5747.055 Tax credit for retirement income.

(A) As used in this section "retirement income" means retirement benefits, annuities, or distributions that are made from or pursuant to a pension, retirement, or profit-sharing plan and that:

(1) In the case of an individual, are received by the individual on account of retirement and are included in the individual's adjusted gross income;

(2) In the case of an estate, are payable to the estate for the benefit of the surviving spouse of the decedent and are included in the estate's taxable income.

(B) A credit shall be allowed against the tax imposed by section 5747.02 of the Revised Code for taxpayers who received retirement income during the taxable year. Only one such credit shall be allowed for each return, and the amount of the credit shall be computed in accordance with the following schedule, subject to the limitation provided in division (F) of this section:

AMOUNT OF RETIREMENT INCOME RECEIVED DURING THE TAXABLE YEAR CREDIT FOR THE TAXABLE YEAR

$500 or less $ 0

Over $500 but not more than $1,500 $ 25

Over $1,500 but not more than $3,000 $ 50

Over $3,000 but not more than $5,000 $ 80

Over $5,000 but not more than $8,000 $ 130

Over $8,000 $ 200

(C) At the election of a taxpayer who receives a lump-sum distribution from a pension, retirement, or profit-sharing plan within one taxable year, the credit allowed by this section for that year shall be computed as follows:

(1) Divide the amount of retirement income received during the taxable year by the taxpayer's expected remaining life on the last day of the taxable year, as shown by annuity tables issued under the provisions of the Internal Revenue Code and in effect for the calendar year that includes the last day of the taxable year;

(2) Using the quotient thus obtained as the amount of retirement income received during the taxable year, compute the credit for the taxable year in accordance with division (B) of this section;

(3) Multiply the credit thus obtained by the taxpayer's expected remaining life. The product thus obtained shall be the credit under this division for the taxable year. A taxpayer who elects to receive a credit under this division is not entitled to receive a credit under this section for any subsequent year except as provided in divisions (D) and (E) of this section.

(D) If the credit under division (C) or (E) of this section exceeds the tax due for the taxable year after allowing for any other credit that precedes that credit in the order required under section 5747.98 of the Revised Code, the taxpayer may elect to receive a credit for each subsequent taxable year. The amount of the credit for each such year shall be computed as follows:

(1) Determine the amount by which the unused credit elected under division (C) or (E) of this section exceeded the tax due for the taxable year after allowing for any preceding credit in the required order;

(2) Divide the amount of such excess by one year less than the taxpayer's expected remaining life on the last day of the taxable year of the distribution for which the credit was allowed under division (C) or (E) of this section. The quotient thus obtained shall be the credit for each subsequent year.

(E) If subsequent to the receipt of a lump-sum distribution and an election under division (C) of this section an individual receives another lump-sum distribution within one taxable year, the taxpayer may elect to receive a credit for that taxable year. The credit shall equal the lesser of:

(1) A credit computed in the manner prescribed in division (C) of this section;

(2) The amount of credit, if any, to which the taxpayer would otherwise be entitled for the taxable year under division (D) of this section times the taxpayer's expected remaining life on the last day of the taxable year. A taxpayer who elects to receive a credit under this division is not entitled to a credit under this section for any subsequent year except as provided in division (D) of this section.

(F) In the case of a taxpayer who elected to take an exclusion under division (A)(1) or (3) of former section 5747.01 of the Revised Code based upon the taxpayer's expected remaining life, and who was entitled immediately preceding the effective date of this section under division (A)(2) or (3) of such section to a further exclusion, any credit computed in accordance with the schedule in division (B) of this section, including the credit computed under division (C)(2) of this section, shall not exceed the credit available upon an amount of retirement income received during the taxable year equal to the sum of such former exclusion plus four thousand dollars.

(G) The credits allowed by this section shall be claimed in the order required under section 5747.98 of the Revised Code. The tax commissioner may require a taxpayer to furnish any information necessary to support a claim for credit under this section, and no credit shall be allowed unless such information is provided.

Effective Date: 07-22-1994