State Taxation of Retirees: Retirement Exclusions, Property Tax Exemptions, and Unique Credits

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, January 24, 2023

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Course Materials

This webinar will highlight the many tax benefits available to seniors in the 50 states for tax practitioners preparing returns for older taxpayers. Our panel of state tax experts will explain retirement exclusions, property tax exemptions, and unique credits offered in specific states for tax practitioners preparing multistate returns.

Description

All 50 states offer some tax benefits to seniors. Many states exempt taxation of retirement income, while others provide a partial exclusion. While California taxes 401(k)s, IRAs, and government and private pensions, Georgia, for example, allows a $35,000 subtraction for taxpayers aged 62-64 and a $65,000 subtraction of retirement income for taxpayers 65 years of age or older.

Twelve states, including California, New York, and Washington, do not tax Social Security benefits. Nevada, Tennessee, and Texas are states with no income tax that would eliminate taxes on retirement income; however, these states often have higher property and other taxes.

In addition to income taxes, all states offer property tax relief for seniors. Many states allow increased exemptions, while others offer property tax credits. Propositions 60 and 90 in California allow persons older than 55 to sell their residences and move without a significant increase in property taxes.

Besides the obvious credits, many states offer unique tax savings opportunities for seniors. Among New York's credits are a credit for purchasing a defibrillator and a nursing home assessment credit. Tax practitioners preparing returns for seniors need to be aware of the tax benefits states offer for older Americans.

Listen as our panel of SALT experts reviews income, property, and other deductions and credits available to reduce taxes paid by retirees.

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Outline

  1. State Estate and Inheritance Taxes
    1. Residency Issues
  2. State Taxation/Exemption of Social Security Income
  3. State Taxation of Qualified Deferred Compensation and Pensions
    1. 4 USC Sec. 114 – only resident state can tax qualified deferred compensation/pensions
    2. State exemptions for 401K and pension income
  4. State Taxation of Non-Qualified Deferred Compensation
    1. No state exemptions for non-qualified deferred compensation
    2. State where the individual worked can tax non-qualified deferred compensation regardless of resident status
      1. Multi-year sourcing
      2. Issues with income streams from intangibles created while a resident
      3. Special Accrual Rule
  5. State Taxation on the Sale of a Business
    1. Sale of S or C Corp Stock
    2. Sale of a Partnership or LLC Interest
    3. Asset Sale
    4. Special Accrual Rules
  6. State Property Tax Exemptions for Seniors

Benefits

The panel will cover these and other key issues:

  • How Propositions 60 and 90 can save seniors significant tax dollars
  • Unique state credits available in New York for retirees
  • Retirement exclusions available in specific states
  • How states tax Veterans' retirement income
  • Property tax exemptions and credits available in certain states

Faculty

Horowitz, Barry
Barry H. Horowitz, CPA, MST

Partner
WithumSmith+Brown

Mr. Horowitz has over 30 years of professional accounting experience and is the Team Leader of the...  |  Read More

Weinberg, Jonathan
Jonathan Weinberg, J.D., LL.M.

Principal
WithumSmith+Brown

Mr. Weinberg has extensive experience with income/franchise tax, sales and use tax, real estate transfer tax, and...  |  Read More

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