Per the Wisconsin filing instructions for Form 1:
State and Municipal Interest:
Enter the total amount of interest you earned from municipal and state issued bonds. This will usually be the total displayed as tax-exempt interest on your Federal Form 1040. (If you were required for allocate expenses on this income on your federal return, reduce the total by such expenses.)
Exception: If you earned interest income which is exempt for state and federal tax purposes, do not include this interest income.)
Distributions from Edvest and Tomorrow's Scholar College Savings Account - Code 01 - See Credits
Federal Net Operating Loss Carryover: - Code 02
Enter any amount deducted as a federal net operating loss carryover (Line 8 Federal form Schedule 1)
Income (Lump-Sum Distributions) Reported on Federal Form 4972:- Code 03
Income earned from a lump-sum distribution is taxable to Wisconsin. If you reported a lump-sum distribution on federal Form 4972, you are required to add the distribution in Wisconsin income. Submit the total of:
- the capital gain portion of the lump-sum distribution from line 6 of Form 4972 and
- the amount that is taxable from line 10 of Form 4972.
You may reduce this total by any federal estate tax on line 18 of Form 4972.
Note: No part of a lump-sum distribution may be recorded as a capital gain on Wisconsin Schedule WD.
Farmland Preservation Credit and Farmland Tax Relief Credit: - Code 04
The total amount of farmland preservation credit from Schedule FC that you earned during 2019 shall be reported as income. Enter as an addition any part of your farmland preservation credit that was not included as income on your federal tax return.
Excess Distribution From a Passive Foreign Investment Company: - Code 05
Enter in the excess distribution from a passive foreign investment company that was not added into federal adjusted gross income (see federal Form 8621 or 8621-A).
Expenses Paid to Related Entities:- Code 06
Enter the amount excluded or subtracted from your federal income for any rental expenses, interest, intangible expenses, and any management fees paid, accrued, or incurred to a related entity (person or business entity). You shall make this addition even if you may be qualified to make a subtraction for these expenses. If you are qualified to take a subtraction, you may then make a subtraction for the amount that qualifies (see Code 21 under Subtractions from Income).
Amounts Not Deductible for Wisconsin: - Code 07
Enter any amount subtracted in computing your federal adjusted gross income that is not allowed as a subtraction for Wisconsin. Enclose a description of the additions you are adding using code 07.
Example You subtracted a passive activity loss on your federal return for losses incurred when you were a resident of another state. The passive activity losses were not allocable to Wisconsin. Therefore, the passive activity losses are not a subtraction for Wisconsin and must be added on line 4.
Codes 08 – 20 Additions for Computed Credits:
If you claimed any of the credits listed below, you must enter the amount. The amount of your credit is earnings and shall be reported on Form 1. If you are unable to take the total credit this year, you may carry part of it forward if the credit is refundable.
Note: Do not enter on any credits passed through to you from a partnership, limited liability company, or tax-option corporation on line 4. These will be included when you make the adjustments described in Codes 51 and 52.
List each credit and the correct code number separately on line 4. Include the following credits computed for 2017:
Development Zone Credit - Code 08
Technology Zone Credit - Code 09
Enterprise Zone Jobs Credit - Code 10
Manufacturing Investment Credit - Code 11
Economic Development Tax Credit - Code 12
Jobs Tax Credit Business Development Credit - Code 13
Capital Investment Credit - Code 14
Community Rehabilitation Program Credit - Code 15
Research Credit - Code 16
Manufacturing and Agriculture Credit - Code 17
Exception - The amount of manufacturing and/or agriculture credit computed for 2016 must be added to earnings on your 2017 Wisconsin income tax return. This is the total from line 16 of your 2016 Schedule MA-A or MA-M.
