Instructions For Schedule L Of W-1040r - City Of Walker Income Tax
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1INSTRUCTIONS FOR SCHEDULE L OF W-1040R
SALES OR EXCHANGES WHILE A RESIDENT - All gains or losses from
GENERAL INFORMATION
the sale of both tangible and intangible property are taxable to residents
The purpose of Schedule L is to help compute Walker income tax for the
regardless of where the property is located. The Walker Income Tax
part-year resident who earned income both as a Walker resident and as a
Ordinance follows the Internal Revenue Code except for gains on the sales
nonresident working in Walker. Certain kinds of income are taxed differently
of obligations of the United States (and subordinate units of government)
to residents of Walker and nonresidents working inside Walker.
and gains from sales or exchanges of property purchased prior to January
1, 1988.
Schedule L must be filed with a Walker Resident Individual Tax Return (W-
1040R).
Instructions for the resident individual return apply to income
SALES OR EXCHANGES WHILE A NONRESIDENT - Only that portion of a
earned while a resident. Instructions for the Nonresident Individual Return
gain or loss from the sale of tangible property located in Walker which
(W-1040NR) apply to income earned in Walker while a nonresident. The
occurred after January 1, 1988, is taxable to a nonresident. The gain or loss
instructions for both returns should be read before attempting to fill out
from the sale of intangible property is not taxable to a nonresident.
Schedule L.
LINE 9c - INCOME (OR LOSS) FROM RENTAL REAL
Page 2 of the resident return must be filled out where required and the totals
ESTATE, ROYALTIES, PARTNERSHIPS, TRUSTS, ETC.
carried over to the appropriate lines on Schedule L.
All supporting
RENTAL AND ROYALTY INCOME earned while a resident must be
schedules must be attached.
reported regardless of the location of the property. Nonresidents must report
Complete lines 1 through 4 with information from the top section of W-
only that portion of rental income derived from the rental of real and tangible
personal property located in Walker. (See the instructions to the
1040R.
Nonresident Return.)
COMPUTATION OF TAXABLE INCOME
PARTNERSHIP, TRUST, ETC. INCOME (OR LOSS) of a resident must be
Lines 5 through 9d of Schedule L describe the kinds of income subject to
reported regardless of where the partnership, trust, etc. is located or does
tax. Column 1 is for income earned while a resident of Walker. Column 2 is
business (attach copy of federal Schedule K-1). Nonresidents must report
for income earned while a nonresident.
Shaded areas in column 1 or
only that portion of partnership income (or loss) allocated to the City on the
column 2 indicate income as a nonresident is not taxable or indicate the line
partnership's Walker Partnership Return (W-1065). If there is no partnership
is not applicable to the particular column.
return on file the processing of the individual return will be delayed until a
partnership return is filed.
Income from trusts etc. is not taxable to a
The following instructions for specific kinds of income must be used together
nonresident.
with the instructions for the Walker resident and nonresident returns.
LINE 9d - OTHER INCOME
LINE 5 - WAGES, SALARIES, COMMISSIONS, TIPS, SICK
Other income of a resident is taxable. See resident return instructions.
PAY, ETC
.
Other income of a nonresident earned in Walker is taxable.
See
All wages earned while a resident must be reported in column 1 regardless
nonresident return instructions for taxability of a nonresident’s other income.
of where earned. To determine resident wages use a check stub close to
the date of the move as a guide. Nonresident wages for an employer equal
LINE 11 - DEDUCTIONS
box 1 of the W-2 form, total wages, less resident wages reported in column
With the exception of the KEOGH, SEP and SIMPLE retirement deduction,
1. Taxable nonresident wages earned in Walker are calculated for each
residents and nonresidents are limited to the deductions listed on line 11.
employer as follows:
The KEOGH, SEP or SIMPLE retirement deduction must be included on line
1. Compute the number of actual days worked in Walker as a
9a. (See instructions for line 9a.) Nonresidents must allocate deductions in
nonresident for the employer.
the same manner they allocate their income. (See the instructions to the
2. Compute the total number of days worked while a nonresident for the
nonresident return.)
employer.
LINE 13 - PERSONAL EXEMPTIONS
3. Divide the days worked in Walker by the total days worked as a
nonresident to compute the percentage of nonresident wages earned
Complete the exemption section of the resident return (Schedule 1) and
in Walker.
enter the total number of exemptions on line 13a of Schedule L. Multiply
4. Multiply the wages as a nonresident by the percentage earned in
number of exemptions by $750 and enter total on line 13a, column 1. If line
Walker (number 3 above) to calculate nonresident wages earned in
13a exceeds resident income on line 12, column 1, enter the excess on line
Walker.
13b, column 2.
5. Enter the nonresident wages earned in Walker in column 2 for each
COMPUTATION OF TAX
employer.
Computation A is for tax years 1988 through the current year. Computation
LINE 7 - INTEREST INCOME
B is reserved for future use.
Interest received while a resident (minus interest from government
Use a separate Schedule L for each tax year requiring a Schedule L.
obligations) is taxable regardless of origin and must be entered in column 1.
Transfer the tax on line 15c of Computation A to page 1, line 7 of the
Interest received while a nonresident is not taxable.
resident return. Insert the words "Schedule L" to the left of the tax amount
to indicate the tax was transferred from a Schedule L.
LINE 8 - DIVIDEND INCOME
Dividends received while a resident are taxable and must be entered in
NEGATIVE TAX
column 1. Dividends received while a nonresident are not taxable.
If taxpayer is a resident at tax year end and line 12, column 1, is a loss,
multiply the loss by the tax rate for line 15a (resident rate) of computation (A
LINE 9a - BUSINESS, PROFESSIONAL AND FARM
or B) you are using and enter this amount on line 15a. If taxpayer is a
INCOME
nonresident at tax year end and line 12, column 1 is a loss, multiply the loss
Business, professional and farm income earned while a resident of Walker
by the tax rate for line 15b (nonresident rate) of the computation (A or B) you
is taxable regardless of where the business or profession is conducted.
are using and enter this amount on line 15a. If line 12, column 2, is a loss,
Nonresident business, professional and farm income earned in Walker is
multiply the loss by the tax rate for line 15b (nonresident rate) of
taxable. See the instructions for the nonresident return to determine the
computation (A or B) and enter this amount on line 15b. Indicate negative
amount of this income to report.
totals by putting them in parenthesis ( ).
The KEOGH, SEP or SIMPLE retirement deduction is subtracted from
If combining lines 15a and 15b results in tax due the tax due must be
business, professional and farm income prior to the income being entered
entered on line 15c Schedule L, and line 7 of the resident return. However, if
on line 9a. This deduction must be allocated between resident and
combining lines 15a and 15b results in a negative tax, enter zero on line 15c
nonresident status in the same manner as income.
ATTACH
of Schedule L and on line 7 of the resident return.
SUPPORTING SCHEDULES DETAILING COMPUTATION OF THIS
DEDUCTION.
COMPLETION OF RESIDENT RETURN W-1040R
LINE 9b - GAIN OR LOSS FROM THE SALE OR
Schedule L is not a return. It must be attached to a resident return. After
EXCHANGE OF PROPERTY
entering your tax on line 7 of the resident return, follow the resident return
instructions to complete the remainder of the return.
Residency status on the date the sale or exchange of property took place
determines whether the sale or exchange is considered a transaction by a
resident or a nonresident.
Rev. 8/00
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