Author Topic: State Income Tax calculations - Crowdsourcing request  (Read 772 times)

MDM

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State Income Tax calculations - Crowdsourcing request
« on: September 15, 2017, 11:34:01 PM »
Thanks to https://taxfoundation.org/state-individual-income-tax-rates-brackets-2017/, tax brackets, standard deduction, and exemption amounts for single and MFJ filers in all 50 states and DC have been loaded into the case study spreadsheet (CSS) with version 9.03.

Didn't think the CSS would ever have nearly this detail in state tax calcs, but the Tax Foundation spreadsheet eliminated a huge barrier by collecting all those numbers in one place.

As of this writing, the CSS assumes the taxable income for a state equals the federal AGI minus the state standard deductions and exemptions, and it ignores any state tax credits.  Specific state tax calculations are enabled by entering the state postal abbreviation in cell 'Calculations'!I35.  The brackets are in the 'State Brackets' tab, and the tax calculation is done in the 'State Tax' tab.

Your suggestions for improvements to this setup are welcome.  Suggestions phrased in Excel-ese would be great, but English language comments will likely work as well.  In particular, things such as "In this state, ..."
- ...the state EIC is X% of the federal EIC.
- ...Social Security benefits aren't taxed at all.
- ...only interest, dividends, and capital gains are taxed.
- ...HSA contributions are not deductible when calculating state taxable income.
- etc.
would be useful.

Some things may be too inconsequential or difficult to implement - the CSS remains non-commercial and not for actual tax filing - but when someone takes the time to make a suggestion, that in itself suggests the implementation may be worthwhile.

Either post suggestions here or PM me.


MMbergmann

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #1 on: September 18, 2017, 03:46:11 PM »
In Texas we have no state income tax. Does that help? Haha

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #2 on: September 18, 2017, 06:37:35 PM »
In Texas we have no state income tax. Does that help? Haha
Believe it or not, that one is already handled. :)

CareCPA

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #3 on: September 18, 2017, 09:31:13 PM »
In no particular order, for PA:
- Taxable wages include 401k contributions, since retirement withdrawals are state-tax free (similarly, early distributions are only partially-taxable since you paid income tax on the contributions going in).
- Losses from one class cannot offset income in another (i.e. business losses cannot reduce wages).
- We have a very complicated and cumbersome local income tax in addition to state taxes. Rates can vary wildly, and is calculated off the nonresident rate where you work, or the resident rate where you live.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #4 on: September 18, 2017, 09:54:44 PM »
- Taxable wages include 401k contributions,
and 403b, 457, and tIRA - correct?

Quote
since retirement withdrawals are state-tax free (similarly, early distributions are only partially-taxable since you paid income tax on the contributions going in).
Is How do I determine if my IRA withdrawals are subject to PA income tax? accurate enough (it is from 2002...)?

Appears both the above (aside from complications such as withdrawal of both basis and gain before age 59.5) can be handled.  Should be in the next update.  Thanks!

Quote
- Losses from one class cannot offset income in another (i.e. business losses cannot reduce wages).
Unless this is simpler than it looks, it's probably out of scope for what the CSS tries to cover.

Quote
- We have a very complicated and cumbersome local income tax in addition to state taxes. Rates can vary wildly, and is calculated off the nonresident rate where you work, or the resident rate where you live.
If this could be handled by, say, a single tax rate imposed on the state taxable income, that would be doable.  If the calculation of taxable income itself is complicated and cumbersome, then "out of scope" is the likely answer.

teen persuasion

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #5 on: September 19, 2017, 08:54:13 AM »
Let's see, for the stuff I know about for NYS (not NYC):

State EITC is 30% of federal EITC, but NY also subtracts a tiny little Household Credit from the end result.  Can't get both, yikes!

State CTC is 33% of federal CTC, but only for children AT LEAST 4 years old by Dec 31.  No idea why young kids don't count.  Age 17 cutoff is same as federal.

State tuition credit is $200 on qualified college tuition expenses <$5k, or 4% if total is >$5k but <=$10k max qualified college tuition expenses.  Only tuition counts, not fees or books, lab equipment, etc., unlike fed rules.  Interestingly, tuition paid by a NY 529 DOES count for the credit, also unlike fed rules.

teen persuasion

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #6 on: September 19, 2017, 09:32:47 AM »
For NYS, things I'm beginning to investigate for the future:

Social Security is not taxed.

