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Delaware Subtractions

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Delaware Subtractions


U.S. Obligations
Interest received on obligations of the United States, and included on your federal tax return, is exempt from Delaware tax and should be entered. Failure to identify the payor on Federal Schedule B will result in the disallowance of the deduction. Interest received on obligations for which the United States is NOT the primary obligor or which are NOT guaranteed by the full faith and credit of the United States is not exempt from tax and may not be entered. (Examples are shown in the table below.)

Examples of

Examples of

U.S. Treasury Bill, Bonds (Series E, F, G, H), Certificates, Notes

Federal National Mortgage Association (Fannie Maes)

Export Import Bank

Federal Home Loan Mortgage Corp. 

Federal Deposit Insurance Corp.

Government National Mortgage Association (Ginnie Maes) 

Federal Farm Credit Bank

International Bank of Reconstruction and Development

Federal Intermediate Credit Banks 

Student Loan Marketing Association
(Sallie Maes)

Federal Land Banks 


Tennessee Valley Authority


Mutual Fund Dividends (Dollar amount or percentage directly attributed to a U.S. obligation, provided the Mutual Fund reports that amount to you.)


Pension Exclusion
Amounts received as pensions from employers (including pensions of a deceased taxpayer) may qualify for an exclusion from Delaware taxable income, subject to the limitations described below.

An early distribution from an IRA or Pension fund due to emergency reasons or a separation from employment does not qualify for the pension exclusion. If the distribution code(s) listed in Box 7 of your 1099 R(s) is a 1 (one), then that amount DOES NOT qualify for the pension exclusion. Also, if you were assessed an early withdrawal penalty on your Federal 1040, that amount DOES NOT qualify for the pension exclusion.

NOTE: Each taxpayer may receive ONLY ONE exclusion, even if he or she is receiving more than one pension or other retirement distribution. A husband and wife who each receive pensions are entitled to one exclusion each.

Disability pension income paid by your employer is reported as wages on the federal return, until you reach the minimum retirement age. Minimum retirement age generally is the age at which you can first receive a pension or annuity if you are not disabled. Therefore, Disability pension income would not qualify for the pension exclusion.

Delaware State Tax Refund
Delaware state tax refunds may be excluded to the extent they are included in federal adjusted gross income.

Fiduciary Adjustment
Net subtractions from fiduciary adjustments derived from income received from an estate or trust, as shown on your Federal Form K-1, BeneficiaryÆs Share of Income and Deductions, should be included.

Work Opportunity Credit
The law allows a deduction for the portion of wages paid but disallowed as a deduction for federal tax purposes by reason of claiming the work opportunity credit on the federal return. That portion of the deduction for wages, which is disallowed for federal purposes, should be included. In order to claim this modification, you must attach Federal Form 5884.

Delaware Net Operating Loss Carryovers
Taxpayers who were prevented in previous years from carrying federal net operating losses to their Delaware returns (because of Delaware’s
$30,000 limit on net operating loss carrybacks) are permitted to carry these additional losses


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Article Details
Views: 1375 Created on: Jun 15, 2013
Date updated: Jan 09, 2019
Posted in: States, Delaware

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