Business Development Credit - Code 18
Electronics and Information Technology Manufacturing Zone Credit - Code 19
Employee College Savings Account Contribution Credit - Code 20
Difference in Federal and Wisconsin Basis of Depreciated or Amortized Assets:- Code 21
Starting with the first taxable year beginning in 2014, adjustments are to be made over a 5-year period for the difference between the Wisconsin adjusted basis and the federal adjusted basis of assets owned on the last day of the taxable year beginning in 2013. The assets must have been depreciated or amortized for both Wisconsin and federal tax purposes. As a result of these adjustments, the Wisconsin adjusted basis and the federal adjusted basis of these assets is deemed to be equal on the first day of the taxable year beginning in 2014.
If you determined for 2014 that the combined federal adjusted basis of all depreciated and amortized assets was greater than the combined Wisconsin adjusted basis of the assets, you were required to add 20 percent of the difference to 2014, 2015, 2016, 2017, and 2018 Wisconsin income. If you filed a Wisconsin return for a short taxable year in any of these years, you may claim the remaining unamortized balance of the modification on your 2019 return.
If the total federal adjusted basis of the assets was less than the total Wisconsin adjusted basis, see the instructions for line 11, Code 31, Difference in Federal and Wisconsin Basis of Depreciated or Amortized Assets, for the subtraction to be claimed to adjust for this difference for a short taxable year.
ABLE Accounts: - Code 22
The owner (beneficiary) of a qualified ABLE account must include in income any amount withdrawn from a qualified ABLE account for any reason other than the payment of qualified disability expenses for the account beneficiary. Also, upon termination of an account, an addition to income is provided for any amount in the account that is returned to an account owner’s estate.
Business Moving Expenses - Code 23
Report the amount of moving expenses deducted from your federal income to move a Wisconsin business operation to a location outside Wisconsin or the United States. You can review a list of allowable moving expenses, here.
The following codes may be an Addition or a Subtraction to Income:
The following items may be either an addition to or a subtraction from federal adjusted gross income, depending on your situation. Fill in the code number and amount of any additions that apply to you on line 4. Fill in the code number and amount of any subtractions that apply to you on line 11.
Note: If an adjustment listed on Schedule 2K-1, 3K-1, or 5K-1 is due to a variation between federal and Wisconsin law, this number should be modified on Wisconsin Schedule I. (i.e bonus depreciation)
Tax-Option (S) Corporation Adjustments: (addition or subtraction) - Code 51
Fill in any of the following adjustments that apply to you:
- If you were a shareholder of a tax-option (S) corporation which is required to file a Wisconsin franchise or income tax return, you will receive a Wisconsin Schedule 5K-1 from the S Corporation informing you of any adjustments to be made for Wisconsin tax purposes.
- If you are a shareholder of a federal S corporation that elects not to be treated as a Wisconsin tax-option (S) corporation, you must reverse all items of S Corporation income, loss, or deduction included in your federal return and then add your pro rata share of any distributions made by the corporation of earnings and profits. (CAUTION - Do not reverse any items of S corporation income or loss reported on Federal Schedule D. These items have aleady been removed from Wisconsin income when you completed Wisconsin Schedule WD.)
- Instead of using tax-option (S) corporation items deductible on federal Schedule A to compute the Wisconsin itemized deduction credit, you may elect to treat these items as subtraction modifications. Your subtraction is limited to the amount actually deductible for federal purposes. This includes any limitation when federal itemized deductions are reduced due to federal adjusted gross income limits.
Note: If you are a shareholder of more than one tax-option (S) corporation and have adjustments from more than one entity, list each entity adjustment separately. For example, if you have a $1,000 subtraction from tax-option (S) corporation A and a $5,000 subtraction from tax-option (S) corporation B, enter two separate subtractions on line 11 with Code 51.
Your Share of Partnership, Limited Liability Company, or Trust or Estate Adjustments: (addition or subtraction)- Code 52
If you were a member of a partnership or limited liability company (LLC) treated as a partnership, or you received income from an estate or trust, you will receive a statement from the partnership, LLC, trust, or estate notifying you of any additions or subtractions which you should make on your return. Enter the amount of any such additions on line 4 and any subtractions on line 11.
Note: A copy of the Schedule 2K-1 or 3K-1 is required when making adjustment, submit copy with return.
