossesreportable for Massachusetts tax purposes andthe gains or losses reported on U.S. Schedule D.For example:

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

◗ Massachusetts long-term capital gains orlosses from transactions reported as installmentsales for U.S. income tax purposes but not forMassachusetts; and

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

Line 10. Adjusted Capital Gainsand LossesExclude/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 DLine 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 Massachu-setts, for example, a long-term gain reported asinstallment sales for U.S. tax purposes but not forMassachusetts, add the amount in line 9 to theamount in 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 Massachusetts pur-poses 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-NR/PY, line 28.

32 2009 Form 1-NR/PY Instructions — Schedule Instructions

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, line24 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,line 24 is a positive amount, enter the smaller ofSchedule D, line 12 (considered as a positiveamount) or Schedule B, line 24 in Schedule D,line 13 and in Schedule 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, enterthe amount from Schedule D, line 14 in ScheduleD, line 16, omit Schedule D, lines 17 through 21and enter the amount from Schedule D, line 16 inSchedule D, line 22, and enter “0” on Form 1-NR/PY, line 28.

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, line16 is “0,” enter “0” in lines 17 through 20 andomit lines 21 and 22. If Schedule D, line 16 is aloss, omit lines 17 through 21 and enter theamount from line 16 in line 22.

Line 17. Allowable DeductionsFrom Your Trade or BusinessEnter the appropriate amount from MassachusettsSchedule C-2 if you qualify for an excess trade orbusiness deduction. Generally, taxpayers may notuse excess 5.3% deductions to offset other income.However, where the taxpayer files a MassachusettsSchedule C or Schedule E, Massachusetts law al-lows such offsets if the following requirements aremet: the excess 5.3% deductions must be adjustedgross income deductions allowed under MGL Ch.62, sec. 2(d); and these excess deductions mayonly be used to offset other income which is effec-tively connected with the active conduct of a tradeor business or any other income allowed underIRC, sec. 469(d)(1)(B) to offset losses from pas-sive activities.

Line 19. Excess ExemptionsEnter in line 19 the amount from line 8 of the Ex-cess Exemption Worksheet.

Line 21. Tax On Long-Term CapitalGainsMultiply line 20 by .053 (5.3%) and enter the re-sult here and in Form 1-NR/PY, line 28.

Note: If choosing the optional 5.85% tax rate,multiply line 20 by .0585 and enter the result hereand in Form 1-NR/PY, line 28.

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-NR/PY.

Substituting U.S. Schedule C-EZIf you are substituting U.S. Schedule C-EZ forMassachusetts Schedule C and there are no dif-ferences between the amounts reported on U.S.Schedule C-EZ and amounts that would be re-ported on Massachusetts Schedule C, write “NoMassachusetts Differences” on the top of U.S.Schedule C-EZ.

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

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 or were required tofile an employment, excise, estate, trust, or alcohol,tobacco and firearms tax return or employ contractlabor. If you do not have an EIN, leave the lineblank. Do not enter your SSN.

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 samebasis. If a taxpayer requesting permission tochange an accounting method for Massachusettspurposes is eligible for an automatic change of ac-counting method federally, and has correctly fol-lowed the most recently issued federal revenueprocedure for requesting an automatic change,then the taxpayer should file his/her annual returnusing the new method and write at the top, “Auto-matic Change of Accounting Method — Filed incompliance with DOR Directive 02-13.” The tax-payer should enclose a copy of federal Form3115, together with any required statements. SeeDOR Directive 02-13 for further information.

Material ParticipationIndicate if you materially participated in the opera-tion 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 interest (otherthan from Massachusetts banks) and dividend,exclude this income from lines 1 and 4 on Mass-achusetts Schedule C and include it in line 32 andin Schedule B, line 3. Examples of interest (otherthan from Massachusetts banks) and dividend in-come are interest received on loans, notes receiv-

332009 Form 1-NR/PY Instructions — Schedule Instructions

able or charge accounts that you accept in the or-dinary course of business, and dividends onstocks received in payment for goods and services.Capital gains from the sale or exchange of assetsused in your business are not reported on Sched-ule C. Use U.S. Form 4797 and report the amountin Form 1-NR/PY, Schedule B and/or Schedule D.You must also exclude from Schedule C any in-come and expenses that pertain to activities foryourself as distinguished from those performed foryour customers. Such income must be reportedby class of income in Schedules B and D. Personalexpenses 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 7. Bad Debts From Salesor ServicesInclude 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.

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, 2009the 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 22. TravelEnter your expenses for lodging and transporta-tion connected with overnight travel for businesswhile away from your tax home. Generally, yourtax home is your main place of business regard-less of where you maintain your family home. Youcannot deduct expenses paid or incurred in con-nection with employment away from home if thatperiod of employment exceeds one year. Spouse’sand other family members’ travel expenses aregenerally disallowed as a business deduction.