Pension and annuity income (including IRA withdrawals) : after age 59.5, the first $20k is excluded annually.  If MFJ, each get a $20k exclusion, but you cannot use any of a spouse's unused portion (thus it only counts against your personal pension/annuity/IRA).

State/local/federal pensions seem to have their own additional exemption, not clear on the rules.

Heroes821

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #7 on: September 19, 2017, 09:37:34 AM »
I can't check the spreadsheet at the moment, and the 2017 tax year SC1040 for South Carolina is not available yet, but the personal exemption for children under the age of 6 is double the federal personal exemption for South Carolina for 2016 tax year, I doubt they removed that. 

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #8 on: September 19, 2017, 11:28:01 AM »
State EITC is 30% of federal EITC, but NY also subtracts a tiny little Household Credit from the end result.  Can't get both, yikes!

State CTC is 33% of federal CTC

Social Security is not taxed.
Done, thanks.

Quote
Pension and annuity income (including IRA withdrawals) : after age 59.5, the first $20k is excluded annually.  If MFJ, each get a $20k exclusion, but you cannot use any of a spouse's unused portion (thus it only counts against your personal pension/annuity/IRA).
Have been considering whether to provide/require more detailed income (e.g., Schedule C) and contributions (e.g., for saver's credit) per person.  This will add in favor of doing so....

Quote
State tuition credit is $200 on qualified college tuition expenses <$5k, or 4% if total is >$5k but <=$10k max qualified college tuition expenses.  Only tuition counts, not fees or books, lab equipment, etc., unlike fed rules.  Interestingly, tuition paid by a NY 529 DOES count for the credit, also unlike fed rules.
Probably won't include this, especially if it is not income-dependent (i.e., wouldn't affect a marginal rate).

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #9 on: September 19, 2017, 11:28:11 AM »
...but only for children AT LEAST 4 years old by Dec 31.  No idea why young kids don't count.  Age 17 cutoff is same as federal.
...the personal exemption for children under the age of 6 is double the federal personal exemption for South Carolina for 2016 tax year, I doubt they removed that. 
Currently don't ask for individual children's ages (other than asking the number of children who meet various federal cutoffs).  Probably won't add that anytime soon, at least not before asking for individual adults' situations (see previous post).  But it's on the list.... ;)

Heroes821

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #10 on: September 19, 2017, 12:30:10 PM »
...but only for children AT LEAST 4 years old by Dec 31.  No idea why young kids don't count.  Age 17 cutoff is same as federal.
...the personal exemption for children under the age of 6 is double the federal personal exemption for South Carolina for 2016 tax year, I doubt they removed that. 
Currently don't ask for individual children's ages (other than asking the number of children who meet various federal cutoffs).  Probably won't add that anytime soon, at least not before asking for individual adults' situations (see previous post).  But it's on the list.... ;)

Yeah I only brought it up because I was just reading that pdf from the state before I read this thread and I have 2/3 kids under 5 this year.

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #11 on: September 19, 2017, 12:43:47 PM »
...but only for children AT LEAST 4 years old by Dec 31.  No idea why young kids don't count.  Age 17 cutoff is same as federal.
...the personal exemption for children under the age of 6 is double the federal personal exemption for South Carolina for 2016 tax year, I doubt they removed that. 
Currently don't ask for individual children's ages (other than asking the number of children who meet various federal cutoffs).  Probably won't add that anytime soon, at least not before asking for individual adults' situations (see previous post).  But it's on the list.... ;)

Yeah I only brought it up because I was just reading that pdf from the state before I read this thread and I have 2/3 kids under 5 this year.
Appears you are more informed than the average bear.  Well done!  We have our own tax spreadsheet containing all our relevant nuances, but it would be much work to generalize it for others.  I don't envy the commercial folks who have to keep up with all the 40-some state income tax regulations - but, they do get paid for it....

