CT Teacher's Pension Exemption

[ATSMAN]

For 2018, CT allowed a 25% exemption on CT Teacher's Pension for state tax purpose. Is that still in effect for 2019?

Any CT Preparers?

[terryats]

From CT dept of revenue: Income Tax Exemption for Teachers’ Pensions For the taxable year 2019, a taxpayer is allowed a subtraction modification of 25% of the income received from the Teachers’ Retirement System when calculating Connecticut Adjusted Gross Income (AGI). This modification applies only to the extent that such income has been properly included in federal AGI for the taxable year. Underpayment Interest: Prior.Check this link for more info: https://portal.ct.gov/-/media/DRS/Fo...1219.pdf?la=en. By the way I am in WI, but I have internet

[Lion]

The 25% exemption for pensions from the CT Retired Teachers' Board still exists. (It was scheduled to step up each year, but on hold at 25%.) Also, CT has a new for 2019 returns 14% exemption for other pension and annuity income:

From the CT DRS Website:

Individuals receiving income from the Teachers’ Retirement System: Taxpayers may not claim the 25% Teachers’ Retirement System income subtraction modification and the 14% pension and annuity income subtraction modification for the same income. However, if a taxpayer filing an individual return or a joint return has income from the Teachers’ Retirement System and income from a pension or annuity that qualifies for the pension or annuity subtraction modification, then the taxpayer may claim both modifications.

For purposes of calculating the amount of the subtraction modification to report on the Connecticut income tax return (Line 48b, on Schedule 1 of the 2019 Form CT‑1040), the term “pension and annuity income” means the pension and annuity income reported on Line 4d of the 2019 federal Form 1040 or Form 1040‑SR, reduced by any military retirement pay and any Tier 1 and Tier 2 railroad retirement benefits. The amounts reported on Line 4d of the federal income tax return are the taxable distributions from retirement plans, including the following: Defined benefit plans; 401(k), 403(b) and governmental 457(b) plans; Military retirement pay; and Tier 1 and Tier 2 railroad retirement benefits. Taxpayers must reduce the amount reported on Line 4d of the federal income tax return by the amount of any military retirement pay and any Tier 1 and Tier 2 railroad retirement benefits. This is required because Connecticut already allows a separate subtraction modification for military retirement pay (Line 44, Schedule 1, Form CT‑1040), and for Tier 1 and Tier 2 railroad retirement benefits or supplemental annuities (Line 43, Schedule 1, Form CT‑1040).

A survivor or beneficiary of a plan participant may claim the 14% subtraction modification for Connecticut income tax purposes in the same manner as the plan participant would have been allowed to claim the modification, if such survivor or beneficiary is required to report the pension and annuity income on the federal income tax return in the same manner as the plan participant would have reported such income.

[ATSMAN]

Thanks for the quick response.

CT sure knows how to make things complicated. I have to check with my software support if this modification has been implemented. I seriously doubt it with all these state variations. I have to spend extra time checking state adjustments. I wish I was preparing returns in FL or TX on a day like today and no state return adjustments!

[Lion]

The CT adjustment for pensions from the TRB is undoubtedly there. It's been around for a few years and stuck at 25% for almost as long. (Although, even though hubby is a retired CT teacher, I missed finding it in the menu the first year for my first couple of retired teachers and had to amend.) I haven't looked for the new 14% CT adjustment yet. I have a software update coming Saturday night, so I'll look for it Sunday.

When the new CT adjustment was being talked about, I thought it was to be either 25% on teachers OR 14% on all pensions, including teachers. That would've required calculations to see which would be best for returns that have both types of pensions. But, it's still 25% for teachers PLUS 14% on other pensions and annuities. I like that, especially for our own return!

[ATSMAN]

But, it's still 25% for teachers PLUS 14% on other pensions and annuities. I like that, especially for our own return!

Quick question. I have another client who is a retired UConn professor. I believe she gets $19,900 in pension from State Comptroller Retirement Division, State of CT.

Is that 25% or 14% reduction??

[Lion]

NOT 25%. The Form 1099-R MUST come from the CT Retired Teachers' Board ONLY for 25%. But, I'm guessing it would be a 14% reduction on the CT return.

[ATSMAN]

NOT 25%. The Form 1099-R MUST come from the CT Retired Teachers' Board ONLY for 25%. But, I'm guessing it would be a 14% reduction on the CT return.

Thanks Lion.