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Category: Wisconsin

Wisconsin Subtractions from Income

Medical Care Insurance - Code 01

You may be able to subtract all or a portion of the cost of your medical care insurance. "Medical care insurance" means a medical care insurance policy that covers you, your spouse, and dependents and provides surgical, medical, hospital, major medical, or other health service coverage (including dental insurance). If you are receiving social security benefits, the amount paid for medical care insurance includes the amount deducted from your monthly benefit for Medicare insurance (for example, Parts B and D). It does not include premiums for:

  • Long-term care insurance,
  • Life insurance policies
  • Policies providing payment for loss of earnings,
  • Policies for loss of life, limb, sight, etc.,
  • Policies that pay you a guaranteed amount each week for a stated number of weeks if you are hospitalized for sickness or injury,
  • The part of your car insurance premiums that provides medical insurance coverage for all persons injured in or by your car, or
  • Medical care insurance if you elected to pay these premiums with tax-free distributions from a retirement plan. In this case, the premiums would have been paid directly to the insurance provider by the retirement plan.

Caution: Do not include insurance premiums paid by an employer unless the premiums are included as wages in box 1 of your Form W-2. Premiums that are deducted pre-tax are not included in box 1 of your Form W-2. If you participate in your employer’s fringe benefit cafeteria plan and agree to a voluntary salary reduction in return for a medical care insurance benefit, you may not consider the amount of your salary reduction an amount you paid for medical care insurance. You cannot subtract premiums paid with money that has not been included in your gross income. Such programs may be known as, for example, flexible spending accounts, employee reimbursement accounts, etc.

Long-Term Care Insurance - Code 02

If you paid long-term care insurance costs during the year, you may be able to subtract all or a portion of the cost of a long-term care insurance policy which covers you or your spouse. "Long-term care insurance policy" means a disability insurance policy or certificate advertised, marketed, offered, or designed primarily to provide coverage for care that is provided in your home or in an institutional or community-based setting. The care must be convalescent or custodial care or care for a chronic condition or terminal illness.

"Long-term care insurance policy" does not include a medicare supplement policy or medicare replacement policy or a continuing care contract. "Continuing care contract" means a contract which provides nursing services, medical services, or personal care services, in addition to food, shelter, and laundry services, for the duration of a person’s life or for a term in excess of one year, conditioned upon any of the following payments:

  • An entrance fee in excess of $10,000.
  • Providing for the transfer of at least $10,000 (if the amount is expressed in dollars) or 50% of the person’s estate (if the amount is expressed as a percentage of the person’s estate) to the service provider upon the person’s death.

Do not include premiums for long-term care insurance if you elected to pay those premiums with tax-free distributions from a retirement plan. In this case, the premiums would have been made directly to the insurance provider by the retirement plan.

Tuition and Fee Expenses - Code 03

You may be able to claim a subtraction for up to $6,943 (per student) of the amount you paid during 2013 for tuition and mandatory student fees for you, your spouse (if married filing a joint return), and children whom you claim as dependents on your federal income tax return. Caution: If you have claimed a tuition and fees deduction on your federal return, be sure you have completed Wisconsin Schedule I. For additional information pertaining to the Tuition and Fees subtraction, please click here.

Military and Uniformed Services Retirement BenefitsCode 04

You may subtract retirement payments received from:

  1. The U.S. military retirement system (including payments from the Retired Serviceman’s Family Protection Plan or the Survivor Benefit Plan), and
  2. The U.S. government that relate to service with the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, or the commissioned corps of the Public Health Service.

Note: Your subtraction cannot be more than the amount of such retirement payments that you included in your federal income.

Local and State Retirement Benefits - Code 05

You may subtract any payments received from the retirement systems listed below provided:

  1. You were retired from the system before January 1, 1964, or
  2. You were a member of the system as of December 31, 1963, retiring at a later date and payments you receive are from an account established before 1964, or
  3. You are receiving payments from the system as the beneficiary of an individual who met either condition 1 or 2.

Note: Your subtraction cannot be more than the amount of such payments that you included in your federal income.