McStache

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #12 on: September 19, 2017, 03:48:48 PM »
In MA, you can deduct 50% of your rent up to $6,000 (so a $3,000 max deduction)

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #13 on: September 19, 2017, 04:02:22 PM »
In MA, you can deduct 50% of your rent up to $6,000 (so a $3,000 max deduction)
Done, thanks.

Rubic

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #14 on: September 20, 2017, 09:34:53 AM »
In Tennessee we don't have a normal income tax (rather a pretty regressive sales tax), but we do have
the Hall Income Tax, applied to all taxable  interest and dividend income over $1250 per person
($2500 for married couples).

Last year (2016) it was reduced from 6% to 5% and is on track to be phased out at 1% per
year.

Personally it had no impact on my retirement plans, but my father was paying the 6% on
about $30K of taxable income, so the phase-out is meaningful to him.

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #15 on: September 20, 2017, 11:35:44 AM »
In Tennessee we don't have a normal income tax (rather a pretty regressive sales tax), but we do have
the Hall Income Tax, applied to all taxable  interest and dividend income over $1250 per person
($2500 for married couples).

Last year (2016) it was reduced from 6% to 5% and is on track to be phased out at 1% per
year.
Thanks!

Does that mean
- 2017 rate is 4%, and
- deduction is $1250 for single filers, and $2500 for MFJ, regardless of the number of dependents?

Rubic

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #16 on: September 20, 2017, 12:50:46 PM »
In Tennessee we don't have a normal income tax (rather a pretty regressive sales tax), but we do have
the Hall Income Tax, applied to all taxable  interest and dividend income over $1250 per person
($2500 for married couples).

Last year (2016) it was reduced from 6% to 5% and is on track to be phased out at 1% per
year.
Thanks!

Does that mean
- 2017 rate is 4%, and
- deduction is $1250 for single filers, and $2500 for MFJ, regardless of the number of dependents?

Correct.

Also, blind people and people over 65 years old whose total annual income is $37,000 or less
($68,000 for joint filers) are not subject to the Hall income tax.

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #17 on: September 20, 2017, 01:30:02 PM »
Correct.

Also, blind people and people over 65 years old whose total annual income is $37,000 or less
($68,000 for joint filers) are not subject to the Hall income tax.
Done, thanks - except it treats anything entered as interest or dividends as taxable, notwithstanding the official 9 categories of taxable and 13 categories of non-taxable in that document. ;)

CareCPA

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #18 on: September 20, 2017, 08:56:53 PM »
- Taxable wages include 401k contributions,
and 403b, 457, and tIRA - correct?
Correct. I was using "401k" in the generic sense, not the technical sense.

Quote
since retirement withdrawals are state-tax free (similarly, early distributions are only partially-taxable since you paid income tax on the contributions going in).
Is How do I determine if my IRA withdrawals are subject to PA income tax? accurate enough (it is from 2002...)?
I'll see if I can find anything more recent to double-check
Appears both the above (aside from complications such as withdrawal of both basis and gain before age 59.5) can be handled.  Should be in the next update.  Thanks!

Quote
- Losses from one class cannot offset income in another (i.e. business losses cannot reduce wages).
Unless this is simpler than it looks, it's probably out of scope for what the CSS tries to cover.
Yea, your formula would be dependent on income class and would have to be greater of 0 or taxable income by class

Quote
- We have a very complicated and cumbersome local income tax in addition to state taxes. Rates can vary wildly, and is calculated off the nonresident rate where you work, or the resident rate where you live.
If this could be handled by, say, a single tax rate imposed on the state taxable income, that would be doable.  If the calculation of taxable income itself is complicated and cumbersome, then "out of scope" is the likely answer.
I don't think it's easily implemented. I've moved a couple times in the few years. Some places my local tax rate was 1%,
 some it was 1.5%, and some it was 2%. It's going to be dependent on the school district and township that the individual lives in.
 Plus, taxable income for local purposes is only on "earned" income, so it isn't even the same taxable income as the state calculation.

Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

MDM

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Re: State Income Tax calculations - Crowdsourcing request
« Reply #19 on: September 28, 2017, 01:14:08 AM »
Various suggestions prior to this post have been incorporated in version 9.03. 
« Last Edit: September 28, 2017, 10:02:54 AM by MDM »