Wisconsin Legislature: Tax 14.03(2)(a)

Note: Requests for a determination under par. (b) should be addressed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.

(3) More than one household in a homestead. Under s. 71.53 (1) (c), Stats., one claimant from each household may claim a homestead credit whether the household is the sole occupant of a homestead or whether several households share the homestead.

(4) Household occupying more than one homestead in a year. Section 71.52 (7), Stats., provides “. . .If a household owns and occupies 2 or more homesteads in the same calendar year, property taxes accrued is the sum of the prorated property taxes accrued attributable to the household for each of such homesteads. If the household owns and occupies the homestead for part of the calendar year and rents a homestead for part of the calendar year, it may include both the proration of taxes on the homestead owned and rent constituting property taxes accrued with respect to the months the homestead is rented in computing the amount of the claim . . .” Thus, if a household owns and occupies a homestead in Wisconsin for a portion of the year and then establishes a homestead in a rented dwelling in Wisconsin for the remainder of the calendar year, property taxes accrued shall be the prorated portion of property taxes attributable to the months the household resided in the owned homestead and rent constituting property taxes accrued shall be 25% of the gross rent paid for the remainder of the year, or 20% if heat was included in the cost of the rent.

Example: A household owns and occupies a homestead in Wisconsin from January 1 to April 30, and then establishes a homestead in a rented dwelling in Wisconsin with no heat furnished for the remainder of the calendar year. The annual property taxes accrued on the owned homestead equaled $1,800 and gross rent paid for the last 8 months of the year totaled $2,800.

The property taxes and rent allowable for homestead credit purposes equals $1,300, consisting of four-twelfths of the $1,800 of property taxes accrued, or $600, plus 25% of the gross rent of $2,800, or $700 of rent constituting property taxes accrued.

(5) Household occupying more than one dwelling at the same time. Under s. 71.52 (2), Stats., “gross rent” is rental paid for the right of occupancy of a homestead, and under s. 71.52 (7), Stats., “property taxes accrued” are property taxes levied on the homestead of a household. Since a homestead is the principal dwelling of a household, if a household pays gross rent or property taxes accrued on 2 dwellings occupied concurrently by the household, a claimant may claim only the rent or property taxes pertaining to the principal dwelling.

Examples: Examples of 2 dwellings occupied concurrently include:

1) A claimant maintains a permanent homestead and lives part of the year at a summer cottage which he or she owns.

2) A claimant moves from one apartment to another and pays rent for both apartments for a two-month period.

(6) Temporary absence from homestead. A claimant who is temporarily absent from a homestead and who does not establish a homestead elsewhere is considered to reside in the homestead for the period of the temporary absence.

Examples: 1) A person is in the hospital at the end of the calendar year and it is expected that the absence is temporary. The person is considered to reside in the homestead from which the person is temporarily absent.

2) A person seasonally employed away from the homestead is treated similarly as in example 1.

(7) Domicile of armed forces member. A member of the United States armed forces stationed outside Wisconsin who retains a Wisconsin domicile and maintains a Wisconsin homestead shall be eligible for a homestead credit if otherwise qualified, even though the member does not occupy the homestead during the year to which the claim relates or at the time of filing the claim. The absence from the Wisconsin homestead is considered to be a temporary absence.

(8) Citizens of other countries. Under s. 71.52 (1), Stats., a citizen of a country other than the United States is not eligible for a homestead credit unless the person is a resident alien for federal tax purposes who does not intend to return to his or her homeland.

Example: A citizen of another country is in the United States for educational purposes and is required to leave the United States when the educational program is completed. This person is not eligible for a homestead credit.

(9) Person claiming a farmland preservation credit. Under s. 71.58 (1) (b), Stats., a person is not eligible for a homestead credit if the person qualifies for and claims a farmland preservation credit for the same year to which a homestead credit claim relates. However, if a person who has claimed a farmland preservation credit withdraws the claim, the person is no longer ineligible to receive a homestead credit because of the filing of a farmland preservation credit claim. Withdrawal of the farmland preservation credit claim shall be in writing. A homestead credit claim filed after the withdrawal of a farmland preservation credit claim shall be filed by the normal deadline for filing a homestead credit claim or the department shall disallow the claim.

