COLORADO PENSION/ANNUITY/IRA SUBTRACTION

Technical topics regarding tax preparation.
#1
CO CPA  
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729
Joined:
17-Oct-2018 10:46am
Location:
Colorado (CO)
Per CO FYI #25:

WHO CAN CLAIM THE PENSION/ANNUITY SUBTRACTION
You can claim the pension/annuity subtraction if you received qualifying pension or annuity income (defined below) and
either:
 you were 55 years or older and the end of the tax year, or
 you received the qualifying pension or annuity income as a beneficiary because of the death of the person who
earned the pension or annuity.

From reading through this guidance, I believe a person under the age of 55 years old that has taxable income from RMD from inherited IRA should qualify to take a deduction for the amount of the RMD.

Any other CO CPAs here that can confirm? I can't find anything that says this is not the case.
 

#2
DAJCPA  
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869
Joined:
24-Apr-2014 1:05pm
Location:
Colorado
That is correct, a beneficiary under age 55 is eligible for the 20K subtraction for distributions from an inherited retirement account. You have to list the deceased SSN on the CO return. Also, often overlooked is the subtraction for retirement income passed through on a K-1 from an estate. The estate beneficiary can take subtraction for this as well.
 

#3
lucyko  
Posts:
933
Joined:
27-Jul-2014 10:19pm
Location:
Orange County,CA
I agree .The language for the Colorado adjustment to income for pensions and annuities is very broad and can even include IRA's and Social security benefits . (See Colorado Pub FYI Income 25) . Keep in mind there is a maximum subtraction of $20,000 for someone under age 55 for combined pension ,annuities, social security ,and IRA distributions .

Although taxable IRA distributions generally qualify for the subtraction any IRA distribution which has the 10 % penalty does not qualify .
 


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