a. All federal social security retirement, disability, or survivorship benefits.
Note to Revisor: Replace the example at the end of sub. (4)(b)4. with the following:
Example: Gross amount of a pension. A claimant was entitled to a pension of $8,000 during the year but received only $5,600 after $2,400 was withheld by the payor for payment of health insurance premiums for the claimant. Of the $8,000 pension, $2,000 was a return of the claimant's contribution.
The gross pension of $8,000 must be included in income.
SECTION 16. Tax 14.03(4)(b)5.e. is created to read:
Tax 14.03(4)(b)5.e. Supplemental security income - exceptional needs, or “SSI-E" payments under s. 49.77(3s), Stats.
SECTION 17. Tax 14.03(4)(b)7., 11., 12., 14., 15. and 20. are amended to read:
Tax 14.03(4)(b)7. Payments made to surviving widows, widowers or parents of war veterans by the United States, but not including insurance proceeds received by beneficiaries of National Service Life Insurance.
11. Scholarship and fellowship gifts, grants, or income and other educational grants, not including student loans.
12. Unemployment compensation insurance, including railroad unemployment compensation.
14. Capital gains not included in Wisconsin adjusted gross income, but not including a gain on the sale of a personal residence deferred under s. 1034 of the internal revenue code or a nonrecognized gain from an involuntary conversion under s. 1033 of the internal revenue code.
15. A gain on the sale of a personal residence excluded under s. 121 of the internal revenue code, which is the once-in-a-lifetime exclusion for a qualifying sale by a person age 55 or older. A gain on the sale of a personal residence which would be reportable under the installment sale method if taxable may be reported either in full in the year of sale or each year as payments are received.
20. Income of an a Native American Indian which is nontaxable under ch. 71, Stats.
SECTION 18. Tax 14.03(4)(b)23.(intro.) and a. to i. are renumbered Tax 14.03(4)(c)(intro.) and 1. to 9. and as renumbered Tax 14.03(4)(c)(intro.) and 6. are amended to read:
Tax 14.03(4)(c)(intro.) The following items deducted in determining Wisconsin adjusted gross income, including items deducted in arriving at partnership, limited liability company and tax-option “S" corporation income or losses reported as a part of Wisconsin adjusted gross income:
6. Contributions to individual retirement accounts under s. 219 of the internal revenue code, including contributions to individual retirement arrangements, or “IRA's," “
IRAs," savings incentive match plans for employes, or “SIMPLEs" and simplified employe pension plans, or “SEP's." “SEPs."
SECTION 19. Tax 14.03(5) is repealed and recreated to read:
Tax 14.03(5) EXCLUSIONS FROM INCOME. (a) Under s. 71.52(6), Stats., income does not include the following:
1. Amounts described in sub. (4)(b)1., 3.e., 7., 11. and 14. as not being includable.
2. Gifts from natural persons, including voluntary support payments.
3. Relief in kind by a governmental agency, including surplus food, food stamps and payments directly to a supplier of goods or services, such as medical care, food, clothing and residential energy.
4. The nontaxable portions of lump sum insurance proceeds received:
a. For a recipient's disability or loss of limb.
b. By a beneficiary of a decedent's life insurance policy.
c. From the surrender of any portion of an insurance policy that does not constitute a personal endowment insurance policy or an annuity contract purchased by the recipient.
5. Wisconsin homestead credit amounts received.
6. Social security or SSI payments received on behalf of a claimant's children or the children of the claimant's household.
7. Pension, annuity or other retirement plan payments rolled over from one retirement plan to another.
8. Tax-free exchanges of insurance contracts under s. 1035 of the internal revenue code.
9. Crime victim compensation payments under ch. 949, Stats.
10. Payments under the Wisconsin petroleum cleanup fund act.
11. “Foster grandparents program" payments under the federal domestic volunteer service act of 1973.
12. Community spouse income allowance payments under the Wisconsin spousal impoverishment program, except the portion of the payments includable under Wisconsin marital property law.
Note: The determination of household income under Wisconsin marital property law is described in s. Tax 14.06(3)(c)2.
(b) Amounts added to Wisconsin adjusted gross income under s. 71.52(6), Stats., on a previous year's homestead credit claim and subsequently repaid may be subtracted from income for the year during which they are repaid.
(c) Scholarship and fellowship gifts or income included in Wisconsin adjusted gross income, which were included in income under s. 71.52(6), Stats., on a previous year's homestead credit claim may be subtracted from income for the current year.
