Tax Type
Individual Income Tax
Description
Computation of the age subtraction fortaxpayers age 62 and over.
Topic
Taxable Income
Date Issued
02-26-1991
IMPORTANT NOTICE
DATE: February 26, 1991
SUBJECT: 1990 Individual Income Tax: Age Subtraction
The 1991 General Assembly retroactively changed the computation of the age subtraction for a limited number of taxpayers age 62 and over.
THIS CHANGE AFFECTS ONLY THOSE TAXPAYERS WHO (1) RECEIVE SOCIAL SECURITY AND/ OR TIER 1 RAILROAD RETIREMENT ACT BENEFITS, AND (2) ARE:
-
- AGE 62-64 WITH FEDERAL ADJUSTED GROSS INCOME (FAGI) OF LESS THAN $6.000, OR
-
- AGE 65 AND OVER WITH FAGI OF LESS THAN $12,000.
No other taxpayers age 62 and over are affected by this change.
The change is effective for all taxable year 1990 returns, including returns already filed.
NEW Computation of the Age Subtraction
Taxpayers age 62-64 with FAGI less than $6,000 or age 65 and over with FAGI less than $12,000, should disregard the instructions for LINE 31 (ONLY) of the 1990 Form 760 and compute the subtraction as follows:
- Line 31: Enter on this line your and your spouse's FAGI PLUS Social Security and Tier 1 Railroad Retirement Act benefits received.
- Lines 32-35: Compute as currently instructed.
- NOTE: If a part-year resident or nonresident, see page 2.
Effect of Change / Examples
The following examples on page 2 illustrate the change:
Example 1: A 70-year old taxpayer has FAGI of $8,000 and Social Security of $9,000.
Line 31 FAGI + Social Security 17,000
Line 32 Maximum subtraction amount $12,000
Line 33 Subtraction base $12,000
(lesser of lines 31 and 32)
Line 34 Sum of Social Security and S 9,000
Tier 1 Railroad Retirement
Line 35 Subtraction (Line 33 - Line 34) $ 3,000
Example 2: A 63-year old taxpayer has FAGI of $5,500 and Social Security of $4,500.
Line 31 FAGI + Social Security $10,000
Line 32 Maximum subtraction amount $ 6,000
Line 33 Subtraction base $ 6,000
(lesser of lines 31 and 32)
Line 34 Sum of Social Security and $ 4,500
Tier 1 Railroad Retirement
Line 35 Subtraction (Line 33 - Line 34) $ 1,500
How to Take Advantage of the Change
If you have not filed your 1990 return, use the instructions on page 1 of this bulletin to compute the age subtraction. As long as you fully complete Part I (lines 31 - 35) of Form 760, the department will verify that you correctly computed the subtraction.
If you have already filed your 1990 return and fully completed Part 1, the department will recompute your age subtraction automatically. Where this results in a lower tax, the department will issue you a refund.
If you have already filed your 1990 return but did not fully complete Part 1, you will need to file an amended return. To assist the department, please note at the top of the amended return "RECOMPUTED AGE SUBTRACTION.
Nonresidents and Part-year Residents
Nonresidents should complete Schedule NPY, Part I as instructed except for line 1, where they need to enter their FAGI plus Social Security and Tier 1 Railroad Retirement benefits.
Part-year residents should fill out Schedule NPY, Part I as instructed, except as follows:
- Lines 1 and 6A should reflect FAGI plus Social Security and Tier 1 Railroad Retirement benefits (line 1 showing amounts received while a Virginia resident and line 6A showing total amounts received).
- The percentage computed on line 8 should be based on FAGI received while a Virginia resident divided by total FAGI (do not include Social Security or Railroad Retirement Act benefits in computation).
Rulings of the Tax Commissioner