H. B. 4633


(By Delegates Linch, Trump, Webb, Hutchins,

Caputo, Houston and Johnson)

[Introduced February 23, 2000; referred to the

Committee on Finance.]




A BILL to amend and reenact section ten, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to the earned income exclusion for personal income tax purposes; allowing the deduction to be in the amount of the poverty guidelines updated annually by the United States department of health and human services; and excluding amounts of unemployment compensation, workers' compensation, social security and similar benefits in determining earned income.

Be it enacted by the Legislature of West Virginia:
That section ten, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, 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 is allowed as a deduction from federal adjusted gross income the amount included of his or her earned income, included therein not to exceed the amount designated for the size of his or her family unit in the poverty guidelines updated annually in the federal register by the United States department of health and human services under authority of 42 U.S.C. § 9902(2), or ten thousand dollars, whichever is greater, except that when a husband and wife file separate returns under this article this exclusion shall may not exceed one half of the amount designated for the size of his or her family unit in the poverty guidelines updated annually in the federal register by the United States department of health and human services under authority of 42 U.S.C. § 9902(2), or five thousand dollars, whichever is greater, per separate return. Provided, 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 equal to or less than one and one-half times the amount designated for the size of his or her family unit in the poverty guidelines updated annually in the federal register by the United States department of health and human services under authority of 42 U.S.C. § 9902(2), 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 equal to or less than one and one-half times one half of the amount designated for the size of his or her family unit in the poverty guidelines updated annually in the federal register by the United States department of health and human services under authority of 42 U.S.C. § 9902(2), 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 and the 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 may 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 may be taken into account; and
(D) No amount received by an individual pursuant to the West Virginia unemployment compensation law, the West Virginia workers' compensation law, the federal Social Security Act or any similar law may 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 is allowed under this section in the case of a taxable year covering a period of less than twelve months.


NOTE: The purpose of this bill is to allow an increase in the earned income exclusion for personal income tax purposes in the amount of the poverty guidelines updated annually by the United States Department of Health and Human Services. It also excludes income received from unemployment compensation, workers' compensation, Social Security and similar benefits when determining earned income.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.