Federal Retirement Benefits - Code 06

You may subtract payments received from a federal retirement system provided:

  1. You were retired from the system before January 1, 1964, or
  2. You were a member of the system as of December 31, 1963, retiring at a later date and payments you receive are from an account established before 1964, or
  3. You are receiving payments from the system as the beneficiary of an individual who met either condition 1 or 2.

A "federal retirement system" is a United States government civilian employee retirement system. Examples of such retirement systems include the Civil Service Retirement System and the Federal Employees' Retirement System. Payments from the federal Thrift Savings Plan do not qualify for the subtraction.

Railroad Retirement Benefits, Railroad Unemployment Insurance, and Sickness Benefits - Code 07

Wisconsin does not tax amounts received from the U.S. Railroad Retirement Board. You may subtract railroad retirement benefits included on line 16b of your federal Form 1040 (line 12b of Form 1040A).

Adoption Expenses- Code 08

If you adopted a child for whom a final order of adoption was entered by a Wisconsin court during 2013, you may subtract up to $5,000 of the amount you paid for adoption fees, court costs, and legal fees relating to the adoption. You may include amounts paid during 2011, 2012, and 2013. Do not count amounts reimbursed under any adoption assistance program. If you adopt more than one child during the year, you may deduct up to $5,000 of adoption expenses for each child.

Recoveries of Federal Itemized Deductions-Code 09

Fill in any amount included as income on your federal tax return that is a recovery of a federal itemized deduction from a prior year for which you did not receive a Wisconsin tax benefit.

Example: You claimed an itemized deduction on your 2012 federal tax return for a casualty loss of $2,000. You could not claim the casualty loss for the itemized deduction credit on your 2012 Wisconsin income tax return. During 2013 you received a reimbursement of $1,000 from your insurance company for part of the casualty loss. The $1,000 reimbursement is included on your 2013 federal tax return as a recovery of an amount previously claimed as an itemized deduction. Because you did not claim the casualty loss for the itemized deduction credit for Wisconsin for 2012, the $1,000 is not taxable to Wisconsin for 2012. Fill in the $1,000 recovery on line 11.

Wisconsin Net Operating Loss Carry forward - Code 10

If you had a net operating loss (NOL) in an earlier year to carry forward to 2013, include the allowable amount on line 11.

Native Americans- Code 11

Certain income (for example, wages) earned by a Native American who both lives and works on his or her tribal reservation is not subject to Wisconsin income tax and may be subtracted.

Amounts Not Taxable by Wisconsin - Code 12

You may subtract any amounts not taxable by Wisconsin (less related expenses except those expenses which are used to calculate the Wisconsin itemized deduction credit) which have been included as income on your federal tax return or excluded from federal deductions.

Farm Loss Carryover - Code 13

If you were subject to farm loss limitations (see instructions for line 4, Item 01 for a description) on your 1998 or subsequent year Wisconsin income tax return, you may be able to claim a subtraction for all or a portion of the farm loss disallowed in those years. Farm losses disallowed as a deduction may be carried forward for 15 years to the extent that the farm losses are not offset against farm income of any year between the loss year and the year for which the carryover is claimed. The amount of carryover that can be subtracted is the lesser of (1) the farm loss carryover or (2) the net profits and net gains from the sale or exchange of capital or business assets in the current year from the same farming business or portion of that business to which the limits on deductible farm losses applied in the loss year.

Contributions to a Wisconsin State-Sponsored College Savings Program - Code 14

You may be able to subtract the amount you contributed to a Wisconsin state-sponsored college savings account(for example, EdVest or "tomorrow’s scholar"). The beneficiary of the account must be you, your spouse (if married filing joint return), your child, grandchild,great-grandchild, niece, or nephew. The subtraction is equal to the amount you contributed to the account during 2013, but not more than $3,000 per beneficiary ($1,500 per beneficiary if you are married filing a separate return). The total subtraction for a married couple may not exceed $3,000 per beneficiary.

