Rhode Island begins with Federal Adjusted Gross Income (AGI) and then requires certain additions and modifications to determine Rhode Island taxable income.
Pathway to this entry is: Rhode Island State Return > Additions to Income
What Are Additions to Income?
Additions to income are amounts that must be added back to federal income when calculating Rhode Island taxable income.
These additions generally result from differences between federal and Rhode Island tax law.
What Income Adjustments Can Be Entered in This Section?
RI Fiduciary Adjustment
Enter any Rhode Island fiduciary adjustment reported on a Rhode Island Schedule K-1 or other applicable Rhode Island tax document.
Recapture of Family Education Account
Enter any required recapture of previously deducted contributions to a Rhode Island Family Education Account.
Bonus Depreciation Addback Adjustment
Enter any bonus depreciation adjustment that Rhode Island requires to be added back to income.
This adjustment is commonly associated with differences between federal and Rhode Island depreciation rules.
Recapture of Tuition Savings Program
Enter any required recapture resulting from withdrawals or distributions from a qualified tuition savings program that no longer qualify for favorable tax treatment.
Recapture of Historic/Motion Picture Tax Credit
Enter any amount required to be recaptured related to a Rhode Island Historic Preservation or Motion Picture Tax Credit.
Recapture of Scituate Medical Savings Account
Enter any required recapture of previously deducted contributions to a Scituate Medical Savings Account.
Pass-Through Entity Tax Elected to Be Paid Under RIGL §44-11-2.3
Enter any pass-through entity tax adjustment required under Rhode Island law.
This amount is generally provided by the pass-through entity on supporting tax documents.
Unemployment Compensation Received but Not Included in Federal AGI
Enter unemployment compensation received that was excluded from Federal Adjusted Gross Income but must be included for Rhode Island tax purposes.
Taxable Portion of Paycheck Protection Program (PPP) Loan Amount
Enter any taxable portion of a Paycheck Protection Program (PPP) loan required to be included in Rhode Island income.
What Is the Add Back of Federal P.L. 119-21, H.R.1 (Schedule HR1)?
Schedule HR1 is used to report adjustments related to Rhode Island's treatment of certain federal deductions and benefits allowed under Public Law 119-21 (H.R.1).
Taxpayers who claimed certain federal deductions may be required to add those amounts back to Rhode Island income.
Who May Need to Complete Schedule HR1?
You may need Schedule HR1 if you claimed any of the following federal tax benefits:
- Business Interest Expense Deduction reported on Federal Schedule C.
- Business Interest Expense received through a Schedule K-1.
- Section 174A research and experimental expenditure deductions.
- Depreciation deductions for business assets subject to Rhode Island adjustment rules.
- Qualified Sound Recording Production Deductions.
What Information Is Needed for Schedule HR1?
Business Interest Expense Deduction
Enter the amount of business interest expense deducted on your federal return that is subject to Rhode Island adjustment requirements.
Section 174A Amortization Adjustment
Taxpayers who made a Section 174A election may be required to complete Schedule 174A.
Information requested may include:
- Description of the expenditure.
- Date amortization began.
- Amortizable amount.
- Amortization period or percentage.
- Current year amortization amount.
Depreciation of Business Assets
Enter any depreciation adjustments required under Rhode Island law.
Qualified Sound Recording Production Deduction
Enter any Qualified Sound Recording Production Deduction that must be added back for Rhode Island purposes.
How Do Additions to Income Affect My Return?
Rhode Island additions to income may:
- Increase Rhode Island taxable income.
- Reduce a Rhode Island refund.
- Increase the amount owed on the return.
- Create differences between federal and Rhode Island taxable income.
Important Information
- Rhode Island does not always follow federal tax law when determining taxable income.
- Certain deductions allowed on the federal return may require an addition to income on the Rhode Island return.
- Taxpayers with pass-through income, business deductions, depreciation adjustments, or Schedule K-1 income should review this section carefully.
- Supporting documentation should be retained with your tax records.
- Amounts entered in this section may increase Rhode Island taxable income and tax liability.
Additional Information
Review all federal schedules, Rhode Island schedules, and Schedule K-1 information before completing the Additions to Income section. Taxpayers claiming deductions affected by Rhode Island adjustment rules may be required to complete Schedule HR1 and related schedules.
For additional information pertaining to these additions, please see Schedule M.