TAX NEWS - JUNE 2009

Retirees Tax FAQ - State of Georgia tax

Q. Does Georgia tax Social Security?

A. No. Taxable Social Security and Railroad Retirement on the Federal return are exempt from Georgia Income Tax. The taxable portion is subtracted on schedule 1 of form 500.


Q. Does Georgia offer any income tax relief for retirees?

A. Yes. A retirement exclusion is allowed provided the taxpayer is 62 years of age or older, or the taxpayer is totally and permanently disabled. Retirement income includes items such as: interest, dividends, net rentals, capital gains, royalties, pensions, annuities, and the first $4000.00 of earned income. Earned income is income from a trade or business, wages, salaries, tips, or other compensation. Refer to the instruction booklet for the amount of the exclusion and for additional information


Q. Can both my spouse and I qualify for the retirement exclusion?

A. Yes, but each must qualify separately.


Q. I am a part-year or nonresident. Am I allowed to take the retirement exclusion?

A. Part-year residents and nonresidents must prorate the retirement exclusion. Compute the retirement exclusion as if the taxpayer was a full-year resident, then prorate the exclusion. It is prorated using the ratio of Georgia source income before the retirement income exclusion (Form 500, Schedule 3, Line 8, Column C, computed without the retirement exclusion) to the Georgia adjusted gross income before the retirement income exclusion (Form 500, Schedule 3, Line 8, Column A, computed without the retirement exclusion).