|January 5, 1981|
|You request a ruling on whether the ********** Retirement Board must withhold Massachusetts income taxes from retirement benefits paid to the surviving spouse of a former city employee who retired under General Laws Chapter 32, Section 58. The Board withholds federal taxes from this pension.|
|Certain veterans who complete thirty years of service with the Commonwealth of Massachusetts, or certain subdivisions thereof, are entitled to a non-contributory pension under General Laws Chapter 32, Section 58. Under Section 58B, those qualifying for Section 58 pensions may elect to receive a smaller annual amount in consideration for the continuance of two-thirds of this reduced pension after the pensioner's death for the benefit of a surviving spouse or beneficiary.|
|General Laws Chapter 62, Section 2 defines Massachusetts gross income as federal gross income with some modifications. Section 2(a)(2)(E) excludes certain contributory government pensions from gross income. In general, non-contributory government pensions are subject to Massachusetts income tax.|
|Income, which is taxable under Massachusetts General Laws Chapter 62, is subject to Massachusetts withholding under General Laws Chapter 62B, Section 2 to the extent that it is subject to federal withholding either under Internal Revenue Code Section 3401 or as the result of a voluntary agreement to withhold federal taxes under Code Section 3402(o).|
|Based on the foregoing, it is ruled that a non-contributory government pension received by the widow of a former city employee is subject to withholding in Massachusetts if it is subject to either mandatory or voluntary federal withholding.|
|Very truly yours,|
|/s/L. Joyce Hampers|
|L. Joyce Hampers|
|Commissioner of Revenue|
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