Example: A 2017 homestead credit claim filed after the withdrawal of a 2017 farmland preservation credit claim must be filed on or before April 15, 2022.

Note: A written withdrawal of a farmland preservation credit claim should be mailed to Wisconsin Department of Revenue, P.O. Box 8906, Madison, WI 53708-8906.

(10) Person claimed as a dependent. Under s. 71.53 (2) (d), Stats., a person does not qualify for a homestead credit if the person is claimed as a dependent for federal income tax purposes during the year to which the claim relates, unless the person claiming a homestead credit is 62 years of age or older as of December 31 of the claim year. However, a person is not disqualified if any of the following apply:

(a) The person is improperly claimed as a dependent on a federal income tax return.

(b) The person qualifies to be claimed as a dependent on a federal income tax return but is not claimed.

(c) The person is properly claimed as a dependent on a federal income tax return but on a later amended federal income tax return is not claimed.

(11) Deceased claimant. Under s. 71.53 (1) (b), Stats., a person must be alive at the time a homestead credit claim is filed. A claim completed and signed but not filed until after a person’s death shall be denied.

Note: The qualification for a homestead credit of a person who becomes married or divorced during a claim year or occupies a separate dwelling from his or her spouse for any part of a claim year is described in s. Tax 14.06.

Note: Section Tax 14.02 interprets ss. 71.52 (1), (2) and (7), 71.53 (1) (b) and (c) and (2) (d) and 71.58 (1) (b), Stats.

History: Cr. Register, February, 1990, No. 410, eff. 3-1-90; r. (2) (c) and am. (5), (9), (10) and (11), Register, July, 2000, No. 535, eff. 8-1-00; CR 21-085: am. (9) (Example) Register August 2022 No. 800, eff. 9-1-22.

Tax 14.03 Household income and income.

(1) Purpose. This section clarifies the meaning of“household income” and “income” includable in household income as the terms apply to homestead credit claims.

(2) Definitions. In this section:

(a) “Household income” has the meaning specified in s. 71.52 (5), Stats.

(b) “Income” has the meaning specified in s. 71.52 (6), Stats.

(3) Deduction for dependents.

(a) Under s. 71.52 (5), Stats., a deduction of $500 is allowed for each of the claimant’s dependents, as defined in s. 152 of the Internal Revenue Code, who have the same principal abode as the claimant for more than 6 months during the calendar year to which a claim for homestead credit relates. A claimant may multiply the number of dependents with the same principal abode for more than 6 months by $500 and subtract the result from the total of the income items to arrive at household income.

Example: A claimant and the claimant’s spouse claim 3 dependents on their 2014 federal income tax return, and all 3 dependents have the same principal abode as the claimant for the entire year. Household income items include Wisconsin adjusted gross income of $10,500, depreciation of $1,500 and unemployment insurance of $500.

Total household income is $11,000, consisting of the total of the income items listed, $12,500, minus the dependent deduction of $1,500, which is $500 multiplied by 3 dependents.

(b) A dependent is considered to have the same principal abode as the claimant during temporary absences from the claimant’s homestead for reasons such as school attendance, illness, vacations, business commitments or military service.

(c) In the following situations, a dependent who does not have the same principal abode as the claimant for more than 6 months during the calendar year to which a claim for homestead credit relates is nonetheless considered to have the same principal abode for more than 6 months if during that year:

1. The dependent is born or dies, and the dependent has the same principal abode as the claimant during the entire time the dependent is alive during that year.

2. The dependent is adopted by the claimant, is placed with the claimant for adoption or becomes the stepchild of the claimant, and the dependent has the same principal abode as the claimant from that time to the end of that calendar year.

(4) Items includable in income. Under s. 71.52 (6), Stats., income includes the sum of:

(a) “Wisconsin adjusted gross income” as defined in s. 71.01 (13), Stats., for the calendar year to which a claim for homestead credit relates.

(b) The following amounts to the extent not included in Wisconsin adjusted gross income:

1. Maintenance payments, not including foster care maintenance and supplemental payments excludable under s. 131 of the internal revenue code.