Do not include expenses for meals and entertain-ment on this line. Instead, see the instructions forlines 23a and 23b.

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 ifthey are (a) directly related to or associated withthe conduct of your trade or business, (b) not lav-ish or extravagant and (c) incurred while you oryour employee is present at the meal. Club duesare not allowed 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 andreported on Form 1099-MISC. Figure how muchof the amount on line 23a is subject to the 50%limit. Then, enter 50% of that amount on line 23b.This amount should be subtracted from theamount in line 23a. Enter the result in line 23 ofMassachusetts 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 taken inaddition to any other deduction for which the ren-ovation costs may qualify.

For more information, contact the Mass. Office ofBusiness Development by calling (617) 973-8600.

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 Form1-NR/PY, line 8 unless you answered “no” to thequestion on material participation on the front ofSchedule C. If you answered “no” to this question,complete a pro forma copy of U.S. Form 8582 thatreflects only income being reported on your Mass-achusetts return. Enter in Massachusetts Sched-ule C, line 31 your allowable loss calculated onForm 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.

Schedule R/NRBe sure to enclose with Form 1-NR/PY.

Part 1. Income AdjustmentsColumn AEnter the amount of income reported on your fed-eral return as modified as if it were received by afull-year Massachusetts resident. Refer to eachspecific line instruction for Form 1-NR/PY to de-termine income that should be added to or sub-tracted from the federal total.

Column BEnter the amount of income from column A thatyou received while a Massachusetts resident.

Column CEnter the amount of income from column A fromboth Massachusetts and non-Massachusettssources that you received while a nonresident.

Column DEnter the amount of income from column C fromMassachusetts sources that you received while anonresident.

See the instructions for a definition of Massachu-setts source income.

Refer to each specific line instruction for Form1-NR/PY to determine the income from Massachu-setts sources received during your nonresident pe-riod. Also see Form 1-NR/PY, line 13 instruction forthose nonresidents eligible to apportion income.

34 2009 Form 1-NR/PY Instructions — Schedule Instructions

If you received income from a business/professionreported on a Schedule C, while a Massachusettsresident and from Massachusetts sources while anonresident, you must complete a separate Mass-achusetts Schedule C for each period.

Column EAdd column B and column D. This is your total in-come received while a Massachusetts resident andreceived from Massachusetts sources while a non-resident. Enter the amount from column E in eachapplicable line on Form 1-NR/PY (see separate in-struction for Schedule D). Subtract the total of col-umn D from column C and enter the result in line14e of Form 1-NR/PY. This is the additional in-come that you received from non-Massachusettssources that would have been reported by you ifyou had been a Massachusetts resident.

Add Form 1-NR/PY lines 5 through 12 and com-plete Form 1-NR/PY line 14 before completing therest of this worksheet.

Schedule DEnter in column A the amount from Schedule D,line 8. Enter in column B the amount of incomefrom column A that you received while a Mass-achusetts resident. Enter in column C the amountof income from column A from both Massachu-setts and non-Massachusetts sources that you re-ceived while a nonresident. Enter the amount ofincome from column C from Massachusettssources that you received while nonresident. Sub-tract column D from column C and enter the result(plus any other applicable adjustments) in Sched-ule D, line 9. Complete Schedule D as otherwiseinstructed.

Part 2. Deduction and ExemptionAdjustmentsSchedule Y, line 9 is adjusted both in Sections Aand B. See Schedule R/NR to determine whichamounts are adjusted in Section A and Section B.

Section ALines 15a and 15bThe amounts reported in column A must be re-lated to income reported in Part 1, column B. Theamounts reported in column B must be related toincome reported in Part 1, column D. The columnC total cannot exceed $2,000.

Schedule Y, line 1The amounts reported in column A must be re-lated to income reported in Part 1, column B. Theamounts reported in column B must be related toincome reported in Part 1, column D. Completeseparate worksheets for columns A and B.

Schedule Y, line 2The amounts reported in column A must be re-lated to income reported in Part 1, column B or ona previous Massachusetts return. The amountsreported in column B must be related to incomereported in Part 1, column D or on a previousMassachusetts return.

Schedule Y, line 4The amounts reported in column A must be relatedto income reported in Part 1, line 5, column B. Theamounts reported in column B must be related toincome reported in Part 1, line 5, column D.

Schedule Y, line 5The amounts reported in column A must be relatedto income reported in Part 1, line 5, column B. Theamounts reported in column B must be related toincome reported in Part 1, line 5, column D.

Schedule Y, line 7The amounts reported in column A must be relatedto income reported in Part 1, line 8, column B. Theamounts reported in column B must be related toincome reported in Part 1, line 8, column D.

