Tax Type
Declaration of Estimated Income Tax by Individuals
Individual Income Tax
Description
Pension income subtraction; Withholding adjustments for IRA subtractions
Topic
Subtractions and Exclusions
Taxable Income
Withholding of Tax
Date Issued
07-28-1989
July 28, 1989
Re: Request for Ruling/Individual Income Tax
Dear***************
This will reply to your letter dated June 29, 1989 in which you request a ruling on the taxability of income from individual retirement accounts (IRAs) under the new retirement income subtraction enacted by the 1989 Special Session of the General Assembly.
For taxable years beginning on and after January 1, 1989, Virginia law provides a subtraction from federal adjusted gross income of up to $16,000 in retirement income for each taxpayer aged 55 and over. The subtraction is based upon a taxpayer's total retirement income from all sources. As the enclosed summary of the key provisions of this recently enacted law illustrates,, the definition of "retirement income" includes income from IRAs. However, retirement income does not include Social Security benefits or ******** Retirement System benefits.
Additionally, regarding your question on the treatment of IRA income for estimated tax purposes, taxpayers eligible for the new subtraction may adjust their 1989 estimated tax payments by the amount of their expected tax savings. However, in order to avoid an addition to the tax for the underpayment of estimated tax, taxpayers must still pay 90% of their income tax liability throughout the year by means of withholding or estimated tax or have withholding and estimated payments equal to or greater than their previous year's tax liability.
If you have any further questions, please contact the department.
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner