1     
SOCIAL SECURITY INCOME TAX AMENDMENTS

2     
2020 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Karen Mayne

5     
House Sponsor: ____________

6     

7     LONG TITLE
8     General Description:
9          This bill provides for an individual income tax credit for certain social security benefits.
10     Highlighted Provisions:
11          This bill:
12          ▸     defines terms;
13          ▸     enacts a tax credit for social security benefits that are included in the claimant's
14     modified adjusted gross income;
15          ▸     provides that an individual who claims the tax credit for social security benefits may
16     not also claim the retirement tax credit;
17          ▸     grants rulemaking authority to the State Tax Commission; and
18          ▸     makes technical and conforming changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides retrospective operation.
23     Utah Code Sections Affected:
24     AMENDS:
25          59-10-1002.2, as last amended by Laws of Utah 2016, Chapter 263
26          59-10-1019, as renumbered and amended by Laws of Utah 2008, Chapter 389
27     ENACTS:
28          59-10-1041, Utah Code Annotated 1953
29     

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 59-10-1002.2 is amended to read:
32          59-10-1002.2. Apportionment of tax credits.
33          (1) A nonresident individual or a part-year resident individual that claims a tax credit
34     in accordance with Section 59-10-1017, 59-10-1018, 59-10-1019, 59-10-1022, 59-10-1023,
35     59-10-1024, [or] 59-10-1028, or 59-10-1041 may only claim an apportioned amount of the tax
36     credit equal to:
37          (a) for a nonresident individual, the product of:
38          (i) the state income tax percentage for the nonresident individual; and
39          (ii) the amount of the tax credit that the nonresident individual would have been
40     allowed to claim but for the apportionment requirements of this section; or
41          (b) for a part-year resident individual, the product of:
42          (i) the state income tax percentage for the part-year resident individual; and
43          (ii) the amount of the tax credit that the part-year resident individual would have been
44     allowed to claim but for the apportionment requirements of this section.
45          (2) A nonresident estate or trust that claims a tax credit in accordance with Section
46     59-10-1017, 59-10-1020, 59-10-1022, 59-10-1024, or 59-10-1028 may only claim an
47     apportioned amount of the tax credit equal to the product of:
48          (a) the state income tax percentage for the nonresident estate or trust; and
49          (b) the amount of the tax credit that the nonresident estate or trust would have been
50     allowed to claim but for the apportionment requirements of this section.
51          Section 2. Section 59-10-1019 is amended to read:
52          59-10-1019. Definitions -- Nonrefundable retirement tax credits.
53          (1) As used in this section:
54          (a) "Eligible over age 65 [or older] retiree" means a claimant, regardless of whether
55     that claimant is retired, who[:] was born on or before December 31, 1952.
56          [(i) is 65 years of age or older; and]
57          [(ii) was born on or before December 31, 1952.]
58          [(b) (i) "Eligible retirement income" means income received by an eligible under age
59     65 retiree as a pension or annuity if that pension or annuity is:]
60          [(A) paid to the eligible under age 65 retiree or the surviving spouse of an eligible
61     under age 65 retiree; and]
62          [(B) (I) paid from an annuity contract purchased by an employer under a plan that
63     meets the requirements of Section 404(a)(2), Internal Revenue Code;]
64          [(II) purchased by an employee under a plan that meets the requirements of Section
65     408, Internal Revenue Code; or]
66          [(III) paid by:]
67          [(Aa) the United States;]
68          [(Bb) a state or a political subdivision of a state; or]
69          [(Cc) the District of Columbia.]
70          [(ii) "Eligible retirement income" does not include amounts received by the spouse of a
71     living eligible under age 65 retiree because of the eligible under age 65 retiree's having been
72     employed in a community property state.]
73          [(c) "Eligible under age 65 retiree" means a claimant, regardless of whether that
74     claimant is retired, who:]
75          [(i) is younger than 65 years of age;]
76          [(ii) was born on or before December 31, 1952; and]
77          [(iii) has eligible retirement income for the taxable year for which a tax credit is
78     claimed under this section.]
79          [(d)] (b) "Head of household filing status" [is as] means the same as that term is
80     defined in Section 59-10-1018.
81          [(e) "Joint filing status" is as defined in Section 59-10-1018.]
82          (c) "Joint filing status" means:
83          (i) spouses who file one return jointly under this chapter for the taxable year; or
84          (ii) a surviving spouse, as defined in Section (2)(a), Internal Revenue Code, who files
85     one federal individual income tax return for the taxable year.
86          [(f)] (d) "Married filing separately status" means a married individual who:
87          (i) does not file [a single] one federal individual income tax return jointly with that
88     married individual's spouse for the taxable year; and
89          (ii) files [a single] one federal individual income tax return for the taxable year.
90          [(g)] (e) "Modified adjusted gross income" means the sum of an eligible over age 65
91     [or older retiree's or eligible under age 65] retiree's:
92          (i) adjusted gross income for the taxable year for which a tax credit is claimed under
93     this section;
94          (ii) any interest income that is not included in adjusted gross income for the taxable