Charitable Contributions: (addition or subtraction)- Code 53
If you were a shareholder of a tax-option (S) corporation, you may elect to treat your charitable contributions reported on Schedule 5K-1, line 12a, as a subtraction modification instead of an itemized deduction for the Wisconsin itemized deduction credit. Your subtraction is limited to the amount actually deductible for federal purposes (as allowable under Wisconsin law) on federal Schedule A (Form 1040 or 1040-SR). Include a copy of Schedule 5K-1, as described above under Code 51.
If the tax-option (S) corporation elected to be taxed at the entity level, do not take a subtraction for charitable contributions reported on Schedule 5K-1. In addition, these amounts may not be used in the computation of the itemized deduction credit.
Differences in Federal & Wisconsin Basis of Assets: (addition or subtraction)- Code 54
Additions or subtractions may be necessary if there is a difference between the federal basis and the Wisconsin basis of your property. Additions or subtractions are necessary if:
- You acquired property after December 31, 2013, which may be depreciated or amortized (such as buildings and leaseholds), and the federal basis is greater or less than the Wisconsin basis at the time you acquired the property.
- You sold (or otherwise disposed of) property which may not be depreciated or amortized (such as land, stocks, and bonds) in a taxable transaction, and your basis in the assets was greater or less for federal purposes than for Wisconsin.
- You sold (or otherwise disposed of) property where the federal basis is greater than the Wisconsin basis due to a previous gain on the sale of an asset being deferred because gain was invested in a "qualified new business venture" or a "qualified Wisconsin business."
Exception Do not use Code 54 for the following situations.
- If the difference in basis is due to the difference in the federal and Wisconsin definition of the Internal Revenue Code (for example, Wisconsin did not allow bonus depreciation for tax year 2018), use Schedule I to adjust for the difference in depreciation for each year there is a difference in depreciation due to the difference in basis.
- If the difference in basis is due to using a different federal election for Wisconsin, (for example, electing to claim a different amount of sec. 179 expense), use Schedule I to adjust for the difference in depreciation as a result of the difference in federal and Wisconsin basis, or submit a pro forma federal return based on the election chosen for Wisconsin.
Differences in Federal & Wisconsin Basis of Partnership Interest: (addition or subtraction)- Code 55
An addition or subtraction may be necessary if you sold your interest in a partnership and any increases or decreases were made to the federal basis of your partnership interest in taxable years prior to 1975, which resulted from partnership business or property located outside Wisconsin. (Prior to 1975, Wisconsin did not tax income from business or property located outside Wisconsin.) Compute any addition or subtraction due to a difference in basis on Wisconsin Schedule T.
Differences in Federal & Wisconsin Reporting of Marital Property (Community): (addition or subtraction)- Code 55
If you are married filing a separate return or married filing as head of household or if you obtained a decree of divorce or separate maintenance during 2017, you may have to report a different amount of income on your Wisconsin Form 1 than on your federal Form 1040. Fill in on line 4 any additional amount which is taxable to you rather than your spouse because of any difference in federal and state reporting of marital property (community) income. Fill in on line 11 any amount which is taxable to your spouse rather than to you because of any difference in federal and state reporting of marital property (community) income.
Other Additions to Income:
The code number is printed to the left of the different additions. The total of this information is added together and will appear on line 4 of your state Form 1. The item's code number will be listed, along with the amount you enter.
Capital Gain/Loss Addition:
If your federal adjusted gross income takes into account capital gains and/or losses, you are required to complete Schedule WD.
Schedule WD dictates whether any capital gain/loss addition needs to be recorded on line 3. For example, after completion of Schedule WD, you may be necessary to add an amount as an addition to income on line 3 since Wisconsin law limits the subtraction for a net capital loss to $500.
NOTE: If the only number reported on line 13 of Form 1040 (line 10 of Form 1040A) is a capital gain distribution from a real estate investment trust or from a mutual fund and you don't have a Wisconsin capital loss carryover, do not complete line 3. See line 10 instructions.
For further information, get Publication 109, Tax Information for Married Persons Filing Separate Returns and Persons Divorced in 2017.
For additional information see the Instructions for Wisconsin Form 1