Count months or days to determine date when 59 1/2?

Discussion in 'Tax' started by Victor Roberts, Sep 13, 2005.

  1. In a previous note I mentioned that the instructions for the
    NY state tax return, IT-201, state that pension payments
    received after a person turns 59 1/2 are excluded from
    taxable income in New York State.

    The simple statement above raises two questions. First, is a
    pension payment received on the day a person turns 59 1/2
    excludable, or does the payment have to be received the
    first day AFTER a person turns 59 1/2, per wording of the
    IT-201 instructions?

    Second, is the date when a person turns 59 1/2 determined by
    counting months or days? That is , does the person take his
    or her birth date and add six months, or is it possible to
    take the day of the year when the person turns 59 and then
    add 183 days to find the date when that person turns 59 1/2?
    In may case, using the day calculation lets me exclude one
    additional month of pension payments.

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 13, 2005
    #1
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  2. Victor Roberts <> wrote:

    > In a previous note I mentioned that the instructions for the
    > NY state tax return, IT-201, state that pension payments
    > received after a person turns 59 1/2 are excluded from
    > taxable income in New York State.
    >
    > The simple statement above raises two questions. First, is a
    > pension payment received on the day a person turns 59 1/2
    > excludable, or does the payment have to be received the
    > first day AFTER a person turns 59 1/2, per wording of the
    > IT-201 instructions?


    Since NY says "after" 59 1/2 then it would be the day after
    not the day they turned 59 1/2. I am basing what NY says on
    your representation. Read the law carefully to see how it
    is phrased. But why not just wait the extra day to be safe?

    > Second, is the date when a person turns 59 1/2 determined by
    > counting months or days? That is , does the person take his
    > or her birth date and add six months, or is it possible to
    > take the day of the year when the person turns 59 and then
    > add 183 days to find the date when that person turns 59 1/2?
    > In may case, using the day calculation lets me exclude one
    > additional month of pension payments.


    You count months. So if you were born 6-8-1950 then you
    turn 59 1/2 on 12-8-2009. At least that is how IRS counts.

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    Drew Edmundson, Sep 15, 2005
    #2
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  3. Victor Roberts

    MTW Guest

    Drew Edmundson wrote:

    > You count months. So if you were born 6-8-1950 then you
    > turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    Actually, wouldn't you turn 59 1/2 at midnight on 12-7-2009 ???

    So, if you received something on the 7th, it would be BEFORE
    turning 59 1/2. If you received it on the 8th, it would be
    AFTER. If you received it at exactly midnight between the
    two dates, then you would have a factual dilemma on your
    hands. <grin>

    MTW

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    MTW, Sep 15, 2005
    #3
  4. Drew Edmundson <> wrote:
    > Victor Roberts <> wrote:


    >> In a previous note I mentioned that the instructions for the
    >> NY state tax return, IT-201, state that pension payments
    >> received after a person turns 59 1/2 are excluded from
    >> taxable income in New York State.
    >>
    >> The simple statement above raises two questions. First, is a
    >> pension payment received on the day a person turns 59 1/2
    >> excludable, or does the payment have to be received the
    >> first day AFTER a person turns 59 1/2, per wording of the
    >> IT-201 instructions?


    > Since NY says "after" 59 1/2 then it would be the day after
    > not the day they turned 59 1/2. I am basing what NY says on
    > your representation. Read the law carefully to see how it
    > is phrased.


    I have not read the actual tax law, but one NYS publication
    says "after" 59 1/2 as I stated in my original note and
    another NYS tax publication says "on or after". I guess I
    will have to contact the DTF.

    > But why not just wait the extra day to be safe?


    Because I will lose the exemption for a one additional
    month.

    >> Second, is the date when a person turns 59 1/2 determined by
    >> counting months or days? That is , does the person take his
    >> or her birth date and add six months, or is it possible to
    >> take the day of the year when the person turns 59 and then
    >> add 183 days to find the date when that person turns 59 1/2?
    >> In may case, using the day calculation lets me exclude one
    >> additional month of pension payments.