Distributions from Wisconsin State-Sponsored College Savings and Tuition Programs - Code 15

If you included earnings from a qualified college savings or tuition program in your federal adjusted gross income, you may subtract that amount if either of the following applies:

  1. The earnings were due to a qualified withdrawal from a Wisconsin state-sponsored college savings account (for example, EdVest or "tomorrow’s scholar" college savings account).
  2. The earnings were from a Wisconsin EdVest tuition unit account and you received a refund because the beneficiary completed the program in which he or she was enrolled and had not used all of the tuition units purchased; or the beneficiary was awarded a scholarship, tuition waiver, or similar subsidy that could not be converted to cash.

Disability Income Exclusion - Code 16

If you are retired on permanent and total disability and have included your disability income on line 1 of Form 1, you may be able to subtract up to $5,200 of your disability income. You must meet ALL these tests:

  • You did not reach mandatory retirement age before January 1, 2013.
  • You were under age 65 on December 31, 2013.
  • You were permanently and totally disabled –
    a. when you retired, or
    b. on January 1, 1976, or January 1, 1977, if you retired before January 1, 1977, on disability or under circumstances which entitled you to retire on disability.
  • If you were married at the end of 2013, you must file a joint return.
  • You did not in any year prior to 1984 choose to treat your disability income as a pension instead of taking the exclusion.
  • Your federal adjusted gross income is less than $20,200 ($25,400 if married and both spouses are eligible).

Sale of Business Assets or Assets Used in Farming to a Related Person - Code 17

You may subtract the taxable portion of gain you realize from the sale or disposition to a related person of business assets or assets used in farming if the following conditions apply:

  • The related person is your child, grandchild, great-grandchild, parent, brother or sister, nephew or niece, grandparent, great-grandparent, or aunt or uncle. The person may be related to you by blood, marriage, or adoption.
  • The asset was held by you for more than 12 months.
  • The gain is treated as capital gain for federal tax purposes. Amounts treated as ordinary income do not qualify.

Gain on the sale or disposition of shares in a corporation or trust qualifies only if:

  • The number of shareholders or beneficiaries does not exceed 15. Lineal ancestors and descendants and aunts, uncles, and 1st cousins thereof count collectively as one shareholder or beneficiary. This collective authorization may not be used for more than one family in a single corporation or trust.
  • The corporation does not have more than two classes of shares.
  • All shareholders or beneficiaries, other than any estate, are natural persons.

For additional information pertaining to this subtraction, please click here.

Repayment of Income Previously Taxed- Code 18

If you had to repay during 2013, an amount that you included in your Wisconsin income in an earlier year, you may be able to subtract the amount repaid. A subtraction may be claimed only for repayments that are allowed as a miscellaneous itemized deduction on your federal Schedule A. If you did not itemize deductions for federal tax purposes, use the amounts that would be deductible if you had itemized deductions. To determine the amounts to use, complete a federal Schedule A. Note: Only amounts previously included in Wisconsin income may be claimed as a subtraction.

Human Organ Donation- code 19

If you, your spouse, or a person who is claimed as a dependent on your federal income tax return donates one or more of their human organs to another person for human organ transplantation, you may subtract up to $10,000 of unreimbursed expenses related to the organ donation. "Human organ" means all or part of a liver, pancreas, kidney, intestine, lung, or bone marrow. The subtraction may be claimed only in the taxable year in which the transplantation occurs. The subtraction may be claimed only once.

Up to $10,000 of the following unreimbursed expenses may be claimed:
• Travel expenses.
• Lodging expenses.
• Lost wages

Reserve or National Guard Members - code 20

If you were a member of the Reserves or National Guard and served on active duty, you may subtract any military pay that is included on your W-2 and was:

  • Received from the federal government,
  • Received after being called into active federal service or into special state service authorized by the federal Department of Defense, and
  • Paid for the time during which you were on active duty.

The subtraction only applies to Reserve or National Guard members called into active federal service under 10 USC 12302(a) or 10 USC 12304 or special state service under 32 USC 502(f). It does not apply to pay that members of the Reserves and National Guard receive for their weekend or two-week annual training. It also does not apply to a person who is serving on active duty or full-time duty in the active guard reserve (AGR) program.

