Category: New Mexico
New Mexico Subtractions from Income
NM Tax-Exempt Interest and Dividends
Enter the total interest or dividend income you received from the following state and local bonds exempt from New Mexico taxable income:
- obligations of the State of New Mexico or its agencies,
- institutions, instrumentalities or political subdivisions.
Also enter interest or dividend income from obligations of the Commonwealth of Puerto Rico, Guam, Virgin Islands, American Samoa or Northern Mariana Islands.
Income from investments in mutual funds, unit investment trusts or simple trusts that are invested in obligations of the State of New Mexico or its agencies, institutions, instrumentalities or political subdivisions, or from the Commonwealth of Puerto Rico, Guam, Virgin Islands, American Samoa or Northern Mariana Islands may also be deducted from New Mexico taxable income. You may deduct only the amount shown on the annual statement provided by the mutual fund, unit investment trust, or simple trust as flowing through to the investor from such investment income. Note: IRAs invested in obligations of the State of New Mexico or its agencies, institutions, instrumentalities or political subdivisions, or from the Commonwealth of Puerto Rico, Guam, Virgin Islands, American Samoa or Northern Mariana Islands do not qualify as a simple trust and may not be deducted.
Net Operating Loss
Enter the carry-forward amount to be applied against New Mexico taxable income for 2011, but only if:
- Your current federal tax return shows a net operating loss carryforward amount, or
- You have an unused New Mexico net operating loss carry-forward amount from a previous year.
All New Mexico net operating losses must flow from a federal net operating loss. You cannot have a New Mexico net operating loss without first having a federal net operating loss. When you calculate New Mexico taxable income using a New Mexico net operating loss carry-forward amount, federal rules apply for modifications to exemptions and taxable income. Use your New Mexico net operating loss carry-forward against taxable income before you apply your personal and dependents’ exemptions.
To compute the carry-forward amount from a New Mexico net operating loss recognized in a previous year, add together the federal adjusted gross income (AGI) figure, any federal net operating loss carry-back or carry-forward deduction, and any other income not included in federal adjusted gross income, but upon which a federal tax is calculated (except amounts for which a tax calculation is made according to the alternative minimum tax under Section 55 of the Internal Revenue Code). From that total subtract the federal standard or itemized deduction. The result is the maximum amount of New Mexico net operating loss that may be applied to the current tax return.
Attach a schedule to your return showing the tax year when each New Mexico net operating loss occurred. The schedule also should list each loss for each tax year for which it was carried forward, including 2011. Unlike a federal net operating loss carry-forward, a New Mexico net operating loss incurred in tax years after 1990 cannot be carried back and may only be carried forward for five years or until the total amount of the loss carryover has been used, whichever occurs first. You cannot apply a New Mexico net operating loss carry-forward until the following tax year -- provided you have filed a timely return -- or until the first tax year that begins after the date you file a return establishing the loss.
Taxable Railroad Retirement Annuities and Benefits
Deduct taxable Railroad Retirement Act annuities and benefits and taxable sick pay under the Railroad Unemployment Insurance Act, and attach Form(s) RRB-1099 and RRB-1099R if those amounts were part of your federal taxable income.
Income of an Indian Wholly Earned on the Reservation
If you or your spouse, or both, were enrolled members of a New Mexico federally recognized Indian nation, tribe, band or pueblo, your income is exempt from base income if:
- You lived on the land of the Indian nation, tribe, band or pueblo of membership when you earned it, and
- You earned that income on the lands of that nation, tribe, band or pueblo.
Note: You must meet both conditions.
Income earned off the lands of your own or your spouse's nation, tribe or pueblo is subject to New Mexico income tax no matter where you live. Military pay of an enrolled member is exempt only for times when the home of record is on the member's own Indian nation, tribe or pueblo lands.
Retirement or pension income is exempt only when the retirement or pension is the result of employment on the member's Indian nation, tribe or pueblo. Retirement or pension income from employment off the lands of the nation, tribe or pueblo may not be deducted.
Deduction for NM Medical Care Savings Account
If you or your spouse are enrolled in a New Mexico Medical Care Savings Account, (NMMSA) established by an employer, and during 2011 you have made or received contributions to the account or have made or received distributions from the account you may be entitled to claim a New Mexico medical care savings account exemption. An NMMSA is a tax-exempt trust or custodial account set up by a self-employed individual or a small employer that maintains a high-deductible individual or family health plan. The funds from the NMMSA are used to pay the employee’s unreimbursed medical care expenses. To qualify for the exemption, the qualified contributions or distributions may not be excluded, exempted or deducted from federal taxable income.
