Download Zipped Introduced WP 8.0 SB0029.ZIP 11,549 Bytes
[Status][Bill Documents][Fiscal Note][Bills Directory]
S.B. 29
1
INDIVIDUAL INCOME TAX - PERSONAL
2
EXEMPTIONS
3
2000 GENERAL SESSION
4
STATE OF UTAH
5
Sponsor: Howard C. Nielson
6
AN ACT RELATING TO THE INDIVIDUAL INCOME TAX ACT; ELIMINATING OVER A
7
FIVE-YEAR PERIOD THE ADDITION TO INCOME OF 25% OF A TAXPAYER'S FEDERAL
8
PERSONAL EXEMPTIONS; MAKING TECHNICAL CHANGES; AND PROVIDING FOR
9
RETROSPECTIVE OPERATION.
10
This act affects sections of Utah Code Annotated 1953 as follows:
11
AMENDS:
12
59-10-114, as last amended by Chapters 60, 131, 240 and 282, Laws of Utah 1999
13
Be it enacted by the Legislature of the state of Utah:
14
Section 1.
Section
59-10-114
is amended to read:
15
59-10-114. Additions to and subtractions from federal taxable income of an
16
individual.
17
(1) There shall be added to the federal taxable income of a resident or nonresident
18
individual:
19
(a) to the extent deducted from federal adjusted gross income as defined by Section 62,
20
Internal Revenue Code, in determining federal taxable income, the amount of any income tax
21
imposed by:
22
(i) this [or any predecessor Utah individual income tax law and the amount of any income
23
tax imposed by] chapter; or
24
(ii) the laws of:
25
(A) another state[,];
26
(B) the District of Columbia[,]; or
27
(C) a possession of the United States[, to the extent deducted from federal adjusted gross
28
income, as defined by Section 62, Internal Revenue Code, in determining federal taxable income];
29
(b) a lump sum distribution allowable as a deduction under Section [402(e)(3)] 402(d)(3),
30
Internal Revenue Code, to the extent deductible under Section 62(a)(8), Internal Revenue Code,
31
in determining federal adjusted gross income;
32
(c) [25% of the personal exemptions, as defined and calculated in the Internal Revenue
33
Code] the amount of personal exemptions provided for under Subsection (3);
34
(d) a withdrawal from a medical care savings account and any penalty imposed in the
35
taxable year if:
36
(i) the [taxpayer] individual did not deduct or include the amounts on [his] the individual's
37
federal tax return pursuant to Section 220, Internal Revenue Code; and
38
(ii) the withdrawal is subject to Subsections
31A-32a-105
(1) and (2); and
39
(e) the amount refunded to a participant under Title 53B, Chapter 8a, Higher Education
40
Savings Incentive Program, in the year in which the amount is refunded.
41
(2) There shall be subtracted from federal taxable income of a resident or nonresident
42
individual:
43
(a) (i) to the extent the interest or dividends are includable in gross income for federal
44
income tax purposes but exempt from state income taxes under the laws of the United States, [the]
45
interest or dividends on obligations or securities of:
46
(A) the United States [and] or its possessions; or [of any]
47
(B) an authority, commission, or instrumentality of the United States[, to the extent
48
includable in gross income for federal income tax purposes but exempt from state income taxes
49
under the laws of the United States, but]; and
50
(ii) the amount subtracted under [this] Subsection (2)(a)(i) shall be reduced by any:
51
(A) interest on indebtedness incurred or continued to purchase or carry the obligations or
52
securities described in [this] Subsection[,] (2)(a)(i); and [by any]
53
(B) expenses incurred in the production of interest or dividend income described in [this]
54
Subsection (2)(a)(i) to the extent that [such] the expenses, including amortizable bond premiums,
55
are deductible in determining federal taxable income;
56
(b) 1/2 of the net amount of any income tax paid or payable to the United States after
57
subtracting all allowable credits, as reported on the United States individual income tax return of
58
the [taxpayer] individual for the same taxable year;
59
(c) the amount of adoption expenses which, for purposes of this subsection, means any
60
actual medical and hospital expenses of the mother of the adopted child which are incident to the
61
child's birth and any welfare agency, child placement service, legal, and other fees or costs relating
62
to the adoption;
63
(d) subject to Subsection (4), amounts received by [taxpayers] an individual under age 65
64
as retirement income which, for purposes of this section, means pensions and annuities, paid from
65
an annuity contract:
66
(i) purchased by:
67
(A) an employer under a plan which meets the requirements of Section 404 (a)(2), Internal
68
Revenue Code[,]; or [purchased by]
69
(B) an employee under a plan which meets the requirements of Section 408, Internal
70
Revenue Code[,]; or
71
(ii) paid to an employee or the employee's surviving spouse by:
72
(A) the United States[,];
73
(B) a state[, or];
74
(C) a political subdivision [thereof,] of a state; or
75
(D) the District of Columbia[, to the employee involved or the surviving spouse];
76
