MODIFICATIONS DECREASING FEDERAL AGI
Line 2a – Income from obligations of the United States Government to the extent included in adjusted gross income for federal tax purposes but exempt for state purposes. However, this amount shall be reduced by any investment interest incurred or continued on the obligation which has been taken as a federal itemized deduction. Example – US Government Series E bond interest. Taxpayers claiming these modifications must submit a schedule showing the source and amount of income claimed to be exempt. RIGL§44- 30-12(c)(1)
Line 2b – Rhode Island fiduciary adjustment under RIGL §44-30-17. A fiduciary adjustment is allowed for a beneficiary for income that maintains its character as it flows from the fiduciary. For example, if the estate or trust has tax exempt interest, the beneficiary would be allowed an adjustment for the tax exempt interest and would list that fiduciary adjustment on this line.
Line 2c – Elective deduction for new research and development facilities under RIGL §44-32-1.
Line 2d – Railroad Retirement benefits included in gross income for federal income tax purposes but exempt from state income taxes under the laws of the United States.
Line 2e – Qualifying investment in a certified venture capital partnership under RIGL §44-43-2.
Line 2f – Family Education Accounts under RIGL §44-30-25(f).
Line 2g – Tuition Saving Program (section 529 accounts) RIGL §44-30- 12(c)(4) - A modification decreasing federal adjusted gross income may be claimed for any contributions made to a Rhode Island account under the tuition savings program. The maximum modification shall not exceed $500, $1,000 if a joint return.
Line 2h – Exemptions from tax on profit or gain for writers, composers and artists residing within a section of the defined Economic Development Zone as defined in RIGL §44-30-1.1 within the cities of Newport, Providence, Pawtucket, Woonsocket or Warwick, or the Towns of Little Compton, Tiverton, Warren or Westerly and creating artistic works while a resident of the Zone. Taxpayers claiming these modifications must submit a schedule showing the source and amount of income claimed to be exempt.
Line 2i – Depreciation that has not been taken for federal purposes because of the bonus depreciation that must be subtracted from Rhode Island income - RIGL §44-61-1.
Line 2j – Depreciation that has not been taken for federal purposes because of the increased section 179 depreciation was not taken originally - RIGL §44-61-1.1.
Line 2k – Allowable modification for performance based compensation realized by an eligible employee under the Rhode Island Jobs Growth Act under RIGL §42-64.11-4.
Line 2l – Modification for exclusion for qualifying option under RIGL §44- 39.3 AND modification for exclusion for qualifying securities or investments under RIGL §44-43-8.
Line 2m – Modification for Tax Incentives for Employers under RIGL §44- 55-4.1. Attach Form RI-107.
Line 2n – Historic Structures - Tax Credit income, Historic Preservation Tax Credits 2013 income, Motion Picture Production Company Tax Credit income or Musical and Theatrical Production Tax Credit income reported on Federal return that is tax exempt under RIGL §44-33.2-3(e)(2), RIGL §44- 31.2-9(c), and RIGL §44-31.3-2(b)(6), respectively.
Line 2o – Active duty military pay of Nonresidents stationed in Rhode Island, as well as the income of their nonresident spouses for services performed in Rhode Island. Income for services performed by the servicemember’s spouse in Rhode Island would be exempt from Rhode Island income tax only if the servicemember’s spouse moves to Rhode Island solely to be with the servicemember complying with military orders sending him/her to Rhode Island. The servicemember and the servicemember’s spouse must also share the same non-Rhode Island domicile.
Not all income earned by the servicemember or his/her spouse is exempt from Rhode Island income tax. Non-military pay of the servicemember, as well as business income, gambling winnings or income from the ownership or disposition of real or tangible property earned from Rhode Island by either the servicemember or his/her spouse is still subject to Rhode Island income tax.
Note: The military servicemember and/or his/her spouse may be asked to submit proof of residency to support taking this modification.
Line 2p – Contributions to a Scituate Medical Savings Account deemed taxable under the Internal Revenue Code, but tax exempt under RIGL §44-30- 25.1(d)(1).
Line 2q - Amounts of insurance benefits for dependents and domestic partners included in Federal adjusted gross income pursuant to chapter 12 under title 36 under §44-30-12(c)(6).
Line 2r - Rhode Island full-year residents only. Up to $10,000 in unreimbursed expenses for travel, lodging and lost wages incurred by an individual as a result of the individual donating one or more of his/her organs to another human being for organ transplantation under RIGL §44-30-12(c)(7). Modification can only be taken once during the lifetime of the individual and is taken in the year that the human organ transplantation occurs.
Line 2s - Under RIGL §42-64.3-7 a domiciliary of an enterprise zone who owns and operates a qualified business facility in that zone may, for the first three years after certification, reduce federal AGI by $50,000 per year and may, for the fourth and fifth years, reduce federal AGI by $25,000 per year.
Line 2t - Income from the discharge of business indebtedness deferred under the American Recovery and Reinvestment Act of 2009 under §44-66- 1. When claimed as income on a federal tax return, this income may be reported as a decreasing modification to federal adjusted gross income to the extent it was previously included as Rhode Island income.
Line 2u – Total Modifications Decreasing Federal Adjusted Gross Income: Add lines 2a through 2t. Enter as a negative number.
Line 3 – Net Modifications to Federal Adjusted Gross income: Combine lines 1h and 2u. Enter the amount here and on RI-1040, page 1, line 2.