    > You count months. So if you were born 6-8-1950 then you
    > turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    Do you have an IRS reference?

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 15, 2005
    #4
  5. Drew Edmundson <> wrote:

    > Since NY says "after" 59 1/2 then it would be the day after
    > not the day they turned 59 1/2.


    I'd calculate it differently. The date someone turns any
    age, including 59 1/2, it is the day after they have lived
    59 1/2 years. Whether you calculate from midnight or even
    the exact time of birth, the anniversary is "after" the
    requisite number of years.

    > I am basing what NY says on
    > your representation. Read the law carefully to see how it
    > is phrased. But why not just wait the extra day to be safe?


    Can't argue with that.

    Stu

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    Stuart A. Bronstein, Sep 15, 2005
    #5
  6. Drew Edmundson <> wrote:
    > Victor Roberts <> wrote:


    >> In a previous note I mentioned that the instructions for the
    >> NY state tax return, IT-201, state that pension payments
    >> received after a person turns 59 1/2 are excluded from
    >> taxable income in New York State.
    >>
    >> The simple statement above raises two questions. First, is a
    >> pension payment received on the day a person turns 59 1/2
    >> excludable, or does the payment have to be received the
    >> first day AFTER a person turns 59 1/2, per wording of the
    >> IT-201 instructions?


    > Since NY says "after" 59 1/2 then it would be the day after
    > not the day they turned 59 1/2. I am basing what NY says on
    > your representation. Read the law carefully to see how it
    > is phrased. But why not just wait the extra day to be safe?


    In my earlier post I stated that two different NYS DTF
    documents stated this in two different ways, one says "after
    59 1/2" and the other says "59 /12 or older". So I read the
    applicable section of New York State Consolidated Law, and
    the wording there is that "pensions received by an
    individual who has attained the age of fifty-nine and
    one-half ..." So - that seems to settle this question.

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 17, 2005
    #6
  7. Victor Roberts <> wrote:
    > Drew Edmundson <> wrote:


    snip

    >> But why not just wait the extra day to be safe?


    > Because I will lose the exemption for a one additional
    > month.


    Ok, I understand now. You were already receiving the
    benefits prior to age 59 1/2. you must have or going to
    have a distribution on or about 59 1/2.

    >>> Second, is the date when a person turns 59 1/2 determined by
    >>> counting months or days? That is , does the person take his
    >>> or her birth date and add six months, or is it possible to
    >>> take the day of the year when the person turns 59 and then
    >>> add 183 days to find the date when that person turns 59 1/2?
    >>> In may case, using the day calculation lets me exclude one
    >>> additional month of pension payments.


    >> You count months. So if you were born 6-8-1950 then you
    >> turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    > Do you have an IRS reference?


    See Reg.1.401(a)(9)-2 for how to calculate age 70 1/2. As
    this is a retirement regulation I believe it makes sense to
    follow it for age 59 1/2.

    For other purposes you turn an age on other dates. For
    example a child turns 18 on her 18th birthday (see Rev. Rul.
    2003-72) but a senior turns 65 on the day before his 65th
    birthday (it is my understanding this is based on common
    law). See the 1040 instructions for an example for age 65.

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    Drew Edmundson, Sep 17, 2005
    #7
  8. Victor Roberts

    Guest

    MTW wrote:
    > Drew Edmundson wrote:


    >> You count months. So if you were born 6-8-1950 then you
    >> turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    > Actually, wouldn't you turn 59 1/2 at midnight on 12-7-2009???


    In part, the answer depends on what you mean by the phrase
    "midnight on 12-7-2009". I suspect you misstated what you
    intended to say. See below.

    In any case, if you are born on 6-8-1950, then you "turn 59"
    on 6-8-2009. I hope you agree with that. If not, we have a
    serious "fail-ure to com-muni-cate". I think you would be
    out of step with everyone else.

