1     
SOCIAL SECURITY TAX AMENDMENTS

2     
2021 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Walt Brooks

5     
Senate Sponsor: Wayne A. Harper

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     federal 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          59-10-1042, 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 59-10-1042 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 credit.
53          (1) As used in this section:
54          (a) "Eligible [age 65 or older retiree] claimant" 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)] (c) "Joint filing status" [is as] means the same as that term is defined in Section
82     59-10-1018.
83          [(f)] (d) "Married filing separately status" means a married individual who:
84          (i) does not file a single federal individual income tax return jointly with that married
85     individual's spouse for the taxable year; and
86          (ii) files a single federal individual income tax return for the taxable year.
87          [(g)] (e) "Modified adjusted gross income" means the sum [of an eligible age 65 or
88     older retiree's or eligible under age 65 retiree's] of the following for an eligible claimant or, if
89     the eligible claimant's return under this chapter is allowed a joint filing status, the eligible
90     claimant and the eligible claimant's spouse:
91          (i) adjusted gross income for the taxable year for which a tax credit is claimed under
92     this section;
93          (ii) any interest income that is not included in adjusted gross income for the taxable
94     year described in Subsection (1)[(g)](e)(i); and
95          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
96     taxable year described in Subsection (1)[(g)](e)(i).
97          [(h)] (f) "Single filing status" means a single individual who files a single federal
98     individual income tax return for the taxable year.
99          (2) Except as provided in Section 59-10-1002.2 and [subject to] Subsections (3)
100     [through (5): (a)] and (4), each eligible [age 65 or older retiree] claimant may claim a
101     nonrefundable tax credit of $450 against taxes otherwise due under this part[; or].
102          [(b) each eligible under age 65 retiree may claim a nonrefundable tax credit against
103     taxes otherwise due under this part in an amount equal to the lesser of:]
104          [(i) $288; or]
105          [(ii) the product of:]
106          [(A) the eligible under age 65 retiree's eligible retirement income for the taxable year
107     for which the eligible under age 65 retiree claims a tax credit under this section; and]
108          [(B) 6%.]
109          [(3) A tax credit under this section may not be carried forward or carried back.]
110          (3) (a) An eligible claimant may not:
111          (i) carry forward or carry back the amount of a tax credit under this section that
112     exceeds the eligible claimant's tax liability for the taxable year; or
113          (ii) claim a tax credit under this section and a tax credit under Section 59-10-1042.
114          (b) An eligible claimant who qualifies for a tax credit under this section and a tax
115     credit under Section 59-10-1042 may elect whether to claim a tax credit under this section or a
116     tax credit under Section 59-10-1042.
117          (4) The [sum of the tax credits] tax credit allowed by Subsection (2) claimed on [one] a
118     return filed under this part shall be reduced by $.025 for each dollar by which modified
119     adjusted gross income for purposes of the return exceeds:
120          (a) for a federal individual income tax return that is allowed a married filing separately
121     status, $16,000;
122          (b) for a federal individual income tax return that is allowed a single filing status,
123     $25,000;
124          (c) for a federal individual income tax return that is allowed a head of household filing
125     status, $32,000; or
126          (d) for a return under this chapter that is allowed a joint filing status, $32,000.
127          [(5) For purposes of determining the ownership of items of retirement income under
128     this section, common law doctrine shall be applied in all cases even though some items of
129     retirement income may have originated from service or investments in a community property
130     state.]
131          Section 3. Section 59-10-1042 is enacted to read:
132          59-10-1042. Nonrefundable tax credit for social security benefits.
133          (1) As used in this section:
134          (a) "Head of household filing status" means the same as that term is defined in Section
135     59-10-1018.
136          (b) "Joint filing status" means the same as that term is defined in Section 59-10-1018.
137          (c) "Married filing separately status" means a married individual who:
138          (i) does not file a single federal individual income tax return jointly with that married
139     individual's spouse for the taxable year; and
140          (ii) files a single federal individual income tax return for the taxable year.
141          (d) "Modified adjusted gross income" means the sum of the following for a claimant
142     or, if the claimant's return under this chapter is allowed a joint filing status, the claimant and
143     the claimant's spouse:
144          (i) adjusted gross income for the taxable year for which a tax credit is claimed under
145     this section;
146          (ii) any interest income that is not included in adjusted gross income for the taxable
147     year described in Subsection (1)(d)(i); and
148          (iii) any addition to adjusted gross income required by Section 59-10-114 for the
149     taxable year described in Subsection (1)(d)(i).
150          (e) "Single filing status" means a single individual who files a single federal individual
151     income tax return for the taxable year.
152          (f) "Social security benefit" means an amount received by a claimant as a monthly
153     benefit in accordance with the Social Security Act, 42 U.S.C. Sec. 401 et seq.
154          (2) Except as provided in Section 59-10-1002.2 and Subsections (3) and (4), each
155     claimant on a return that receives a social security benefit may claim a nonrefundable tax credit
156     against taxes otherwise due under this part equal to the product of:
157          (a) the percentage listed in Subsection 59-10-104(2); and
158          (b) the claimant's social security benefit that is included in adjusted gross income on
159     the claimant's federal income tax return for the taxable year.
160          (3) (a) A claimant may not:
161          (i) carry forward or carry back the amount of a tax credit under this section that
162     exceeds the claimant's tax liability for the taxable year; or
163          (ii) claim a tax credit under this section and a tax credit under Section 59-10-1019.
164          (b) A claimant that qualifies for a tax credit under this section and a tax credit under
165     Section 59-10-1019 may elect whether to claim a tax credit under this section or a tax credit
166     under Section 59-10-1019.
167          (4) The tax credit allowed by Subsection (2) claimed on a return filed under this part
168     shall be reduced by $.025 for each dollar by which modified adjusted gross income for
169     purposes of the return exceeds:
170          (a) for a federal individual income tax return that is allowed a married filing separately
171     status, $22,500;
172          (b) for a federal individual income tax return that is allowed a single filing status,
173     $30,000;
174          (c) for a federal individual income tax return that is allowed a head of household filing
175     status, $45,000; or
176          (d) for a return under this chapter that is allowed a joint filing status, $45,000.
177          (5) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
178     commission may make rules governing the calculation and method for claiming the tax credit
179     described in this section.
180          Section 4. Retrospective operation.
181          This bill has retrospective operation for a taxable year beginning on or after January 1,
182     2021.