Schedule Y, line 9The amounts reported in column A must be re-lated to income reported in Part 1, column B. Theamounts reported in column B must be related toincome reported in Part 1, column D.

Note: If you are claiming a deduction for attor-ney’s fees and court costs involving certain unlaw-ful discrimination suits (Schedule Y, line 9), thepart-year resident portion of the deduction must bedirectly related to Massachusetts income as re-ported on Form 1-NR/PY, line 12 and should beincluded on Section A of Schedule R/NR. For thenonresident portion of the deduction, taxpayersmust use Section B of Schedule R/NR to determinethe amount of the deduction, only if it is directlyrelated to Massachusetts income as reported onForm 1-NR/PY, line 12. If it is not directly related toincome reported on Form 1-NR/PY, you are not al-lowed any deduction for the nonresident period.

Schedule Y, line 13The amounts reported in column A must be relatedto income reported in Part 1, line 6, column B. Theamounts reported in column B must be related toincome reported in Part 1, line 6, column D.

Schedule Y, line 14The amounts reported in columns A and B must berelated to income previously reported on Form 1or Form 1-NR/PY.

Column CAdd column A and column B and enter the totalin each applicable line of Form 1-NR/PY or Sched-ule Y.

Section BYou may claim only a deduction for either line 16or line 17. Refer to the Form 1-NR/PY instructionsto determine which deduction is better for you.

Line 16Complete the worksheet in Form 1-NR/PY instruc-tions through number 4 and enter that amount incolumn A. In column B enter the amount fromcolumn A that is related to your Massachusettsresident period. Subtract column B from columnA and enter the result in column C. Multiply theamount from column C by Form 1-NR/PY, line 14gand enter the result in column D. Add columns Band D and enter the result in column E and Form1-NR/PY, line 16.

Line 17If you have a dependent member(s) of householdunder age 12, or dependents age 65 or over as ofDecember 31, 2009, or disabled dependents andyou are not claiming an amount in line 16, enter$3,600, or $7,200 for two or more such depen-dents, in column A. Multiply the column A amountby Form 1-NR/PY, line 2 and enter the result incolumn B. Subtract the amount in column B fromcolumn A and enter the result in column C. Multi-ply the column C amount by Form 1-NR/PY, line14g and enter the result in column D. Add columnB and column D and enter the result in column Eand in Form 1-NR/PY, line 17.

Line 22In column A enter the amount from Form 1-NR/PY, line 4f. Multiply the column A amount byForm 1-NR/PY, line 2 and enter the result in col-umn B. Subtract the amount in column B fromcolumn A and enter the result in column C. Multi-ply the column C amount by Form 1-NR/PY, line14g and enter the result in column D. Add columnB and column D and enter the result in column Eand in Form 1-NR/PY, line 22.

Line 45Multiply the earned income credit amount fromyour U.S. Form 1040, line 64a; Form 1040A, line41a; or Form 1040EZ, line 9a by .15 (15%). Enterthe result in column A. If you choose to have theIRS compute your federal earned income credit,wait until the IRS notifies you of your federalearned income credit amount before entering anamount in column A. If you have not received yourearned income credit amount as computed by theIRS by April 15, 2010, you may file MassachusettsForm M-4868, Application for Automatic Six-Month Extension of Time to File Massachusetts In-come Tax Return. Multiply the amount in column Aby Form 1-NR/PY, line 2 and enter the result in col-umn B. Subtract the amount in column B from col-umn A and enter the result in column C. Multiplythe amount in column C by Form 1-NR/PY, line

352009 Form 1-NR/PY Instructions — Schedule Instructions

14g and enter the result in column D. Add columnB and column D and enter the result in column Eand in Form 1-NR/PY, line 45.

Schedule Y, line 3In column A enter the total alimony paid from U.S.Form 1040, line 31a. In column B enter the amountfrom column A paid while you were a Massachu-setts resident. Subtract the column B amount fromthe column A amount and enter the result in col-umn C. Multiply the column C amount by Form1-NR/PY, line 14g and enter the result in column D.Add column B and column D and enter the total incolumn E and in Form 1-NR/PY, Schedule Y, line 3.

Schedule Y, line 6In column A enter the total medical savings accountdeduction included in U.S. Form 1040, line 36.Multiply the column A amount by Form 1-NR/PY,line 2 and enter the result in column B. Subtractthe column B amount from the column A amountand enter the result in column C. Multiply the col-umn C amount by Form 1-NR/PY, line 14g andenter the result in column D. Add column B and Dand enter the total in column E and in Form1-NR/PY, Schedule Y, line 6.