Note: Generally, qualified contributions and earnings are excluded, exempted or deducted from federal adjusted gross income and distributions paid for the eligible medical expenses are excluded, exempted or deducted from federal adjusted gross income. You may not claim the exemption from New Mexico taxable income if your qualified contribution or distribution is excluded, exempted or deducted from federal taxable income.
Renewable Energy Production
Enter the amount of approved renewable energy production tax credit claimed on Form RPD-41227, Renewable Energy Production Tax Credit. Personal income taxpayers receive credit for producing electricity by solar light or heat, wind or biomass for 10 years following the date the qualified energy generator begins producing electricity. A qualifying energy generator means a facility with at least one megawatt generating capacity located in New Mexico that produces electricity using a qualified energy resource and that sells that electricity to an unrelated person.
For additional information about this subtraction/credit, please Form PIT-RC.
Special Needs Adopted Child Tax Credit
If you qualify for the Special Needs Adopted Child Tax Credit, enter $1,000 for each special needs adopted child on line 24 of Schedule PIT-RC. If you are married filing separately, enter $500 for each child. A husband and wife who fi le separate returns may each claim only one-half of the credit.
You may claim the Special Needs Adopted Child Tax Credit if:
1) you file a New Mexico personal income tax return 2) you are not a dependent of another taxpayer 3) you have adopted a special needs child, and 4) the special needs adopted child is claimed as a dependent on your federal return.
A Special Needs Adopted Child means an individual who may be over 18 years of age and who is certified by the New Mexico Children, Youth and Families Department or a licensed child placement agency as meeting the definition of a "difficult to place child" pursuant to the Adoption Act; and the classification is based on physical or mental impairment that is at least moderately disabling.
In the first year you claim the special needs adopted child tax credit for a qualifying adopted child, you will need to attach a copy of the certificate issued by the New Mexico Children, Youth and Families Department or the licensed child placement agency for each child you adopted in that year. If you claimed the credit for adoption of special needs children for a qualifying adopted child in a prior year, you do not need to attach the supporting documentation to the return. Maintain the documentation in your files.
Deduction for Contributions to NM Education Trust Account
Deduct contributions you made during the tax year to the New Mexico Education Trust Fund (to an account in one of the New Mexico-approved Section 529 college savings plans) for each beneficiary. Contributions include the principal and earnings portion of amounts rolled over to a New Mexico-approved Section 529 college savings plan account from a non-New Mexico-approved Section 529 college savings plan.
Note: You may only deduct contributions to a Section 529 Plan established and approved by the New Mexico Education Trust Board. A husband and wife who file separate returns may each claim half the deduction allowed on a joint return.
Military Active Duty Pay
Enter the pay, wages or salaries paid to you or your spouse for active duty military service in the armed forces of the United States, if it was included in the federal adjusted gross income and reported on line 6 of Form PIT-1. This exemption from state income tax applies to residents and non-residents of New Mexico.
Active duty, as defined in 37 USC 101, means full-time duty in active service, and includes full-time training duty, annual training duty, full-time National Guard duty, and attendance, while in the active service, at a school designated as a service school by law or by the Secretary concerned. Armed forces, includes the Army, Navy, Air Force, Marine Corps and Coast Guard.
Medical Care Expenses for Persons Age 65 Years or Older
If you or your spouse are 65 years of age or older and you paid unreimbursed and uncompensated medical care expenses of $28,000 or more during tax year 2011, you may claim an exemption of $3,000. The medical care expenses may be made for the care of any combination of yourself, your spouse or dependents. The deduction is allowed for out-of-state residents with income tax responsibility to New Mexico. Enter $3,000 if you qualify.
Deduction for Organ Donation-Related Expenses
Enter any human organ donation-related expenses, not to exceed $10,000, including lost wages, lodging and travel expenses incurred during the taxable year by the taxpayer or the taxpayer’s dependent. "Human organs" are defined as all or part of a heart, liver, pancreas, kidney, intestine,lung or bone marrow. A husband and wife who file separate returns for a tax year in which they could have filed a joint return may each claim only one-half of the deduction that would have been allowed on a joint return.
NM Guard Member Life InsuranceAn individual who receives a reimbursement from the National Guard Service Member’s Life Insurance Reimbursement Fund may claim a personal income tax exemption in the amount of the reimbursement. The reimbursements are issued by the New Mexico Office of Military Affairs, which sends each recipient a Form 1099-Misc for the reimbursement. Attach the Form 1099-Misc to support the New Mexico National Guard member life insurance reimbursements tax exemption claimed.