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Department of Finance: Division of Revenue

PIT FAQS


Topics


Non-Resident Working In Delaware                Delaware Resident Working Out Of State
Retirement Information, Pension Exclusions    Penalties And Interest Rates
Request For Copies of Returns                      Bonds
Refund Of Erroneous Withholdings                Severance Pay
Inheritance                                                   Military
Address Change                                           Volunteer Firefighter's Credit




NON-RESIDENT WORKING IN DELAWARE

Q.  I am looking at a new job in Delaware. I live in New Jersey. Someone told me if I take a job in Delaware, I can claim the extra taxes that will be withheld by Delaware. Is this true? Can I have the Delaware employer just withhold New Jersey state tax?

A.  As a resident of New Jersey who works in Delaware, you would be required to file a non-resident return with Delaware (Form 200-02). You would be allowed a credit on your New Jersey return for taxes imposed by Delaware. Your employer would be required to withhold Delaware taxes as long as you work in Delaware.




DELAWARE RESIDENT WORKING OUT OF STATE

Q.  I'm considering taking a job in Maryland. I know the states do not have a reciprocal agreement. How does the credit work for taxes paid to another state? Will I owe County taxes in MD?

A.  If you are a resident of Delaware who works in Maryland, you may take credit on line 10 of the Delaware return (form 200-01) for taxes imposed by other states. You must attach a signed copy of your Maryland return in order to take this credit.

You will not be liable for Maryland County Taxes as a Delaware resident.




RETIREMENT INFORMATION, IRA TOPICS, PENSION EXCLUSIONS, SOCIAL SECURITY BENEFITS

Q.  I'm planning to move to Delaware within the next year. I am retired. I am receiving a pension and also withdrawing income from a 401K. My spouse receives social security. What personal income taxes will I be required to pay as a resident of Delaware? I also would like information on real estate property taxes.

A.  As a resident of Delaware, the amount of your pension and 401K income that is taxable for federal purposes is also taxable in Delaware. However, person's 60 years of age or older are entitled to a pension exclusion of up to $12,500 or the amount of the pension and eligible retirement income (whichever is less). Eligible retirement income includes dividends, interest, capital gains, net rental income from real property and qualified retirement plans (IRS Sec. 4974), such as IRA, 401 (K), and Keough plans, and government deferred compensation plans (IRS Sec. 457). The combined total of pension and eligible retirement income may not exceed $12,500 per person age 60 or over. If you are under age 60 and receiving a pension, the exclusion amount is limited to $2,000.

Social Security and Railroad Retirement benefits are not taxable in Delaware and should not be included in taxable income.

Also, Delaware has a graduated tax rate ranging from 2.2% to 5.55% for income under $60,000, and 6.60% for income of $60,000 or over.

For information regarding property taxes, you can access the Delaware Development Office web page at www.dedo.delaware.gov and do a search on Real Estate Taxes or you may contact the Property Tax office for the county you plan to live in. You may contact the Property Tax offices at the following phone numbers:

Property Tax - New Castle County (302) 323-2600
Property Tax - Kent County (302) 736-2077
Property Tax - Sussex County (302) 855-7760

Senior citizens can contact the Department of Finance concerning property tax reductions by clicking here.




PENALTIES AND INTEREST RATES

Q.  What are the applicable interest and penalty rates for underpayments of Delaware Income Tax?

A.  The interest and penalty rates for underpayment of Delaware Income Tax are as follows:

Interest - The Delaware Code imposes interest on any underpayment or late payment of income taxes due at the rate of ½% per month, or fraction of a month, on any tax due, from the due date of the return to the date paid.

Penalty - Late Filing - The Delaware Code imposes penalties on any late filing of a balance due return at the rate of 5% per month up to a maximum of 50%.

Penalty - Failure to Pay - The law provides for a penalty of 1% per month (not to exceed 25%) on any unpaid balance, for the failure to pay the tax liability due on a timely filed return.

Penalty - Failure to File/Pay Estimated Taxes -The law provides a penalty of 1½% per month of the computed tax payment for failure to file/pay estimated taxes due. This penalty is in addition to those penalties and interest listed above. The penalty is also assessed if the estimated payment is filed late.




REQUEST FOR COPIES OF RETURNS

Q.  How do I request a copy of a tax return I have filed?

A.  In order to give you this information, please provide your social security number, name, your filing status for that year, the amount of refund or balance due, and your address on the return at that time. You may email your request by clicking the personal income tax email address in the contact file, or contact our Public Service Bureau at (302) 577-8200.




BONDS

Q.  Are in-state municipal bonds taxable or tax-exempt to residents of your state? Are out-of-state municipal bonds taxable or tax-exempt to residents of your state? What is the maximum state income tax rate on out-of-state municipal bonds, and at what level of income does this rate apply?

A.  Delaware municipal bonds are tax-exempt to residents of Delaware. Municipal bonds from states other than Delaware are taxable to residents of Delaware.

Example: Interest received on Pennsylvania Turnpike Bonds.

Delaware does not have a specific income tax rate for municipal bonds. Income from out-of-state municipal bonds would be included in the federal adjusted gross income, which is carried over to the Delaware return.

Delaware has a graduated tax rate ranging from 2.2% to 5.55% on income under $60,000. The maximum income tax rate is 6.60% on income of $60,000 or over.




