H. B. 4474
(By Delegates Cann, Kominar, Stalnaker, Perdue, Perry
and
Michael)
[Introduced February 9, 2006; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-21-10 of the code of West
Virginia, 1931, as amended, relating to the low income
exclusion.
Be it enacted by the Legislature of West Virginia:
That §11-21-10 of the code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
§11-21-10. Low income exclusion.
(a)
Earned income exclusion. -- In the case of an eligible
taxpayer, there shall be allowed as a deduction from federal
adjusted gross income the amount of his or her earned income
included therein, not to exceed ten thousand dollars, except that
when a husband and wife file separate returns under this article
this exclusion shall not exceed five thousand dollars per
separate return:
Provided, That for the taxable year beginning
the first day of January, two thousand seven, the exclusion provided for in this section shall not exceed twenty-two thousand
dollars, except that when a husband and wife file separate
returns under this article this exclusion shall not exceed eleven
thousand dollars per separate return That for the taxable year
beginning the first day of January, one thousand nine hundred
ninety-six, the exclusion provided for in this section shall
apply only to earned income received after the thirtieth day of
June, one thousand nine hundred ninety-six, and the amount
excluded shall not exceed fifty percent of the annual low income
exclusion amounts set forth in this subsection.
(b)
"Eligible taxpayer" defined. -- The term "eligible
taxpayer" means:
(1) Any unmarried individual and any husband and wife filing
a joint return under this article who has or have federal
adjusted gross income of ten thousand dollars or less for the
taxable year
: Provided, That for tax years beginning the first
day of January, two thousand seven, the federal adjusted gross
income amount shall be twenty two thousand dollars or less for
the taxable year; or
(2) Any husband or wife filing a separate return under this
article who has federal adjusted gross income of five thousand
dollars or less
: Provided, That for tax years beginning the first
day of January, two thousand seven, the federal adjusted gross
income amount shall be eleven thousand dollars or less for the
taxable year.
(c)
"Earned income" defined. --
(1) The term "earned income" means:
(A) Wages, salaries, tips, and other employee compensation;
plus
(B) The amount of the taxpayer's net earnings from
self-employment for the taxable year (within the meaning of
Section 1402(a) of the Internal Revenue Code), but such net
earnings shall be determined with regard to the deduction allowed
to the taxpayer under Section 164 of the Internal Revenue Code.
(2) For purposes of this section:
(A) The earned income of an individual shall be computed
without regard to any community property laws;
(B) No amount received as pension or annuity shall be taken
into account; and
(C) No amount received for services provided by an
individual while the individual is an inmate at a penal
institution shall be taken into account.
(d)
Taxable year must be full taxable year. -- Except in the
case of a taxable year closed by reason of the death of the
taxpayer, no credit shall be allowed under this section in the
case of a taxable year covering a period of less than twelve
months.
NOTE: This bill would increase the earned income exclusion
from ten thousand dollars to twenty-two thousand dollars.
Strike-throughs indicate language that would be stricken
from the present law, and underscoring indicates new language
that would be added.