News Releases

News Release

 

Jan. 28, 2010 – Delphi Pensioners May Need to Make Estimated Tax Payments

 

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 payments.”   

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:

tax.ohio.gov/documents/forms/ohio_individual/individual/2010/PIT_IT1040ES_Arrow.pdf

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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.