95     year described in Subsection (1)[(g)](e)(i); and
96          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
97     taxable year described in Subsection (1)[(g)](e)(i).
98          [(h)] (f) "Single filing status" means a single individual who files [a single] one federal
99     individual income tax return for the taxable year.
100          (2) Except as provided in Section 59-10-1002.2 [and subject to Subsections (3) through
101     (5): (a)] and Subsections (3) and (4), each eligible over age 65 [or older] retiree may claim a
102     nonrefundable tax credit of $450 against taxes otherwise due under this part[; or].
103          [(b) each eligible under age 65 retiree may claim a nonrefundable tax credit against
104     taxes otherwise due under this part in an amount equal to the lesser of:]
105          [(i) $288; or]
106          [(ii) the product of:]
107          [(A) the eligible under age 65 retiree's eligible retirement income for the taxable year
108     for which the eligible under age 65 retiree claims a tax credit under this section; and]
109          [(B) 6%.]
110          [(3) A tax credit under this section may not be carried forward or carried back.]
111          (3) An eligible over age 65 retiree may not:
112          (a) carry forward or carry back a tax credit under this section; or
113          (b) claim a tax credit under this section if a tax credit is claimed under Section
114     59-10-1041 on the same return.
115          (4) [The sum of the tax credits allowed by Subsection (2)] A tax credit described in this
116     section that is claimed on one return filed under this part [shall be] is reduced by $.025 for each
117     dollar by which modified adjusted gross income for purposes of the return exceeds:
118          (a) for a federal individual income tax return that is allowed a married filing separately
119     status, $16,000;
120          (b) for a federal individual income tax return that is allowed a single filing status,
121     $25,000;
122          (c) for a federal individual income tax return that is allowed a head of household filing
123     status, $32,000; or
124          (d) for a return under this chapter that is allowed a joint filing status, $32,000.
125          [(5) For purposes of determining the ownership of items of retirement income under
126     this section, common law doctrine shall be applied in all cases even though some items of
127     retirement income may have originated from service or investments in a community property
128     state.]
129          Section 3. Section 59-10-1041 is enacted to read:
130          59-10-1041. Nonrefundable tax credit for social security benefits.
131          (1) As used in this section:
132          (a) "Head of household filing status" means the same as that term is defined in Section
133     59-10-18.
134          (b) "Joint filing status" means:
135          (i) spouses who file one return jointly under this chapter for a taxable year; or
136          (ii) a surviving spouse, as defined in Subsection (2)(a), Internal Revenue Code, who
137     files one federal individual income tax return for a taxable year.
138          (c) "Married filing separately status" means a married individual who:
139          (i) does not file one federal individual income tax return jointly with that married
140     individual's spouse for the taxable year; and
141          (ii) files one federal individual income tax return for the taxable year.
142          (d) "Modified adjusted gross income" means the sum of a claimant's:
143          (i) adjusted gross income for the taxable year for which the claimant claims a tax credit
144     under this section;
145          (ii) any interest income that is not included in adjusted gross income for the taxable
146     year described in Subsection (1)(d)(i); and
147          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
148     taxable year described in Subsection (1)(d)(i).
149          (e) "Single filing status" means a single individual who files one federal individual
150     income tax return for the taxable year.
151          (f) "Social security benefit" means an amount received by a claimant as a monthly
152     benefit in accordance with the Social Security Act, 42 U.S.C. Sec. 401 et seq.
153          (2) Except as provided in Section 59-10-1002.2 and Subsections (3) and (4), a claimant
154     may claim a nonrefundable tax credit against taxes otherwise due under this part equal to the
155     product of:
156          (a) the percentage listed in Subsection 59-10-104(2); and
157          (b) the claimant's social security benefit that is included in adjusted gross income on
158     the claimant's federal income tax return for the taxable year.
159          (3) A claimant may not:
160          (a) carry forward or carry back a tax credit under this section; or
161          (b) claim a tax credit under this section if a tax credit is claimed under Section
162     59-10-1019 on the same return.
163          (4) A tax credit described in this section that is claimed on a return filed under this part
164     is reduced by $.025 for each dollar by which modified adjusted gross income for purposes of
165     the return exceeds:
166          (a) for a return that has a married filing separately status, $40,000;
167          (b) for a return that has a single filing status, $50,000;
168          (c) for a return that has a head of household filing status, $80,000; or
169          (d) for a return that has a joint filing status, $80,000.
170          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
171     commission may make rules governing the calculation and method for claiming a tax credit
172     described in this section.
173          Section 4. Retrospective operation.
174          This bill has retrospective operation for a taxable year beginning on or after January 1,
175     2020.