Oklahoma Subtractions from Income Schedule 511-A
Interest on U.S. Government Obligations
If you report interest on bonds, notes and other obligations of the U.S. Government on your Federal return, this income may be excluded from your Oklahoma AGI if a detailed schedule is furnished, accompanied with 1099's showing the amount of interest income and the name of the obligations from which the interest is earned. If the income is from a mutual fund which invests in U.S. government obligations, include documentation from the mutual fund to substantiate the percentage of income derived form obligations exempt from Oklahoma tax. Interest from entities such as FNMA and GNMA does not qualify.
Note: The capital gain/loss from the sale of a U.S. Government Obligation is exempt. Enter exempt gains on Schedule 511-A line 11 and exempt losses on Schedule 511-B, line 7.
Taxable Social Security
Social Security benefits that are included in the Federal AGI shall be subtracted.
Federal Civil Service Retirement in Lieu of Social Security
Each individual may exclude 100% of their retirement benefits received from the Federal Civil Service Retirement System (CSRS), including survivor benefits, paid in lieu of Social Security to the extent such benefits are included in the Federal AGI. Enter your Retirement Claim Number from your Form CSA 1099-R or CSF 1099-R in the box on Schedule 511-A, line 3.
Note: Retirement benefits paid under the Federal Employees Retirement System (FERS) do not qualify for this exclusion. However, for retirement benefits containing both a FERS and a CSRS component, the CSRS component will qualify for the exclusion.
Each individual may exclude 75% of their retirement benefits or $10,000, whichever is greater but not to exceed the amount included in the Federal Adjusted Gross Income. The retirement benefits must be from any component of the Armed Forces of the United States.
OK Government or Federal Civil Service Retirement
Each individual may exclude their retirement benefits, up to $10,000, but not to exceed the amount included in the Federal Adjusted Gross Income. (To be eligible you must have retirement income in your name.) The retirement benefits must be received from the following: the civil service of the U.S., the Oklahoma Public Employees Retirement System of Oklahoma, the Oklahoma Teacher's Retirement System, the Oklahoma Law Enforcement Retirement System, the Oklahoma Firefighters Pension and Retirement System, the Oklahoma Police Pension and Retirement System, the Employee retirement systems created by the counties pursuant to 19 OS Sec. 951, the Uniform Retirement System for Justices and Judges, the Oklahoma Wildlife Conservation Department Retirement Fund, the Oklahoma Employment Security Commission Retirement Plan, or the Employee retirement systems created by municipalities pursuant to Sections 48-101 et seq. of Title 11 of the Oklahoma Statues. Do not include on this line any CSRS retirement benefits already excluded on Schedule 511 on line 3.
Other Retirement Exclusion
Each individual may exclude their retirement benefits, up to $10,000, but not to exceed the amount included in the Federal AGI. For an individual who claims the exclusions for government retirees on Schedule 511-A, line 5, the amount of the exclusion on this line cannot exceed $10,000 minus the amounts already claimed on Schedule 511-A, line 5.
U.S. Railroad Retirement Board Benefits
All qualified U.S. Railroad Retirement Board benefits that are included in the Federal AGI may be excluded.
Oklahoma depletion on oil and gas well production, at the option of the taxpayer, may be computed at 22% of gross income derived from each Oklahoma property during the taxable year. Any depletion deduction allowable is the amount so computed minus the Federal depletion claimed. If Oklahoma options are exercised, the Federal depletion not used due to the 65% limitation may not be carried over for Oklahoma purposes.
Note: Major oil companies, as defined in 52 OS Sec. 288.2, when computing Oklahoma depletion shall be limited to 50% of the net income) computed without the allowance for depletion) from each property.
Oklahoma Net Operating Loss
Enter carryover(s) from previous years. The loss year return must be filed to establish the Oklahoma Net Operating Loss
Exempt Tribal Income
If the tribal member's principal residence is on "Indian country" as defined in 18 U.S.C. Section 1151, the income earned on Indian country may be deducted. Legally acknowledged Indian country must be within the jurisdiction of the tribe of which he or she is a member.
