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Oklahoma Exclusions

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Question
What is Included in Oklahoma Exclusions Listed on Oklahoma's Tax Return?

Answer

Oklahoma Subtractions from Income Schedule 511-A

-Interest on U.S. Government Obligations If you report interest on bonds, notes and other obligations of the U.S. government on your federal return, this income may be excluded from your Oklahoma Adjusted Gross Income if a detailed schedule is furnished, accompanied with 1099s showing the amount of interest income and the name of the obligation from which the interest is earned. If the income is from a mutual fund which invests in U.S. government obligations, provide documentation from the mutual fund to substantiate the percentage of income derived from obligations exempt from Oklahoma tax. Interest from entities such as FNMA and GNMA does not qualify. Note: The capital gain/loss from the sale of an U.S. Government Obligation is exempt. Enter exempt gains on Schedule 511-A, line 11 and exempt losses on Schedule 511-B, line 8 

-Social Security Social Security benefits that are included in the Federal Adjusted Gross Income shall be subtracted. Provide a copy of your federal return.

-Federal Civil Service Retirement in Lieu of Social Security Each individual may exclude 100% of their retirement benefits received from the Federal Civil Service Retirement System (CSRS), including survivor benefits, paid in lieu of Social Security to the extent such benefits are included in the Federal Adjusted Gross Income. Enter your Retirement Claim Number from your Form CSA 1099-R or CSF 1099-R in the box on Schedule 511-A, line 3. Provide a copy of Form CSA 1099-R or CSF 1099-R with your return. To be eligible, such 1099-R must be in your name.

                 Note: Retirement benefits paid under the Federal Employees Retirement System (FERS) do not qualify for this exclusion, except:

                         · Retirement benefits containing both a FERS and a CSRS component, the CSRS component will qualify for the exclusion.

                         · The FERS Annuity Supplement (as authorized by Chapter 84 of Title 5 of the United States Code) paid to certain FERS retirees until eligible for social security at age 62, will qualify for the                                   exclusion.

               Provide substantiation for the CSRS component or FERS Annuity Supplement, such as a copy of your Notice of Annuity Adjustment.

-Military Retirement Each individual may exclude the greater of 75% of their retirement benefits or $10,000, but not to exceed the amount included in the Federal Adjusted Gross Income. The retirement benefits must be from any component of the Armed Forces of the United States.

-Oklahoma Government or Federal Civil Service Retirement Each individual may exclude their retirement benefits up to $10,000, but not to exceed the amount included in the Federal Adjusted Gross Income. (To be eligible, you must have retirement income in your name.) The retirement benefits must be received from the following: the civil service of the United States*, the Oklahoma Public Employees Retirement System of Oklahoma, the Oklahoma Teacher’s Retirement System, the Oklahoma Law Enforcement Retirement System, the Oklahoma Firefighters Pension and Retirement System, the Oklahoma Police Pension and Retirement System, the Employee retirement systems created by counties pursuant to 19 OS Sec. 951, the Uniform Retirement System for Justices and Judges, the Oklahoma Wildlife Conservation Department Retirement Fund, the Oklahoma Employment Security Commission Retirement Plan, or the Employee retirement systems created by municipalities pursuant to 11 OS Sec. 48-101. Provide a copy of Form 1099-R. 

-Other Retirement Income Each individual may exclude their retirement benefits, up to $10,000, but not to exceed the amount included in the Federal Adjusted Gross Income. For any individual who claims the exclusions for government retirees on Schedule 511-A, line 5, the amount of the exclusion on this line cannot exceed $10,000 minus the amounts already claimed on Schedule 511-A, line 5 (if less than zero, enter zero). The retirement benefits must be received from the following and satisfy the requirements of the IRC: an employee pension benefit plan under IRC Section 401, an eligible deferred compensation plan under IRC Section 457, an individual retirement account, annuity or trust or simplified employee pension under IRC Section 408, an employee annuity under IRC Section 403 (a) or (b), United States Retirement Bonds under IRC Section 86, or lumpsum distributions from a retirement plan under IRC Section 402 (e). Provide a copy of Form 1099-R or other documentation

-U.S. Railroad Retirement Board Benefits All qualified U.S. Railroad Retirement Board benefits that are included in the Federal Adjusted Gross Income may be excluded.