Note to Revisor: 1) Remove the “1)" from the first note at the end of Tax 14.03.
2) Remove notes 2 to 5 at the end of Tax 14.03.
3) Insert the following 3 notes at the end of Tax 14.03:
Note: Section Tax 14.03 interprets s. 71.52(5) and (6), Stats.
Note: Section 71.01(6), Stats., was revised by 1997 Wis. Act 37, to include provisions of P.L. 105-34, relating to the exclusion of a gain from the sale of a personal residence, effective for sales after May 6, 1997, the same time as for federal purposes. Under the statutes in effect immediately prior to the enactment of 1997 Wis. Act 37, certain gains from the sale of a personal residence could be deferred under s. 1034 of the internal revenue code, and those gains were excludable from income under s. 71.52(6), Stats. In addition, a gain on the sale of a personal residence excluded under s. 121 of the internal revenue code, which was the once-in-a-lifetime exclusion for a qualifying sale by a person age 55 or older, was includable in income under s. 71.52(6), Stats.
Note: Section71.52(6), Stats., was amended by 1997 Wis. Act 27, effective for 1998 homestead credit claims filed in calendar year 1999 and thereafter. Under the statutes in effect immediately prior to the enactment of 1997 Wis. Act 27, scholarship and fellowship amounts described in sub. (5)(c) could not be excluded from income.
SECTION 20. Tax 14.04(2), (3)(b) and (c) and (4)(a), (b)1. and 2. and (c) are amended to read:
Tax 14.04(2) DEFINITION. Under s. 71.52(7), Stats., “property taxes accrued" means real or personal property taxes or monthly parking permit fees under s. 66.058(3)(c), Stats., exclusive of special assessments, delinquent interest and charges for service, levied under ch. 70, Stats., on a homestead owned by a claimant or a member of the claimant's household, less the tax credit for general property tax relief, if any, afforded in respect of the property by s. 79.10, Stats. With respect to sub. (3)(e), “property taxes accrued" means the property taxes accrued levied on the former homestead owned by the claimant.
(3)(b) The property taxes levied accrued on a homestead or former homestead for the year to which a claim relates need not be paid prior to filing a homestead credit claim. The fact that the property taxes on a claimant's accrued on the homestead or former homestead are delinquent for years prior to the year to which a claim relates does not disqualify the claimant.
(c) “Property taxes accrued" includes personal property taxes assessed on a homestead or former homestead that is constructed on leased land or assessed on a mobile home owned by the claimant
or a member of the claimant's household. “Property taxes accrued" also includes mobile home parking permit fees assessed under s. 66.058(3)(c), Stats., for a mobile home owned by the claimant
or a member of the claimant's household.
Note to Revisor: 1) In sub. (3), add periods after the subdivision numbers, 5 times.
2) Replace the example at the end of sub. (3)(e), incorrectly labeled 1) and 2), with the following:
Example: A claimant moves on July 1, 1997, from the homestead she owns to an apartment that is exempt from property taxes. She has listed her former homestead for sale with a realtor. While continuing to reside in the apartment, she sells the former homestead; the date on the closing agreement is May 31, 1998. The property taxes accrued on the former homestead are $2,400 for 1997 and the prorated property taxes on the closing agreement are $1,000.
The claimant may file a 1997 homestead credit claim, based on the 1997 property taxes accrued of $2,400 for the entire year. She may also file a 1998 claim, based on the property taxes accrued of $1,000, prorated from January 1, 1998, to the date of the sale.
(4)(a) Except as provided in pars. (b) and (c), a claimant who claims property taxes accrued shall submit with the homestead credit claim a copy of the property tax bill, or if not available, a substitute for the property tax bill containing equivalent information to that appearing on the original property tax bill. If the claimant presents the claim in person to an authorized representative of the department and wishes to retain the original tax bill but is unable to provide a copy, and if the department's representative is unable to produce a copy of the tax bill, an indication that the representative has inspected the tax bill shall satisfy this requirement. In this event, the department's representative shall enter information on the face of Schedule H indicating that the representative has examined the tax bill and verified the tax, followed by the representative's signature.
(b)1. The closing agreement from the sale of the homestead;.
