Technical topics regarding tax preparation.
26-Jan-2023 2:39pm
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I have a client who has been receiving a pension from the Ohio Public Retirement System for many, many years.
He is a resident of the state of KY, and we have always excluded that from his KY returns for all of those years. KY is now saying that it is taxable income for KY. We have taken the stance that "one state cannot tax another states retirement income if it is State Government Retirement Income". I believe this goes back to a Federal Law from 1995. However, I am just going by memory and can't seem to find anything definitive on that.
Does anyone recall that provision?
Thanks
26-Jan-2023 3:13pm
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Davis decision I think.
And it was more like: a state cannot tax pension income of a nonresident.
I think KY is correct, unless they have a subtraction for pension income.
Last edited by
sjrcpa on 26-Jan-2023 7:53pm, edited 1 time in total.
26-Jan-2023 7:39pm
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Retired, no salvage value.
26-Jan-2023 7:46pm
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But wouldn't OH have a claim on the sourced income?
26-Jan-2023 7:49pm
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‘‘(a) No State may impose an income tax on any retirement
income of an individual who is not a resident or domiciliary of
such State (as determined under the laws of such State).
Retired, no salvage value.
26-Jan-2023 8:17pm
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I would report this as income to KY and take an appropriate deduction on KY Sched. M up to the limits for the retirement income exclusion for the year.
If they haven't already done so, they will likely assess all open years.
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