Provide the following information for tax year 2016:
a. A copy of your tribal membership card or certification by yourtribe as to your tribal membership during the tax year; and
b. A copy of the trust deed, or other legal document, which describes the real estate upon which you maintained your principal place of residence and which was an Indian allotment, restricted, or held in trust by the United States during the tax year. If your name does not appear on the deed, or other document, provide proof of residence on such property; and
c. A copy of the trust deed, or other legal document, which describes the real estate upon which you were employed or performed work or received income and which was held by the United States of America in trust for a tribal member or an Indian tribe or which was allotted or restricted Indian land during the tax
year. Also a copy of employment or payroll records which show you are employed on that Indian country or an explanation of your work on Indian country; and
d. Any other evidence which you believe supports your claim that you meet all of the criteria for exemption from income tax. All information to support your claim for refund must be provided with your return.
Gains from the Sale of Exempt Government Obligations
Note: The capital gain/loss from the sale of an U.S. Government Obligation is exempt. Enter exempt gains on Schedule 511-A, line 11 and exempt losses on Schedule 511-B, line 7.
Oklahoma Capital Gain Deduction
You can deduct qualifying gains receiving capital treatment which are included in Federal Adjusted Gross Income. “Qualifying gains receiving capital treatment” means the amount of net capital gains, as defined under IRC Section 1222(11).
- Be earned on real or tangible personal property located within Oklahoma that you have owned for at least five uninterrupted years prior to the date of the sale.
- Be earned on the sale of stock or ownership interest in an Oklahoma headquartered company, limited liability company, or partnership where such stock or ownership interest has been owned by you for at least two uninterrupted years prior to the date of the sale.
- Be earned on the sale of real property, tangible personal property or intangible personal property located within Oklahoma as part of the sale of all or substantially all of the assets of an Oklahoma headquartered company, limited liability company, or partnership or an Oklahomaproprietorship business enterprise or owned by the owners of such entity or business enterprise for a period of at least two uninterrupted years prior to the date of the sale.
Miscellaneous Oklahoma Other Subtractions
1. Royalty Earned by an Inventor- Royalty income earned by an inventor from a product developed and manufactured in this state shall be exempt from income tax for a period of seven years from January 1 of the first year in which such royalty is received as long as the manufacturer remains in this state. To support your deduction please furnish:
- copy of the patent.
- copy of the royalty agreement with the manufacturer.
- copy of registration form from OCAST. (Title 74 O.S. Section 5064.7 (A)(1))
2. Manufacturer's Exclusion - If the following applies: (Title 74 O.S. Sect 5064.7 (A)(2))
3. Small Business Incubator Exclusion - Exemption for income earned by the sponsor (Title 74 O.S. Section 5075). Exemption for income earned by the tenant (Title 74 O.S. Section 5078).
4. Death of Military Member Killed - Payments received as a result of a Military member being killed in a combat zone: Any payment made by the U.S. Dept. Of Defense as a result of the death of a member of the Armed Forces who has been killed in action in a designated combat zone shall be exempt from Oklahoma income tax during the taxable year in which the individual is declared deceased by the Armed Forces. (Title 68 O.S. Section 2358.1A)
5. Spouse of Military Member Killed - Income earned by an individual whose Military spouse was killed in a combat zone: Any income earned by the spouse of a member of the Armed Forces of the U.S. who has been killed in action in a designated combat zone shall be exempt from Oklahoma income tax during the taxable year in which the individual is declared deceased by the Armed Forces.
Enter the number “99” if the following applies:
Allowable subtractions not included in (1) through (5): Enter any allowable Oklahoma deductions from Federal Adjusted Gross Income to arrive at Oklahoma Adjusted Gross Income that were not previously claimed under this heading “Miscellaneous: Other Subtractions.” Specify type of subtraction and Oklahoma Statute authorizing the subtraction. Provide a detailed explanation and verifying documents.