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 on Line 33. 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 on Line 33. (Examples are shown in the table below.)
Examples of INTEREST THAT IS EXEMPT
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Examples of INTEREST THAT IS NOT EXEMPT
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U.S. Treasury Bill, Bonds (Series E, F, G, H), Certificates, Notes
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Federal National Mortgage Association (Fannie Maes)
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Export Import Bank
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Federal Home Loan Mortgage Corp.
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Federal Deposit Insurance Corp.
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Government National Mortgage Association (Ginnie Maes)
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Federal Farm Credit Bank
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International Bank of Reconstruction and Development
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Federal Intermediate Credit Banks
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International Bank of Reconstruction and Development
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Federal Land Banks
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International Bank of Reconstruction and Development
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Tennessee Valley Authority
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International Bank of Reconstruction and Development
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Mutual Fund Dividends (Dollar amount or percentage directly attributed to a U.S. obligation, provided the Mutual Fund reports that amount to you.)
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Student Loan Marketing Association (Sallie Maes)
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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 Line 58 of 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, Beneficiary’s Share of Income and Deductions, should be included on Line 35.
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 entered on Line 35. In order to claim this modification, you must attach Federal Form 5884.
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