(e) subject to Subsection (4), for each [taxpayer] individual age 65 or over before the close
77
of the taxable year, a $7,500 personal retirement exemption;
78
(f) 75% of the amount of the personal exemption, as defined and calculated in the Internal
79
Revenue Code, for each dependent child with a disability and adult with a disability who is
80
claimed as a dependent on [a taxpayer's] an individual's return;
81
(g) any amount included in federal taxable income that was received pursuant to any
82
federal law enacted in 1988 to provide reparation payments, as damages for human suffering, to
83
United States citizens and resident aliens of Japanese ancestry who were interned during World
84
War II;
85
(h) subject to [the limitations of] Subsection [(3)(e)] (5), amounts [a taxpayer] an
86
individual pays during the taxable year for health care insurance, as defined in Title 31A, Chapter
87
1, General Provisions:
88
(i) for:
89
(A) the [taxpayer] individual;
90
(B) the [taxpayer's] individual's spouse; and
91
(C) the [taxpayer's] individual's dependents; and
92
(ii) to the extent the [taxpayer] individual does not deduct the amounts under Section 125,
93
162, or 213, Internal Revenue Code, in determining federal taxable income for the taxable year;
94
(i) [except as otherwise provided in this subsection] subject to Subsection (6), the amount
95
of:
96
(i) a contribution made [in the tax year] on behalf of [the taxpayer] an individual to a
97
medical care savings account; and
98
(ii) interest earned on a contribution to a medical care savings account established pursuant
99
to Title 31A, Chapter [32] 32a, Medical Care Savings Account Act[, to the extent the contribution
100
is accepted by the account administrator as provided in the Medical Care Savings Account Act,
101
and if the taxpayer did not deduct or include amounts on his federal tax return pursuant to Section
102
220, Internal Revenue Code. A contribution deductible under this subsection may not exceed
103
either of the following:];
104
[(i) the maximum contribution allowed under the Medical Care Savings Account Act for
105
the tax year multiplied by two for taxpayers who file a joint return, if neither spouse is covered by
106
health care insurance as defined in Section
31A-1-301
or self-funded plan that covers the other
107
spouse, and each spouse has a medical care savings account; or]
108
[(ii) the maximum contribution allowed under the Medical Care Savings Account Act for
109
the tax year for taxpayers:]
110
[(A) who do not file a joint return; or]
111
[(B) who file a joint return, but do not qualify under Subsection (2)(i)(i); and]
112
(j) the amount included in federal taxable income that was derived from money paid by
113
the [taxpayer] individual to the program fund under Title 53B, Chapter 8a, Higher Education
114
Savings Incentive Program, not to exceed amounts determined under Subsection
53B-8a-106
(1)(d)
115
and investment income earned on participation agreements under Subsection
53B-8a-106
(1) when
116
used for higher education costs of the beneficiary; and
117
(k) for [tax] taxable years beginning on or after January 1, 2000, any amounts paid for
118
premiums [on] for long-term care insurance [policies] as defined in Section
31A-22-1402
to the
119
extent the amounts paid for long-term care insurance were not deducted under Section 213,
120
Internal Revenue Code, in determining federal taxable income.
121
(3) (a) For purposes of Subsection (1)(c) and this Subsection (3), "personal exemptions"
122
means the total dollar amount of personal exemptions a resident or nonresident individual may
123
claim:
124
(i) under Section 151, Internal Revenue Code; and
125
(ii) for:
126
(A) the individual;
127
(B) the individual's spouse; and
128
(C) the individual's dependents.
129
(b) For purposes of Subsection (1)(c), a resident or nonresident individual shall add the
130
following amounts to the individual's federal taxable income:
131
(i) for the taxable year beginning on or after January 1, 2000, but beginning on or before
132
December 31, 2000, 25% of the individual's personal exemptions;
133
(ii) for the taxable year beginning on or after January 1, 2001, but beginning on or before
134
December 31, 2001, 20% of the individual's personal exemptions;
135
(iii) for the taxable year beginning on or after January 1, 2002, but beginning on or before
136
December 31, 2002, 15% of the individual's personal exemptions;
137
(iv) for the taxable year beginning on or after January 1, 2003, but beginning on or before
138
December 31, 2003, 10% of the individual's personal exemptions;
139
(v) for the taxable year beginning on or after January 1, 2004, but beginning on or before
140
December 31, 2004, 5% of the individual's personal exemptions; and
141
(vi) for taxable years beginning on or after January 1, 2005, the individual may not be
142
required to add any personal exemptions to the individual's federal taxable income.
