Taxes on retirees (income, income tax, exemptions)

[KyJake]

We have (had) decided that Tennessee was the place we wanted to retire after several trips to look at property.
I thought I understood Tennessee taxes but am now afraid I have been mistaken. I visited the Tennessee Department of Revenue site but want to make sure I am correct.
I understand that dividend and capital gains are taxable to the individual. Is that true if the dividends and capital gains are generated in a regular IRA or Roth IRA account?
If that is the case, we will have to retire elsewhere.
I just find it difficult to believe that Tennessee would penalize retirees!
I would appreciate your opinions - I know I may need to contact the Department of Revenue but would like as much information as possible before I call.
I am hoping I don't have to start over and find a different state - we were so certain Tennessee is for us!

[BarbG]

Hope this helps:

Individual Income Tax Frequently Asked Questions (http://www.state.tn.us/revenue/faqs/indincome.htm#3 - broken link)

12. What about pension income, Social Security, 401(k) and IRA distributions?

As the Tennessee income tax does not apply to salaries and wages, items of income such as Social Security and pension income are not subject to state tax. Tenn. Code Ann. Section 67-2-104(m) provides that income from stocks and bonds of pension trusts and profit-sharing trusts which are exempt from federal income taxation shall be exempt from the state income tax. This includes such accounts as IRA and 401(k) accounts. Distributions from IRAs and 401(k) plans are also exempt.

[TN Gal now]

there is not a CPA on the forum to respond to your question, you would surely be wise to contact one for advice. There was a tax like you mentioned, but I don't have facts enough to share. Good luck

[hiknapster]

I would think that this makes it crystal clear.

Originally Posted by BarbG

Hope this helps:

Individual Income Tax Frequently Asked Questions (http://www.state.tn.us/revenue/faqs/indincome.htm#3 - broken link)

12. What about pension income, Social Security, 401(k) and IRA distributions?

As the Tennessee income tax does not apply to salaries and wages, items of income such as Social Security and pension income are not subject to state tax. Tenn. Code Ann. Section 67-2-104(m) provides that income from stocks and bonds of pension trusts and profit-sharing trusts which are exempt from federal income taxation shall be exempt from the state income tax. This includes such accounts as IRA and 401(k) accounts. Distributions from IRAs and 401(k) plans are also exempt.

[KyJake]

Thank you - I appreciate your help! Your reply did indeed make it crystal clear!

[TN Gal now]

is a term I've often heard in reference to state or some sort of additional "income" taxes paid and I believe it has to do with income from investments. Although I worked for CPAs, I was not involved in accounting or tax preparation. I still suggest checking with a CPA for a final judgment regarding taxes on your personal investment income.

[TN Gal now]

The individual income tax is imposed only on individuals and other entities receiving interest from bonds and notes and dividends from stock.
Enacted in 1929, this tax was originally called the Hall income tax for the senator who sponsored the legislation. The law can be found in Tennessee Code Annotated in Title 67, Chapter 2.
Exemptions:
Persons over 65 with total income less than $16,200 for a single filer or $27,000 for a joint filer are exempt.

Individual Income Tax (http://www.tn.gov/revenue/tntaxes/indinc.htm - broken link)

[kdmartin]

Originally Posted by KyJake

We have (had) decided that Tennessee was the place we wanted to retire after several trips to look at property.
I thought I understood Tennessee taxes but am now afraid I have been mistaken. I visited the Tennessee Department of Revenue site but want to make sure I am correct.
I understand that dividend and capital gains are taxable to the individual. Is that true if the dividends and capital gains are generated in a regular IRA or Roth IRA account?
If that is the case, we will have to retire elsewhere.
I just find it difficult to believe that Tennessee would penalize retirees!
I would appreciate your opinions - I know I may need to contact the Department of Revenue but would like as much information as possible before I call.
I am hoping I don't have to start over and find a different state - we were so certain Tennessee is for us!

we are from Tn and moving back there to retire, we're in Kansas and looking forward to less pricey everything! good luck, TN is our choice!