In Delaware, if you are 60 or over, your pension AND retirement income (which includes dividends, interests, income from IRA, capital gains, rental income from real estate property) are eligible for the exclusions. Does this rule apply the same to those who are under 60 and retired? The instruction only mentions that if you are under 60, the maximum exclusion is $2000 if you receive a non-military pension.
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Under age 60, the $2,000 Delaware pension exclusion refers to distributions from pension plans.
In the Delaware state income tax return, at the screen Pensions and Annuities, the hyperlink eligible states:
Distributions received from pension and retirement plans may qualify for an exclusion from Delaware taxable income.
If you were under 60 on December 31, 2023, you can exclude up to $2,000 of a distribution you receive from an employer paid pension plan (this does not include distributions from other plans, such as a deferred compensation or 401k plan). Your federal Form 1099-R should display code 7 (or for code 4, see below) to be eligible for the pension exclusion. Early distributions are not eligible for the exclusion (unless a Form 1099-R was issued with a code 4 (death) in box 7).
If you were under 60 on December 31, 2023, and you receive a military pension, you can exclude $12,500 or the amount of that pension, whichever is less.
Thank you so much for your answer. No to be pedantic, but to make doubly sure:
For those under 60, Delaware pension exclusion refers to distribution from pension + some distribution from qualified retirement plans not including early distribution. But, no other retirement income.
Whereas for those 60 or over, Delaware pension exclusion refers to distribution from pension + distribution from qualified retirement plans + other retirement income (such as dividends, capital gains, interests, net rental income).
Is this correct?
Yes, you are correct. As it says in these excerpts from the Delaware individual tax return instructions, pension income for those under age 60 refers to pensions from employers, while pension income for those 60 or over includes dividends, net capital gains, interest, rental income and individual IRA accounts: DE individual tax return instructions
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