143
[(3)] (4) (a) For purposes of Subsection (2)(d), the amount of retirement income subtracted
144
for [taxpayers] an individual under 65 shall be the lesser of the amount included in federal taxable
145
income, or $4,800, except that:
146
(i) for married [taxpayers] individuals filing joint returns, for each $1 of adjusted gross
147
income earned over $32,000, the amount of the retirement income exemption that may be
148
subtracted shall be reduced by 50 cents;
149
(ii) for married [taxpayers] individuals filing separate returns, for each $1 of adjusted gross
150
income earned over $16,000, the amount of the retirement income exemption that may be
151
subtracted shall be reduced by 50 cents; and
152
(iii) for [individual taxpayers] an individual filing as a single taxpayer, for each $1 of
153
adjusted gross income earned over $25,000, the amount of the retirement income exemption that
154
may be subtracted shall be reduced by 50 cents.
155
(b) For purposes of Subsection (2)(e), the amount of the personal retirement exemption
156
shall be further reduced according to the following schedule:
157
(i) for married [taxpayers] individuals filing joint returns, for each $1 of adjusted gross
158
income earned over $32,000, the amount of the personal retirement exemption shall be reduced
159
by 50 cents;
160
(ii) for married [taxpayers] individuals filing separate returns, for each $1 of adjusted gross
161
income earned over $16,000, the amount of the personal retirement exemption shall be reduced
162
by 50 cents; and
163
(iii) for [individual taxpayers] an individual filing as a single taxpayer, for each $1 of
164
adjusted gross income earned over $25,000, the amount of the personal retirement exemption shall
165
be reduced by 50 cents.
166
(c) For purposes of Subsections [(3)] (4)(a) and (b), adjusted gross income shall be
167
calculated by adding to federal adjusted gross income any interest income not otherwise included
168
in federal adjusted gross income.
169
(d) (i) For purposes of determining ownership of items of retirement income common law
170
doctrine will be applied in all cases even though some items may have originated from service or
171
investments in a community property state.
172
(ii) Amounts received by the spouse of a living retiree because of the retiree's having been
173
employed in a community property state are not deductible as retirement income of such spouse.
174
[(e)] (5) For purposes of Subsection (2)(h), a subtraction for an amount paid for health care
175
insurance as defined in Title 31A, Chapter 1, General Provisions, is not allowed:
176
[(i)] (a) for an amount that is reimbursed or funded in whole or in part by:
177
(i) the [federal government,] United States;
178
(ii) the state[,]; or
179
(iii) an agency or instrumentality of:
180
(A) the [federal government] United States; or
181
(B) the state; and
182
[(ii)] (b) for [a taxpayer] an individual who is eligible to participate in a health plan
183
maintained and funded in whole or in part by the [taxpayer's] individual's employer or the
184
[taxpayer's] individual's spouse's employer.
185
(6) (a) An individual may subtract from the individual's federal taxable income a
186
contribution or interest earned on a contribution under Subsection (2)(i):
187
(i) to the extent the contribution is accepted by the account administrator as provided in
188
Title 31A, Chapter 32a, Medical Care Savings Account Act; and
189
(ii) if the individual did not deduct or include the amounts of the contribution or interest
190
earned on the contribution on the individual's federal individual income tax return pursuant to
191
Section 220, Internal Revenue Code.
192
(b) A contribution subtracted from federal taxable income under Subsection (2)(i) may not
193
exceed:
194
(i) for an individual described in Subsection (6)(c), the product of:
195
(A) the maximum contribution allowed under Title 31A, Chapter 32a, Medical Care
196
Savings Account Act, for the taxable year; and
197
(B) two; or
198
(ii) for an individual described in Subsection (6)(d), the maximum contribution allowed
199
under Title 31A, Chapter 32a, Medical Care Savings Account Act, for the taxable year.
200
(c) A contribution subtracted from federal taxable income under Subsection (2)(i) may not
201
exceed the amount described in Subsection (6)(b)(i) for an individual filing a joint return if:
202
(i) neither spouse filing the joint return is covered by:
203
(A) health care insurance as defined in Section
31A-1-301
; or
204
(B) a self-funded plan that covers the other spouse; and
205
(ii) each spouse filing the joint return has a medical care savings account.
206
(d) A contribution subtracted from federal taxable income under Subsection (2)(i) may not
207
exceed the amount described in Subsection (6)(b)(ii) for an individual who:
208
(i) does not file a joint return; or
209
(ii) files a joint return, but does not meet the requirements of Subsection (6)(c).
210
Section 2. Retrospective operation.
211
This act has retrospective operation for taxable years beginning on or after January 1, 2000.
Legislative Review Note
as of 1-11-00 3:45 PM
A limited legal review of this legislation raises no obvious constitutional or statutory concerns.