2. Court-ordered support payments, including support for dependents under ch. 49, Stats.

3. Cash public assistance and county relief, including the following:

a. Aid to families with dependent children, or “AFDC.”

b. Wisconsin works, or “W-2” payments.

c. Non-legally responsible relative, or “NLRR” AFDC payments or kinship care payments under s. 48.57, Stats. These are payments received as a relative other than a parent, for caring for a dependent child in the claimant’s homestead.

d. Cash benefits paid by counties under s. 59.53 (21), Stats.

e. Reimbursement from a governmental agency for amounts originally paid for by the recipient, not including cash reimbursements for home energy assistance or for services under Title XX of the federal social security act and community options program, or “COP” payments under s. 46.27, 2017 Stats.

f. Adoption assistance payments under Title IV-E of the federal social security act or from another state, or payments by the Wisconsin department of children and families under s. 48.975, Stats., to adoptive parents of children having special needs as described in s. DCF 50.03 (1) (b).

g. Veterans administration payments for reimbursement of services purchased by the recipient.

h. Federal housing and urban development, or “H.U.D.” payments for housing.

i. Disaster relief grants under the federal disaster relief act of 1974.

4. The gross amount of a pension or annuity, including:

a. Railroad retirement benefits.

b. Veterans’ disability pensions.

c. Any amounts withheld by the payor.

d. Nontaxable recoveries of cost.

e. Disability income exclusions from taxable income.

Example: Gross amount of a pension. A claimant was entitled to a pension of $8,000 during the year but received only $5,600 after $2,400 was withheld by the payor for payment of health insurance premiums for the claimant. Of the $8,000 pension, $2,000 was a return of the claimant’s contribution.

The gross pension of $8,000 must be included in income.

5. Except as provided in subd. 3. e., all payments received for the benefit of a claimant or a member of the claimant’s household under the federal social security act, including:

a. All federal social security retirement, disability or survivorship benefits.

b. Lump sum death benefits.

c. Medicare premiums deducted from social security benefits received by all members of a household.

d. Supplemental security income, or “SSI” benefits received by persons over 65 years of age, or blind or disabled.

e. Supplemental security income - exceptional needs, or “SSI-E” payments under s. 49.77 (3s), Stats.

6. Compensation and other cash benefits received from the United States for past or present service in the armed forces.

7. Payments made to surviving widows, widowers or parents of veterans by the United States, but not including insurance proceeds received by beneficiaries of National Service Life Insurance.

8. Proceeds from a personal endowment insurance policy or annuity contract purchased by the recipient.

9. The gross amount of “loss of time” insurance proceeds.

10. Nontaxable interest received from the federal government or any of its instrumentalities, or from state or municipal bonds.

11. Scholarship and fellowship gifts or income and other educational grants, not including student loans.

12. Unemployment insurance, including railroad unemployment compensation.

13. Workers’ compensation.

14. Capital gains not included in Wisconsin adjusted gross income, but not including a nonrecognized gain from an involuntary conversion under s. 1033 of the internal revenue code.

15. A gain on the sale of a personal residence excluded under s. 121 of the internal revenue code. A gain on the sale of a personal residence which would be reportable under the installment sale method if taxable may be reported either in full in the year of sale or each year as payments are received.

16. Dividends not included in Wisconsin adjusted gross income.

17. Income of a nonresident or part-year resident married to a full-year resident of Wisconsin.

18. A housing allowance provided to a member of the clergy.

19. The amount by which a resident manager’s rent is reduced.

20. Income of a Native American which is nontaxable under ch. 71, Stats.

21. Income from sources outside of Wisconsin which is nontaxable under ch. 71, Stats.

22. Nontaxable deferred compensation.

(c) The following items deducted in determining Wisconsin adjusted gross income, including items deducted in arriving at partnership, limited liability company and tax-option “S” corporation income or losses reported as a part of Wisconsin adjusted gross income:

1. Intangible drilling costs.

2. Depletion allowances.

3. Depreciation, including that portion of the standard mileage rate which is determined under the internal revenue code to be depreciation.