Child and Dependent Care Expenses - Code 28

Do you qualify for the federal credit for child and dependent care expenses for 2012? If yes, you may qualify to claim the Wisconsin subtraction for child and dependent care expenses. If married, you must file a joint return unless (1) you lived apart from your spouse during the last six months of 2012, (2) the qualifying person lived in your home more than half of 2012, and (3) you provided over half the cost of keeping up your home.

Your Wisconsin subtraction is equal to the amount on line 6 of federal Form 2441, but not more than $1,500 if you have one qualifying person or $3,000 if more than qualifying person.

Relocated Business - Code 29

A subtraction may be claimed for the income of a business that relocated to Wisconsin from another state or country in 2011 or 2012. Please see Schedule RB for additional information.

 

Tax-Option (S) Corporation Adjustments (either addition or subtraction) - Code 51

Fill in any of the following adjustments that apply to you:

  1. If you were a shareholder of a tax-option (S) corporation which is required to file a Wisconsin franchise or income tax return, you will receive a Wisconsin Schedule 5K-1 from the S Corporation informing you of any adjustments to be made for Wisconsin tax purposes
  2. If you are a shareholder of a federal S corporation that elects not to be treated as a Wisconsin tax-option (S) corporation, you must reverse all items of S Corporation income, loss, or deduction included in your federal return and then add your pro rata share of any distributions made by the corporation of earnings and profits.
  3. Instead of using tax-option (S) corporation items deductible on federal Schedule A to compute the Wisconsin itemized deduction credit, you may elect to treat these items as subtraction modifications. Your subtraction is limited to the amount actually deductible for federal purposes.

Your Share of Partnership, Limited Liability Company, or Trust or Estate Adjustments (either addition or subtraction) - Code 52

If you were a member of a partnership or limited liability company (LLC) treated as a partnership, or you received income from an estate or trust, you will receive a statement from the partnership, LLC, trust, or estate notifying you of any additions or subtractions which you should make on your return. Fill in the amount of any such additions on line 4 and any subtractions on line 11.

 

Differences in Federal & WI Basis of Assets (either addition or subtraction) - Code 53

Additions or subtractions may be necessary if there is a difference between the federal basis and the Wisconsin basis of your property. Additions or subtractions are necessary if:

  1. You acquired property after December 31, 1964, which may be depreciated or amortized (such as buildings and leaseholds), and the federal basis is greater or less than the Wisconsin basis.
  2. You sold (or otherwise disposed of) property which may not be depreciated or amortized (such as land, stocks, and bonds) in a taxable transaction, and your basis in the assets was greater or less for federal purposes than for Wisconsin.
  3. You sold (or otherwise disposed of) property where the federal basis is greater than the Wisconsin basis due to a previous gain on the sale of an asset being deferred because gain was invested in a "qualified new business venture" or a "qualified Wisconsin business."

Differences in Federal & WI Basis of Partnership Interest (either addition or subtraction) - Code 54

An addition or subtraction may be necessary if you sold your interest in a partnership and any increases or decreases were made to the federal basis of your partnership interest in taxable years prior to 1975, which resulted from partnership business or property located outside Wisconsin. (Prior to 1975, Wisconsin did not tax income from business or property located outside Wisconsin.) Compute any addition or subtraction due to a difference in basis on Wisconsin Schedule T.

Differences in Federal & WI Reporting of Marital Property (either addition or subtraction) - Code 55

If you are married filing a separate return or married filing as head of household or if you obtained a decree of divorce or separate maintenance during 2013, you may have to report a different amount of income on your Wisconsin Form 1 than on your federal Form 1040. Fill in on line 4 any additional amount which is taxable to you rather than your spouse because of any difference in federal and state reporting of marital property (community) income. Fill in on line 11 any amount which is taxable to your spouse rather than to you because of any difference in federal and state reporting of marital property (community) income.