2. The property tax bill for the year prior to the year to which the claim relates;or.
(c) If a claimant's homestead is a mobile home owned by the claimant or a member of the claimant's household, on which parking permit fees are assessed under s. 66.058(3)(c), Stats., proper verification of property taxes accrued shall be a copy of the parking permit fee statement issued by an authorized representative of the municipality in which the mobile home was located, or if the claimant paid rent for the land on which the mobile home was located and also paid parking permit fees to a landlord, a statement of the parking permit fees paid to the landlord, signed by the landlord, such as a Wisconsin department of revenue form I-017, “Rent Certificate."
SECTION 21. Tax 14.04(5) is repealed and recreated to read:
Tax 14.04(5) EFFECT OF RELIEF AND OTHER PUBLIC ASSISTANCE. (a) Under s. 71.54(2)(a), Stats., property taxes accrued shall be reduced by one-twelfth for each month or portion of a month for which the claimant received either $400 or more of county relief under s. 59.53(21), Stats., or any amount of aid to families with dependent children, or “AFDC" under s. 49.19, Stats., Wisconsin works payments for community service jobs or transitional placements under s. 49.147(4) or (5), Stats., or Wisconsin works payments as a caretaker of a newborn child under s. 49.148(1m), Stats. However, property taxes accrued need not be reduced if the assistance consists solely of foster care payments under s. 49.19(10)(a), Stats., non-legally responsible relative, or “NLRR" AFDC payments or kinship care payments.
(b) County relief and other cash public assistance payments that are repaid by the claimant in the same calendar year in which they are received are not considered payments for purposes of computing the one-twelfth reduction of property taxes accrued as required by par. (a).
SECTION 22. Tax 14.04(8)(a) and (b) are amended to read:
Tax 14.04(8)(a) Under Except as provided in par. (c), under s. 71.52(7), Stats., if a homestead is owned by 2 or more persons or entities as joint tenants or tenants in common or is owned as marital property or survivorship marital property and one or more such persons, entities, or owners of the co-owners is not a member of the claimant's household, property taxes accrued is that part of the property taxes accrued levied on the homestead, reduced by the tax credit under s. 79.10, Stats., that reflects the ownership percentage of the claimant and the claimant's household.
(b) If Except as provided in par. (c), if a qualified claimant residing in a co-owned homestead pays the homestead property taxes accrued for a co-owner not residing in the homestead and not claiming property taxes accrued under s. 71.54(2)(c)2., Stats., and sub. (3)(e), the claimant shall be entitled to
may claim a homestead credit based upon both the claimant's appropriate proportionate share of “property taxes accrued" as described in par. (a) and “gross rent" for the homestead property taxes accrued paid on behalf of each absent owner, as provided in s. Tax 14.05(3)(c). On the other hand, if a qualified claimant residing in a co-owned homestead pays the homestead property taxes accrued for a co-owner who also resides in the homestead but who is not a member of the payor's household, or who is claiming property taxes accrued under s. 71.54(2)(c)2., Stats., and sub. (3)(e), each co-owner may file a claim based upon that part portion of the property taxes accrued that reflects the ownership percentage of each claimant and his or her household.
Note to Revisor: Replace the 3 examples at the end of sub. (8)(b) with the following:
Examples: 1) A, B and C each own a one-third interest in a dwelling. A and B are married to each other and live in the dwelling; C lives elsewhere. A and B both qualify for homestead credit and pay all of the property taxes accrued, which are $1,800.
Either A or B may claim a homestead credit based upon “property taxes accrued" of $1,200, their two-thirds share, plus “gross rent" of $600, since they pay C's one-third share of the property taxes.
If C had also occupied the homestead, A and B could have claimed only $1,200 of “property taxes accrued" and no “gross rent," even though they paid the entire $1,800. In addition, C could have filed a claim if otherwise qualified, based upon “property taxes accrued" of $600.
2) A mother and son each own a one-half interest in a dwelling occupied solely by the mother, who qualifies for homestead credit. The son pays all of the property taxes accrued on the dwelling.
The mother may claim a homestead credit based upon one-half of the property taxes accrued.
3) A brother and sister both qualify for homestead credit and own 75% and 25% interests, respectively, in a homestead they both occupy. The brother pays all of the property taxes accrued on the homestead.
Each may claim a homestead credit based upon the portion of property taxes accrued reflecting their ownership percentage.
SECTION 23. Tax 14.04(8)(c) is created to read:
Tax 14.04(8)(c) Under s. 71.52(7), Stats., if a claimant has inherited a partial ownership interest in a homestead, is entitled to possession of the property and is required by the terms of the will that transferred the ownership to pay all of the property taxes on the homestead, the claimant may claim a homestead credit based upon the entire amount of property taxes accrued on the homestead.
