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Why does Wisconsin tax out of state pensions?

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Peregrine Took Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Oct-20-09 02:43 PM
Original message
Why does Wisconsin tax out of state pensions?
I love the state and 'would love to move there but 'just can't take the hit on my pension. Its little enough as it is.

Any hint they would ever change their tax laws on this subject?

Thanks for any input. You would think that they would encourage people to move there.
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EC Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Oct-20-09 03:33 PM
Response to Original message
1. You have a pension from the State of Wisconsin?
The tax is on state retirees, because they pay no Social Security while they are employed by the state.
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Peregrine Took Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Oct-20-09 05:20 PM
Response to Reply #1
2. Illinois.
EXEMPTIONS FOR RETIREMENT INCOME (Wisconsin)
Generally, the same amount of your pension and annuity income that is taxable for federal tax purposes is taxable by Wisconsin. Social Security and Railroad Retirement benefits are not taxable. Certain Wisconsin state- and local-government retirees qualify for a tax exemption, but out-of-state government pensions are fully taxed. All retirement payments from the U.S. military employee retirement system, the Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, and the Public Health Service are exempt. Retired people whose income is less than $10,000 ($19,000 if married filing a joint return) are also eligible for a working families tax credit. This credit reduces or eliminates the Wisconsin income tax for people, including retirees, who are full-year residents of Wisconsin. You don't have to be employed or have more than one person in your household to claim this credit.

From Kiplingers' Guide to State Income Taxes, 2009-2010

(Retired State of Illinois employee.)
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Nipper1959 Donating Member (322 posts) Send PM | Profile | Ignore Tue Oct-20-09 06:59 PM
Response to Reply #1
3. Not true
As a state employee I know that I pay into Social Security.
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Sabien Donating Member (430 posts) Send PM | Profile | Ignore Wed Oct-21-09 05:00 AM
Response to Reply #1
4. not true...n/t
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Peregrine Took Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-21-09 12:38 PM
Response to Reply #4
5. Er, thanks for the information but I was wondering why out of state
public employee (and private, too) pensions are taxed. I definitely paid into SS.

I'm an early retiree, healthy, daily runner, have my own insurance and do a lot of volunteer work in my community. I imagine there are a lot of people like me out there but with states taxing our pensions we can't move to our desired locations.

My brother wasn't aware of this when he bought his dream retirement house in Fontana when he was still working but 'then he had to sell it after he retired and found out about the tax which, I think was around 12% at that time.
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a kennedy Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Oct-27-09 02:52 PM
Response to Reply #4
7. I was a State of Wisconsin employee and I paid Soc Sec tax......
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Jackpine Radical Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Nov-01-09 12:14 PM
Response to Reply #1
9. I have a WI pension. I paid SS. I pay income tax on every cent of my pension
except for the part that I contributed out of my wages while I worked.
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LiberalFighter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Oct-25-09 10:25 PM
Response to Original message
6. Why do other states tax out of state pensions?
I pay taxes on my pension here in Indiana and there are other states that do the same.

Only Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming don't have a state tax which means no tax on your pension. And then there is Pennsylvania and Mississippi exempt all retirement income from taxation. Most of those states I wouldn't want to live in or consider friendly for retirement for other reasons.

You also need to consider the state and local sales taxes. Some are higher than others and can mislead one to believe that they pay less taxes because their property taxes are lower and/or their state taxes are lower or don't pay it.

About 27 states don't tax Social Security. Wisconsin is one of them.
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Peregrine Took Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Oct-28-09 07:05 PM
Response to Original message
8. This is a good website that shows which states tax pensions and which don't.
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