Schedule Y, line 8In column A enter the total health savings accountdeduction from U.S. Form 1040, line 25. Multiplythe column A amount by Form 1-NR/PY, line 2 andenter the result in column B. Subtract the columnB amount from the column A amount and enterthe result in column C. Multiply the column Camount by Form 1-NR/PY, line 14g and enter theresult in column D. Add column B and D and enterthe total in column E and in Form 1-NR/PY, Sched-ule Y, line 8.

Schedule Y, line 9In column A enter any amount included in U.S.Form 1040, line 36 for attorney’s fees and courtcosts involving certain unlawful discriminationclaims (part-year residents and nonresidents, seenote). Multiply the column A amount by Form1-NR/PY, line 2. Subtract the column B amountfrom the column A amount and enter the result incolumn C. Multiply the column C amount by Form1-NR/PY, line 14g and enter the result in column D.Add column B and column D and enter the total incolumn E and in Form 1-NR/PY, Schedule Y, line 9.

Note: If you are claiming a deduction for attor-ney’s fees and court costs involving certain unlaw-ful discrimination suits (Schedule Y, line 9), thepart-year resident portion of the deduction must bedirectly related to Massachusetts income as re-ported on Form 1-NR/PY, line 12 and should beincluded on Section A of Schedule R/NR. For thenonresident portion of the deduction, taxpayersmust use Section B of Schedule R/NR to determinethe amount of the deduction, only if it is directlyrelated to Massachusetts income as reported onForm 1-NR/PY, line 12. If it is not directly related toincome reported on Form 1-NR/PY, you are not al-lowed any deduction for the nonresident period.

Schedule Y, line 10In column A enter the total student loan interestdeduction from U.S. Form 1040, line 33 or 1040A,line 18. Multiply the column A amount by Form1-NR/PY, line 2. Subtract the column B amountfrom the column A amount and enter the result incolumn C. Multiply the column C amount by Form1-NR/PY, line 14g and enter the result in column D.Add column B and D and enter the total in columnE and in Form 1-NR/PY, Schedule Y, line 10.

Schedule Y, line 11Complete the worksheet in Form 1-NR/PY instruc-tions through item 6 and enter that amount in col-umn A. Multiply the amount in column A by Form1-NR/PY, line 2 and enter the result in column B.Subtract the amount in column B from column Aand enter the result in column C. Multiply the col-umn C amount by Form 1-NR/PY, line 14g andenter the result in column D. Add column B andcolumn D and enter the result in column E and inSchedule Y, line 11.

Schedule Y, Line 12In column A enter the amount of interest paid onan undergraduate student loan(s) (see ScheduleY, line 12 instructions). Multiply the amount in col-umn A by Form 1-NR/PY, line 2 and enter the re-sult in column B. Subtract the amount in columnB from column A and enter the result in column C.Multiply the column C amount by Form 1-NR/PY,line 14g and enter the result in column D. Add col-umn B and column D and enter the result in col-umn E and in Schedule Y, line 12.

Schedule Y, Line 15Complete the worksheet in Form 1-NR/PY instruc-tions through item 6 and enter that amount in col-umn A (see Schedule Y, line 15 instructions). Mul-tiply the amount in column A by Form 1-NR/PY,line 2 and enter the result in column B. Subtractthe amount in column B from column A and enterthe result in column C. Multiply the column Camount by Form 1-NR/PY, line 14g and enter theresult in column D. Add column B and column Dand enter the result in column E and in ScheduleY, line 15.

Completing Form 1-NR/PYAfter entering the amounts from this worksheet inthe applicable lines of Form 1-NR/PY, completeForm 1-NR/PY, lines 28 through 52.

Note: In Form 1-NR/PY, line 41, only enter amountslisted as Massachusetts withholding.

Credit for Income Taxes Paid toAnother State or JurisdictionsYou may only claim a Credit for Income Taxes Paidto Another State or Jurisdictions on income re-ceived while a Massachusetts resident. Completethe Schedule Z, line 11 worksheet based on in-come received during your Massachusetts resi-dent period only.

36 2009 Form 1-NR/PY Instructions — Schedule Instructions

TTHHIISS PPAAGGEELLEEFFTT BBLLAANNKK

IINNTTEENNTTIIOONNAALLLLYY

38 2009 Massachusetts Income Tax Table at the 5.3% RateUse this table to calculate tax for taxable 5.3% income (line 25) of not more than $24,000.

Line 26 Instructions: To find your Tax on 5.3% Income (line 26), read down the tax table income column to the line containing the amount you en-tered in line 25. Then read across to the TAX column and enter this amount in line 26. If your taxable 5.3% income in line 25 is greater than $24,000,multiply the amount by .053. Enter the result in line 26.

Note: If choosing the optional 5.85% tax rate, multiply line 25 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 thosetaxpayers 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

93M 12/09 2010JMBPRINTOFF150103 partially printed on recycled paper

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.

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.

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