SECTION 24. Tax 14.04(9)(a) and (b), (10)(a) and (11) are amended to read:
Tax 14.04(9)(a) Under s. 71.52(7), Stats., if a claimant sells or purchases a homestead during the year to which a claim for homestead credit relates, the property taxes accrued shall be prorated for the time the seller or the buyer both owned and occupied the homestead during the year. The seller may use the closing agreement, the property tax bill for the year prior to the year to which the claim relates, or the property tax bill for the year to which the claim relates as the basis for computing allowable taxes property taxes accrued. The purchaser may use only the property tax bill for the year to which the claim relates as the basis for computing allowable taxes property taxes accrued.
(b) Except as provided under s. 71.54(2)(c)2., Stats., and sub. (3)(e), if a seller moved from the homestead or established a homestead elsewhere before the closing date shown on a closing agreement and the property taxes are prorated on the agreement to the closing date, the property taxes shall be further prorated for homestead credit purposes to consider in the year of sale only the property taxes accrued during for the period the seller maintained a homestead on the property.
Note to Revisor: Replace the example at the end of sub. (9) with the following:
Example: Ownership of a homestead is transferred on June 30. The prorated property taxes for 6 months on the closing agreement are $1,200. The seller moves from that homestead to a new homestead on May 31.
The portion of prorated property taxes allowable to the seller is $1,000, which is the property taxes from January 1 to May 31 rather than the $1,200 shown on the closing agreement.
(10)(a) Not part of a farm. Under s. 71.52(3) and (7), Stats., if a homestead is not part of a farm, property taxes accrued for land are limited to the property taxes on up to one acre of land which surrounds the homestead dwelling and is reasonably necessary to the use of the dwelling as a home. A parcel of land separated from the homestead parcel by such things as a street, river, or utility right-of-way shall be considered to be a part of the homestead parcel.
(11) MULTIPURPOSE AND MULTIDWELLING BUILDINGS. Under s. 71.52(7), Stats., property taxes accrued on a homestead that is part of a multipurpose or multidwelling building are the taxes property taxes accrued on the part portion occupied as a principal residence, based on upon a percentage of the total taxes property taxes accrued on the multipurpose or multidwelling building, and the amount computed using the same percentage of the taxes property taxes accrued on the land surrounding it which otherwise qualifies as described in sub. (10). Property used partly as a homestead and partly for any business purpose, other than farming, for which a deduction is allowed or allowable for income tax purposes is multipurpose property. Property used partly as a homestead and partly as living quarters rented to others is multidwelling property. A building divided into two 2 units, one of which is the homestead of a claimant and the other of which is the living quarters of a person who does not pay rent is multidwelling property, even though there is no business or rental use.
Note to Revisor: 1) Replace the 4 examples at the end of sub. (11) with the following:
Examples: 1) A claimant was a homeowner who as a salesperson used one room of the 8-room house exclusively for business activities. Property taxes accrued for the year were $1,600.
The claimant may claim only seven-eighths of the property taxes accrued, or $1,400, in the computation of allowable homestead credit, since the other one-eighth, or $200, constitutes business taxes.
2) Assume the same facts as in example 1, except that the room was not used exclusively for business. No deductions would be allowable for income tax purposes and the full $1,600 of property taxes accrued could therefore be claimed in the computation of allowable homestead credit.
3) A claimant owned a duplex, lived in one of the 2 equal-sized units and rented out the other unit. Property taxes accrued for the year were $2,400.
Only $1,200, representing the property taxes accrued on the claimant's principal dwelling, may be claimed in the computation of allowable homestead credit.
4) Assume the same facts as in example 3, except that the claimant lived in one unit and the claimant's son or daughter lived in the other unit but was not required to pay rent. The claimant nevertheless may claim only $1,200 of the property taxes accrued.
2) Replace the example at the end of sub. (12) with the following:
Example: A widow and her son reside in the same homestead. Prior to the year of the claim, the widow transferred the property to her son by quit-claim deed but retained a life estate in the property. She pays the property taxes, but the property tax bill comes in her son's name.
If otherwise qualified, the widow may file a claim for homestead credit based upon the entire amount of property taxes accrued. The son may not claim homestead credit based upon any portion of the property taxes accrued on the homestead even though he resides in the property and is otherwise qualified.
3) Remove the “1)" from the first note at the end of Tax 14.04.
