CT retired teacher

[Catherine]

From a colleague (EA) here who is not part of any tax forums online (silly wabbit).

For a CT resident who is a retired  teacher, on Schedule 1 of CT-1040, who is qualified to use line 45
to take 10% of income from  CT teacher's retirement system?  Who issues the 1099-R?
My friend is a retired teacher from Ellis Tech in Killington, CT.  His 1099-r is issued by the
State of CT.
 
My other question is with regards  to property tax credit table for limitation. Why was only the
Single file status threshold reduced to 47500?  This looks like a penalization for high earners who
are single.

[Catherine]

@Lion EA - any advice?

[Lion EA]

CT goofed on the property tax and now admits it:

http://www.ct.gov/drs/cwp/view.asp?Q=578316&A=1436

ERROR AFFECTING SOME RESIDENT STATE INCOME TAXPAYERS BEING CORRECTED

 

For Immediate Release:

Friday, March 18, 2016

 

Hartford – Connecticut Department of Revenue Services (DRS) Commissioner Kevin Sullivan issued the following statement.

 

“Late Thursday, DRS discovered that certain information provided to some resident income taxpayers claiming property tax credits was in error.  The error does not affect single filers claiming a property tax credit but does affect some other filers claiming the credit.  As a result, about 7% or approximately 120,000 of all resident income tax returns processed to date may have resulted in a higher credit to their tax liability. 

 

When we make a mistake, we own it and fix it immediately. In this case, we did not correctly inform taxpayers of the additional phase down of the property tax credit enacted by the General Assembly in the 2015 legislative session. This year the DRS will process 1.6 million resident state income returns and while this affects a relatively small number of income taxpayers, I apologize for our error and the inconvenience to those taxpayers.

 

Affected taxpayers who have already received refunds or whose tax payments were completed before the error was discovered will be notified in writing by DRS.  Those with a resulting underpayment will be billed without penalty or interest for the balance.  Those who already received a refund will be given the option of making repayment now or as an offset when filing for the next tax year, also without penalties.  Those whose returns were not processed prior to March 17^th will either receive a reduced refund or notice of additional tax to be paid.”

 

Additional Background and Information:

 

The Department of Revenue Services has discovered a miscalculation in the Property Tax Credit applied to the resident Personal Income Tax. For certain filing statuses in the 2015 income tax year, it is anticipated this miscalculation has resulted in about $11 to $12 million in underpayments of personal income taxes across fewer than 7% of income taxpayers.

 

 

As part of the biennial budget, there was a change to the Property Tax Credit as it applies to the Personal Income Tax, which reduced the income thresholds at which the credit would begin to phase-out for all filing statuses. That was due to take effect on July 1, 2015 and apply to the 2015 income tax year.

 

However, DRS’ system was only applying the change to the resident Property Tax Credit to individuals filing as Single. As a result of this miscalculation, individual taxpayers who file with the statuses of Married Filing Joint, Married Filing Separate, Qualifying Widower and Head of Household, who fall within the affected income thresholds, would either be underpaying or filing for refunds in amounts higher than they should have received. The Department of Revenue Services has stopped processing income tax returns that fit this criteria until the error is fixed.

[Lion EA]

The Form 1099-R must be from the CT Teachers' Retirement Board to qualify for the subtraction of 10% on the Form CT-1040.  And, the pension must have been included in gross income for federal income tax purposes, as well as be received from the state teachers' retirement system.

The percentage is due to increase each year: 10% for 2015, 25% for 2016, and 50% for 2017 and each year thereafter.

http://www.ct.gov/trb

Trying to compete with NY and MA retirement benefits, not to mention FL.

[Lion EA]

CT has only one real across-the-board-applies-to-anyone-who-owns-a-car-or-house deduction, and they were trying to penalize everyone by reducing it yet again.  But, they goofed on their tables and now want it back!

[Catherine]

Thank you SO much!  I have passed all the info along.  You're a pal.

[Lion EA]

Glad I can pay it back once in a great while!