Ga. Comp. R. & Regs. R. 560-7-4-.02 - Procedures Governing Retirement Income Exclusion. Amended
(1)
Eligibility. Eligibility is provided in O.C.G.A. §
48-7-27.
(2)
Married Filing Jointly. In
the case of a married couple filing jointly, each spouse shall if otherwise
qualified be individually entitled to exclude retirement income received by
that spouse up to the exclusion amount for such spouse. Taxpayers must qualify
on a separate basis. One spouse may not use any income attributable to the
other spouse in the calculation of his or her retirement exclusion. If property
is jointly owned, income derived is allocated to each taxpayer at 50 percent of
the total.
(3)
Effect on
Other Adjustments. The exclusion provided for in this paragraph shall
not apply to or affect and shall be in addition to those adjustments to net
income provided for under O.C.G.A. §§
48-7-27 and
48-7-28.2. Accordingly, the other
income and loss adjustments to Georgia taxable income that are required by
O.C.G.A. §§
48-7-27 and
48-7-28.2 shall be added or
subtracted first before computing the retirement income exclusion. Only
retirement income that is included in Georgia taxable income shall be included
when computing the retirement income exclusion.
(4)
Computation of the Exclusion.
(a) The amount of the exclusion shall
be determined based on O.C.G.A. §
48-7-27(a)(5)(A).
(b) Retirement Income.
1. For the purpose of this paragraph,
retirement income shall be divided into two parts, the unearned income portion
of the retirement income exclusion and the earned income portion of the
retirement income exclusion. The unearned income portion of the retirement
income exclusion shall include interest income, dividend income, net income or
loss from rental property that is not subject to Federal FICA tax or Federal
self employment tax, partnership income that is not subject to Federal FICA tax
or Federal self employment tax, income from an S-corporation in which the
taxpayer or the taxpayer's spouse does not materially participate and non trade
or business income from an S-corporation in which the taxpayer or the
taxpayer's spouse materially participates, capital gains or losses, income from
royalties, income from pensions and annuities, and other similar income. The
earned income portion of the retirement income exclusion is limited to no more
than $4,000.00 of an individual's earned income. This shall include, but not be
limited to, the net business income earned by an individual from any trade or
business carried on by such individual, net income or loss from rental property
that is subject to Federal FICA tax or Federal self employment tax, partnership
income that is subject to Federal FICA tax or Federal self employment tax,
trade orbusiness income from an S-corporation in which the taxpayer orthe
taxpayer's spouse materially participates, wages, salaries, tips, and other
employer compensation. For purposes of this paragraph, material participation
shall be determined in the same manner as provided in Internal Revenue Code
Section 469.
2. Retirement income shall not include income
received directly or indirectly from lotteries, gambling, illegal sources, or
similar income. Indirect income from lotteries, gambling, illegal sources, or
similar income shall include but not be limited to such income received through
partnerships, S corporations, limited liability companies, trusts, estates,
etc.
(c) The earned
income portion of the retirement income exclusion shall be computed separately
from the unearned income portion of the retirement income exclusion. For both
the earned income portion of the retirement income exclusion and the unearned
income portion of the retirement income exclusion, losses shall be offset
against income. If after each portion has been separately computed, either
portion is less than zero, the portion that is less than zero shall not be
offset against the other portion. For example, if the earned income portion of
the retirement exclusion is a negative $3,000 and the unearned income portion
of the retirement income exclusion is a positive $9,000, the total retirement
income exclusion that is allowed shall be $9,000.
(5)
Part-Year Residents and
Nonresidents.
(a) Part-year residents
and nonresidents must prorate the retirement income exclusion. The earned
income portion and the unearned income portion shall each be separately
prorated. Such portions shall be prorated using the ratio of Georgia source
retirement income to retirement income computed as if the taxpayer were a
resident of Georgia for the entire year.
(b) Example 1:
1. A taxpayer that is 62 years old has $1,000
of earned retirement income that is sourced to Georgia. The taxpayer has total
earned retirement income of $10,000 computed as if the taxpayer were a resident
of Georgia for the entire year. The earned income portion of the retirement
exclusion is $400 ($1,000 / $10,000 x $4,000).
2. The same taxpayer also has $5,000 of
unearned retirement income that is sourced to Georgia. The taxpayer has total
unearned retirement income of $50,000 computed as if the taxpayer were a
resident of Georgia for the entire year. The unearned income portion of the
retirement exclusion is $3,100 ($5,000 / $50,000 x $31,000 (maximum retirement
exclusion of $35,000 less the maximum earned income portion of $4,000)). The
taxpayer also has $7,000 of Georgia lottery winnings which are not retirement
income and therefore are not considered when computing the retirement
exclusion.
(c) Example
2:
1. A taxpayer that is 62 years old has
$1,000 of earned retirement income that is sourced to Georgia. The taxpayer has
total earned retirement income of $2,000 computed as if the taxpayer were a
resident of Georgia for the entire year. The earned income portion of the
retirement exclusion is $1,000 ($1,000 / $2,000 x $2,000).
2. The same taxpayer also has $5,000 of
unearned retirement income that is sourced to Georgia. The taxpayer has total
unearned retirement income of $50,000 computed as if the taxpayer were a
resident of Georgia for the entire year. The unearned income portion of the
retirement exclusion is $3,300 ($5,000 / $50,000 x $33,000 (maximum retirement
exclusion of $35,000 less the earned income of $2,000)). The taxpayer also has
$7,000 of Georgia lottery winnings which are not retirement income and
therefore are not considered when computing the retirement exclusion.
(6) Effective Date. The
provisions set forth in this regulation will apply to taxable years beginning
on or after January 1, 2011. Taxable years beginning before January 1, 2011
will be governed by the regulations of Chapter 560-7 as they exist before
January 1, 2011 in the same manner as if the amendments thereto set forth in
this regulation had not been promulgated.
Notes
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