Effective for taxable years beginning
on or after January 1, 2009, individuals who receive income from a qualified retirement plan or an individual retirement account (IRA) may be able to subtract up to $5,000 of such retirement benefits when computing their Wisconsin income tax.
To qualify for the subtraction, the individual must be at least 65 years of age before the close of the taxable year for which the subtraction is being claimed, and meet the following income limitations for that year.
- If the individual is single or files as head of household, his or her federal adjusted gross income is less than $15,000.
- If the individual is married and files a joint return, the couple's federal adjusted gross income is less than $30,000.
- If the individual is married and files a separate return, the sum of both spouses' federal adjusted gross income is less than $30,000.
The subtraction does not apply to retirement benefits that are otherwise exempt from Wisconsin income tax. For example, an individual is receiving military retirement benefits that are exempt from Wisconsin income tax. The individual may not claim the $5,000 subtraction based on the military retirement benefits.
The subtraction will first be available on 2009 Wisconsin income tax returns (due April 15, 2010). Individuals who will qualify for the subtraction and who will be making estimated tax payments for 2009 may want to consider the subtraction when determining the amount of their estimated tax payments.
May 8, 2008