Chapter 224
2009 -- S 0076
Enacted 11/09/09
A N A C T
RELATING TO TAXATION - PERSONAL INCOME TAX
Introduced By: Senators Blais, Miller, and Maher
Date Introduced: January 22, 2009
It is enacted by the
General Assembly as follows:
SECTION 1. Section 44-30-12 of the General Laws in Chapter
44-30 entitled "Personal
Income Tax" is hereby
amended to read as follows:
44-30-12.
Island income of a resident individual means his or
her adjusted gross income for federal income
tax purposes, with the modifications specified in this
section.
(b) Modifications
increasing federal adjusted gross income. - There shall be added to
federal adjusted gross income:
(1) Interest income on
obligations of any state, or its political subdivisions, other than
(2) Interest or
dividend income on obligations or securities of any authority, commission,
or instrumentality of the
extent exempted by the laws of the
income taxes;
(3) The modification
described in section 44-30-25(g);
(4) (i) The amount defined below of a
nonqualified withdrawal made from an account in
the tuition savings program pursuant to section
16-57-6.1. For purposes of this section, a
nonqualified withdrawal is:
(A) A transfer or
rollover to a qualified tuition program under Section 529 of the Internal
Revenue Code, 26 U.S.C. section
529, other than to the tuition savings program referred to in
section 16-57-6.1; and
(B) A withdrawal or
distribution which is:
(I) Not
applied on a timely basis to pay "qualified higher education
expenses" as defined
in section 16-57-3(12) of the beneficiary of the account
from which the withdrawal is made;
(II) Not made for a
reason referred to in section 16-57-6.1(e); or
(III) Not made in other
circumstances for which an exclusion from tax made applicable
by Section 529 of the Internal Revenue Code, 26 U.S.C.
section 529, pertains if the transfer,
rollover, withdrawal or distribution is made within two (2)
taxable years following the taxable
year for which a contributions modification pursuant to
subdivision (c)(4) of this section is taken
based on contributions to any tuition savings program
account by the person who is the
participant of the account at the time of the contribution,
whether or not the person is the
participant of the account at the time of the transfer, rollover,
withdrawal or distribution;
(ii) In the event of a
nonqualified withdrawal under subparagraphs (i)(A) or (i)(B) of this
subdivision, there shall be added to the federal adjusted gross
income of that person for the
taxable year of the withdrawal an amount equal to the lesser
of:
(A) The amount equal to
the nonqualified withdrawal reduced by the sum of any
administrative fee or penalty imposed under the tuition savings
program in connection with the
nonqualified withdrawal plus the earnings portion thereof, if any,
includible in computing the
person's federal adjusted gross income for the taxable year;
and
(B) The amount of the
person's contribution modification pursuant to subdivision (c)(4)
of this section for the person's taxable year of the
withdrawal and the two (2) prior taxable years
less the amount of any nonqualified withdrawal for the two
(2) prior taxable years included in
computing the person's
Any amount added to federal adjusted gross income
pursuant to this subdivision shall constitute
(5) The modification
described in section 44-30-25.1(d)(3)(i).
(c) Modifications
reducing federal adjusted gross income. - There shall be subtracted
from federal adjusted gross income:
(1) Any interest income
on obligations of the
extent includible in gross income for federal income tax
purposes, and any interest or dividend
income on obligations, or securities of any authority,
commission, or instrumentality of the
from state income taxes under the laws of the
subtracted shall in any case be reduced by any interest on indebtedness
incurred or continued to
purchase or carry obligations or securities the income of
which is exempt from
personal income tax, to the extent the interest has been
deducted in determining federal adjusted
gross income or taxable income;
(2) A modification
described in section 44-30-25(f) or section 44-30-1.1(c)(1);
(3) The amount of any
withdrawal or distribution from the "tuition savings program"
referred to in section 16-57-6.1 which is included in federal
adjusted gross income, other than a
withdrawal or distribution or portion of a withdrawal or
distribution that is a nonqualified
withdrawal;
(4) Contributions made
to an account under the tuition savings program, including the
"contributions
carryover" pursuant to paragraph (iv) of this subdivision, if any, subject
to the
following limitations, restrictions and qualifications:
(i)
The aggregate subtraction pursuant to this subdivision for any taxable year of
the
taxpayer shall not exceed five hundred dollars ($500) or one
thousand dollars ($1,000) if a joint
return;
(ii) The following
shall not be considered contributions:
(A) Contributions made
by any person to an account who is not a participant of the
account at the time the contribution is made;
(B) Transfers or
rollovers to an account from any other tuition savings program account
or from any other "qualified tuition program"
under section 529 of the Internal Revenue Code, 26
U.S.C. section 529; or
(C) A change of the
beneficiary of the account;
(iii) The subtraction
pursuant to this subdivision shall not reduce the taxpayer's federal
adjusted gross income to less than zero (0);
(iv)
The contributions carryover to a taxable year for purpose of this
subdivision is the
excess, if any, of the total amount of contributions
actually made by the taxpayer to the tuition
savings program for all preceding taxable years for which
this subsection is effective over the
sum of:
(A) The total of the subtractions
under this subdivision allowable to the taxpayer for all
such preceding taxable years; and
(B) That part of any
remaining contribution carryover at the end of the taxable year
which exceeds the amount of any nonqualified withdrawals during
the year and the prior two (2)
taxable years not included in the addition provided for in
this subdivision for those years. Any
such part shall be disregarded in computing the
contributions carryover for any subsequent
taxable year;
(v) For any taxable
year for which a contributions carryover is applicable, the taxpayer
shall include a computation of the carryover with the
taxpayer's
tax return for that year, and if for any taxable year on
which the carryover is based the taxpayer
filed a joint
jointly for a subsequent taxable year, the computation shall
reflect how the carryover is being
allocated between the prior joint filers; and
(5) The modification
described in section 44-30-25.1(d)(1).
(6) Amounts deemed
taxable income to the taxpayer due to payment or provision of
insurance benefits to a dependent, including a domestic partner
pursuant to chapter 12 of title 36
or other coverage plan.
(7) Modification for
organ transplantation. (i) An individual may subtract
up to ten
thousand dollars ($10,000) from federal adjusted gross income
if he or she, while living, donates
one or more of his or her human organs to another human
being for human organ transplantation,
except that for purposes of this subsection, "human
organ" means all or part of a liver, pancreas,
kidney, intestine, lung, or bone marrow. A subtract
modification that is claimed hereunder may be
claimed in the taxable year in which the human organ
transplantation occurs.
(ii) An individual
may claim that subtract modification hereunder only once, and the
subtract modification may be claimed for only the following
unreimbursed expenses that are
incurred by the claimant and related to the claimant's organ
donation:
(A) Travel expenses.
(B) Lodging expenses.
(C) Lost wages.
(iii) The subtract modification
hereunder may not be claimed by a part-time resident or a
nonresident of this state.
(d) Modification for
subtracted from federal adjusted gross income (as the case may
be) the taxpayer's share, as
beneficiary of an estate or trust, of the
section 44-30-17.
(e) Partners. - The
amounts of modifications required to be made under this section by a
partner, which relate to items of income or deduction of a
partnership, shall be determined under
section 44-30-15.
SECTION 2. This act shall take effect upon passage.
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LC00360
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