-Oklahoma Depletion Oklahoma depletion on oil and gas well production, at the option of the taxpayer, may be computed at 22% of gross income derived from each Oklahoma property during the taxable year. Any depletion deduction allowable is the amount so computed minus the federal depletion claimed. If Oklahoma options are exercised, the federal depletion not used due to the 65% limitation may not be carried over for Oklahoma purposes. A complete detailed schedule by property must be furnished. 

-Oklahoma Net Operating Loss Enter carryover(s) from previous years. Also enter the loss year(s). The loss year return must be filed to establish the Oklahoma Net Operating Loss. See the “Net Operating Loss” section on page 4. Also see Schedule 511-B, line 4.

-Exempt Tribal Income If the tribal member’s principal residence is on “Indian country” as defined in 18 U.S.C. Section 1151, the income earned on Indian country may be deducted. Legally acknowledged Indian country must be within the jurisdiction of the tribe of which he or she is a member. All claimants must provide sufficient information to support that these requirements have been satisfied.

            Provide the following information for tax year 2019:

                       a. A copy of your tribal membership card or certification by your tribe as to your tribal membership during the tax year; and

                       b. A copy of the trust deed, or other legal document, which describes the real estate upon which you maintained your principal place of residence and which was an Indian allotment, restricted,                              or held in trust by the United States during the tax year. If your name does not appear on the deed, or other document, provide proof of residence on such property; and

                      c. A copy of the trust deed, or other legal document, which describes the real estate upon which you were employed or performed work or received income and which was held by the United                                 States of America in trust for a tribal member or an Indian tribe or which was allotted or restricted Indian land during the tax year. Also a copy of employment or payroll records which show                               you are employed on that Indian country or an explanation of your work on Indian country; and

                     d. Any other evidence which you believe supports your claim that you meet all of the criteria for exemption from income tax. All information to support your claim for refund must be provided                                 with your return.

-Gains from the Sale of Exempt Government Obligations See the “note” for Schedule 511-A, line 1 and Schedule 511-B, line 1 instructions. Provide Federal Schedule D and Form 8949.

-Oklahoma Capital Gain Deduction You can deduct qualifying gains receiving capital treatment which are included in Federal Adjusted Gross Income. “Qualifying gains receiving capital treatment” means the amount of net capital gains, as defined under IRC Section 1222(11).

The qualifying gain must:

1) Be earned on real or tangible personal property located within Oklahoma that you have owned for at least five uninterrupted years prior to the date of the sale.

2) Be earned on the sale of stock or ownership interest in an Oklahoma headquartered company, limited liability company, or partnership where such stock or ownership interest has been owned by you for at least two uninterrupted years prior to the date of the sale.

3) Be earned on the sale of real property, tangible personal property or intangible personal property located within Oklahoma as part of the sale of all or substantially all of the assets of an Oklahoma headquartered company, limited liability company, or partnership or an Oklahoma proprietorship business enterprise or owned by the owners of such entity or business enterprise for a period of at least two uninterrupted years prior to the date of the sale

-Income Tax Refund Beginning tax year 2016, if you itemized your deductions on your federal return, you were required to add back state or local income tax to calculate Oklahoma itemized deductions. The refund of such taxes included on your federal return (Form 1040 or 1040-SR, Schedule 1, line 1) may be deducted. 

-Oklahoma Income Distributed by an Electing PTE If you are a member, either directly or indirectly, of an electing pass-through entity (PTE) subtract the Oklahoma income covered by the election pursuant to the provisions of the PassThrough Entity Act of 2019 (68 OS Sec 2355.1P-1 et seq.). 

 


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Article Details
Views: 1329 Created on: Jun 15, 2013
Date updated: Dec 09, 2019
Posted in: States, Oklahoma

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