REFUND OF ERRONEOUS WITHHOLDINGS

Q.  My company moved its office from Delaware to Ohio last year. I had an employment contract and the company paid me according to this contract, although my employment was terminated this year. They have taken Delaware State income tax out of my payments for part of this year. I would like to know under these circumstances why they continue to take out Delaware state tax and what if any tax liability I have, considering I do not live in Delaware and have not worked in Delaware this year. If there is any tax liability, please provide me details of why and tell me how to calculate Schedule W, which clearly shows there is no apportioned Delaware income when no days are worked in Delaware for a non-resident.

A.  You must file a non-resident tax return (form 200-02) to receive a refund of erroneously withheld Delaware income taxes if you did not live or work in the State of Delaware at any time during the taxable year.

You must attach to your Delaware return certification from your employer that:

a.  You did not work in Delaware during any part of the taxable year.

b.  Your employer erroneously withheld Delaware income taxes, and
c.  Your employer has not and will not file a Claim for Refund of such erroneous withholdings.




SEVERANCE PAY

Q.  I am a Resident of Pennsylvania and have worked for XYZ company in Delaware for the last 20 years. The company moved its operations to the State of North Carolina last July and did not operate in Delaware after that date. I did not relocate. The company gave me severance pay this year. Do I have to report that income to Delaware? I did not work or live in Delaware this year.

A.  Yes, you need to file a Delaware Non-Resident return and report the Severance Pay as Delaware sourced income. Severance Pay is taxable, based on the years of service rendered in Delaware. If you have any questions regarding severance pay, please contact James Stewart at (302) 577-8170.

Q.  I worked for the same company for 25 years in Delaware. During that time I was a Delaware Resident. The company downsized in last year and my employment was voluntarily terminated. I moved to Florida the following January. I received severance pay during this year. Do I have to report that income to Delaware even though I did not work there this year and only lived there for a few weeks this year?

A.  Yes, you need to file a Delaware Non-Resident return and report the Severance Pay as Delaware sourced income. Severance Pay is taxable, based on the years of service rendered in Delaware. If you have any questions regarding severance pay, please contact James Stewart at (302) 577-8170.




INHERITANCE

Q.  Could you please advise if any annuity paid directly to the beneficiary is subject to a inheritance tax?

A.  For decedents dying before December 31, 1998 the answer is yes, an annuity paid directly to the beneficiary is subject to inheritance tax. Please note, the inheritance tax has been repealed for those decedents dying after December 31, 1998.




MILITARY

Q.  I am in the military and stationed in Delaware, but I am a legal resident of New Jersey. I have a part-time job in Delaware and earned $10,544 from this job. Am I required to file a Delaware return? If so, do I have to include my military income on the return even though I am not a Delaware resident?

A.  Yes, you would be required to file a Delaware Non-Resident return and report your non-military income from your part-time job. You would include all your income in Column 1 (the Federal column) but, only your part-time Delaware income in Column 2 (the Delaware source income column).




ADDRESS CHANGE

Q.  How do I go about changing my address with the State of Delaware so I can receive my tax information my at new address for next year?

A.  We can change your address in the system at any time. You can e-mail the change to us at PersonalAddressChanges@state.de.us and we will update our files or you can call the address change voice mailbox at (302) 577-8589. If your address is changed before the middle of November, your new tax booklet will be mailed to your new address. If your address is changed after the middle of November, your new tax booklet will be mailed to your old address. You can download forms and/or instructions from our website or contact our Public Service Bureau at 302-577-8200 to receive a tax booklet.

To insure correct updates of our records, please include your name, social security number, old address and the new address.




VOLUNTEER FIREFIGHTER'S CREDIT

Q.  How much is the Volunteer Firefighter's Credit and who can claim it?

A. The law allows a credit up to $400 against the income tax liability of Delaware residents who are active firefighters, or members of fire company auxiliaries or rescue squads, for the purchase of clothing, equipment, motor fuel and other items necessary to perform their duties. You must keep the receipts to document these purchases.

To qualify for the credit, you must be an active volunteer firefighter on call to fight fires on a regular basis, a member of a fire company auxiliary or active member of an organized rescue squad in a Delaware Volunteer Company.

You must enter the Fire Company number where you volunteer on the Resident return, Line 11 in the space provided, to qualify for the credit. Enter the amount of this credit on Line 11, Column A and/or B. Each spouse may claim only one $400 credit. A credit may not be claimed for any of the following items: raffle tickets, benefit dinners, cash contributions, auctions, or any other such function.

Example 1: John is an active volunteer fireman at the Aetna Hose, Hook & Ladder Company, Station Number 9. The Fire Company gave all the volunteer firefighters helmets, boots, bunker pants, a coat and tools when they became a volunteer. In 2004, John incurred traveling costs of $100.00 during the year to travel to and from the fires and fire company meetings. John also bought himself a new helmet for $259.00 because he did not like the one he was given. On the 2004 Delaware Resident income tax return Line 11, Station number 9 should be input in the space provided. John's firefighter credit amount is $100.00. John is not allowed to take credit for the new helmet, since he was already given one by the Fire Company.

Example 2: Mike is an active volunteer fireman at the Felton Community Fire Company, Station Number 48. The Fire Company did not provide any clothing or equipment. Mike purchased a helmet, boots, bunker pants, a coat and tools, which cost $1,300. On the 2004 Delaware Resident income tax return Line 11, Station number 48 should be input in the space provided. Mike's firefighter credit amount is limited to $400.00, which is the maximum credit amount.

For tax year 2003 and before, the credit was $300.



Last Updated: Tuesday, 08-Apr-2014 12:38:42 EDT
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