COLUMBUS, Ohio – The
Ohio Department of Taxation cautioned Delphi
Corporation retirees that they may need to make
quarterly estimated tax payments based on the income
they are starting to receive from the Pension Benefit
Guaranty Corporation (PBGC).
Last year, the PBGC stepped in to protect Delphi
pensions for hourly and salary workers because Delphi
could not afford to maintain them. Hourly and salaried
Delphi retirees began receiving monthly pension
payments from the PBGC this month.
Unfortunately, the federal corporation does not
withhold state or local taxes from its payments to
retirees. This pushes the responsibility for making
state income tax payments onto Delphi retirees, who
could be in for some unwelcome surprises next year if
they don’t make estimated quarterly payments.
Possibilities include a large amount of unpaid tax due
with their 2010 tax return, penalties and interest.
“Since the Pension Benefit Guaranty Corporation is not
withholding state income tax, retirees need to plan
appropriately,” said Del Harlan, the Ohio Department of
Taxation’s executive administrator for income tax. “We
don’t want to penalize anyone.”
Quarterly estimated payments are required when
withholding and credits will not cover the total tax
liability for a given year. Generally speaking,
taxpayers must make estimated tax payments if they
expect their 2010 state income tax liability to be more
than $530 after subtracting withholding and credits.
(For example, pension benefits included in taxpayers’
federal adjusted gross income may qualify for a
retirement income credit of up to $200.)
For more information on making quarterly estimated
payments, visit tax.Ohio.gov, go to
the “Filing Season Central” page, then select “Making
Estimated state income tax is filed with form IT 1040ES
using quarterly vouchers. It is paid in quarterly
installments due April 15, June 15, and Sept. 15, 2010,
and Jan. 18, 2011. The form and instruction are
available at the following link:
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News media with further questions should contact Mike
McKinney at (614) 466-5461. Taxpayers with questions
should call (800) 282-1780.