The inflation-adjusted amounts apply for tax year 2019, and therefore will not appear on tax returns until early 2020 (covering the 2019 tax year). Nevertheless, they are important to know now for tax-planning purposes.
The inflation-adjusted numbers will also aid tax professionals and taxpayers throughout 2019 as they make any needed adjustments to withholding or estimated payments, or for other purposes. The inflation-adjusted amounts are presented in the following tables.
Most taxpayers are able to claim the full amount of their applicable standard deduction. The same
is true for personal exemptions and dependency exemptions. However, if a taxpayer’s federal adjusted gross income (as modified for Rhode Island tax purposes) falls within a certain income range, the standard deduction amount – and the personal and dependency exemption amounts – are limited.
If income exceeds the range, the taxpayer cannot claim a standard deduction or personal or dependency exemption amount. The income ranges are listed in the following table.
Personal income tax: uniform rate schedule
The Division of Taxation has recalculated tax bracket ranges for tax year 2019, as required by statute. The changes were made to the Rhode Island personal income tax’s uniform tax rate schedule, which is used by all filers.
If the dollar figures in tax brackets remained constant, a taxpayer might be bumped into a higher bracket solely because of an annual wage increase that is intended to help the worker keep pace with inflation -- an outcome often referred to as “bracket creep.” To help offset the effects of bracket creep, the General Assembly adopted a provision that requires the tax brackets to be adjusted annually with inflation. (Standard deduction and exemption amounts are adjusted in similar fashion.) The effect can be seen in the following two tables: one for tax year 2018, the other for tax year 2019.
Trusts and estates: income tax rate schedule
The Division of Taxation has posted the income tax rate schedule for 2019 that will be used by
fiduciaries for many trusts and estates. As a convenience, tables for tax year 2018 and tax year 2019 appear below.
Withholding tables, W-4 withholding certificate
By December 31, 2018, the Division of Taxation plans to post on its website the booklet of income tax withholding tables for tax year 2019. Employers use the tables to calculate how much to withhold from an employee’s pay for Rhode Island personal income tax purposes.
The booklet will also include a copy of the 2019 version of Form RI W-4, “Employee’s Withholding Allowance Certificate.” Both documents will be available via the following website:
Social Security and pension modification amounts for TY 2018
The Division of Taxation has set key numbers associated with the Social Security and pension/annuity/401(k) modifications for the 2018 tax year. The Division has also established the maximum credit amount for the statewide property-tax relief credit (Form RI-1040H) for the 2018 tax year. These numbers apply retroactively to the tax year beginning on or after January 1, 2018, and will appear on forms and instructions during the filing season which begins in January 2019.
SOCIAL SECURITY
Rhode Island legislation enacted in 2015 established a new modification involving the personal income tax.
Effective for tax years beginning on or after January 1, 2016, the modification decreases federal adjusted gross income for Rhode Island purposes for qualifying taxpayers who receive Social Security benefits. In general, a taxpayer is eligible for the modification if all three of the following conditions are met:
- The taxpayer’s federal adjusted gross income (AGI) includes taxable income from Social Security;
- The taxpayer has reached “full retirement age” as defined by the Social Security Administration; and
- The taxpayer’s federal AGI is below a certain amount (see table below).
PENSIONS, 401(K) PLANS, MILITARY RETIREMENT PAY, ANNUITIES, ETC.
Rhode Island legislation enacted in 2016 established a new modification involving the personal income tax.
Effective for tax years beginning on or after January 1, 2017, the modification decreases federal adjusted gross income for Rhode Island purposes for qualifying taxpayers who receive income from private‐sector pensions, government pensions, 401(k) plans, 403(b) plans, military retirement pay, annuities, and/or certain other sources.
In general, a taxpayer is eligible for the modification if all three of the following conditions are
met:
- The taxpayer’s federal AGI includes taxable income from pensions, 401(k) plans, annuities, and/or other such sources;
- The taxpayer has reached “full retirement age” as defined by the Social Security Administration; and
- The taxpayer’s federal AGI is below a certain amount. (Please see table below.)
PROPERTY-TAX RELIEF CREDIT (FORM RI-1040H)
The Division of Taxation has set the maximum property-tax relief credit for the 2018 tax year. The credit is claimed on Form RI-1040H. The amount is listed in the table below.
No comments:
Post a Comment