    By analogy, you turn 59 1/2 6 months after you turn 59,
    which is 12-8-2009. As Drew states correctly, the law
    counts months, not days. If it counted days, we would have
    a serious debate about how many days constitute "6 months".
    Is it 182? Is it 183? Is it 180? (Rhetorical questions.)

    > So, if you received something on the 7th, it would be BEFORE
    > turning 59 1/2. If you received it on the 8th, it would be
    > AFTER. If you received it at exactly midnight between the
    > two dates, then you would have a factual dilemma on your
    > hands. <grin>


    That reveals your misunderstanding or misuse of the phrase
    "midnight on 12-7-2009". Apparently you meant to say
    "midnight on 12-8-2009".

    Midnight on 12-7-2009 occurs one minute after 11:59pm on
    12-6-2009. Midnight is the beginning of the day. This is
    evidenced by the fact that midnight is 12am -- "ante
    meridian" means "before noon". This is also explained
    somewhere in the banking code, as I recall. I forgot where.
    I briefed this several years ago.

    More to the point, if you insist on your hypothesis, why do
    you assume that a person would turn a particular age (e.g,
    59 1/2) exactly at midnight? If you believe we determine an
    "exact" age based on time of day, why wouldn't it depend on
    the time of birth? (Rhetorical question.)

    Anyway, I think we can show by analogy that the law -- at
    least the IRS -- draws no such distinction. Consider the
    definition of "holding period" in IRS Pub 550. In an
    example, it states: "If you bought invested property on
    February 5, 2003, and sold it on February 5, 2004, your
    holding period is not more than 1 year and you have a
    short-term capital gain or loss. If you sold it on February
    6, 2004, your holding period is more than 1 year and you
    have a long-term capital gain or loss".

    Note that "not more than" means "less than or equal to". So
    February 5 is "equal to". No mention of midnight or any
    other time of day as a special case.

    Finally, hopefully to put the question to rest, IRS Pub 575
    states: "You reach age 70 1/2 on the date that is 6
    calendar months after the date of your 70th birthday. For
    example, if your 70th birthday was on June 30, 2004, you
    reached age 70 1/2 on December 30, 2004. If your 70th
    birthday was on July 1, 2004, you reached age 70 1/2 on
    January 1, 2005."

    Again, no mention of special cases based on time of day.

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    , Sep 17, 2005
    #8
  9. Victor Roberts

    Guest

    Drew Edmundson wrote:

    > Since NY says "after" 59 1/2 then it would be the day after
    > not the day they turned 59 1/2.
    > [....]
    > You count months. So if you were born 6-8-1950 then you
    > turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    As evidenced by IRS Pub 575 states, which states: "You
    reach age 70 1/2 on the date that is 6 calendar months after
    the date of your 70th birthday. For example, if your 70th
    birthday was on June 30, 2004, you reached age 70 1/2 on
    December 30, 2004. If your 70th birthday was on July 1,
    2004, you reached age 70 1/2 on January 1, 2005."

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    , Sep 17, 2005
    #9
  10. Victor Roberts

    Guest

    Victor Roberts wrote:
    > Drew Edmundson <> wrote:


    >> You count months. So if you were born 6-8-1950 then you
    >> turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    > Do you have an IRS reference?


    Not a legal citation, but probably good enough for your
    purposes ....

    IRS Pub 575 states: "You reach age 70 1/2 on the date
    that is 6 calendar months after the date of your 70th
    birthday. For example, if your 70th birthday was on
    June 30, 2004, you reached age 70 1/2 on December 30,
    2004. If your 70th birthday was on July 1, 2004, you
    reached age 70 1/2 on January 1, 2005."

    No mention of midnight or any other time of day as a
    special case.

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    , Sep 17, 2005
    #10
  11. Victor Roberts

    A.G. Kalman Guest

    Stuart A. Bronstein wrote:
    > Drew Edmundson <> wrote:


    >> Since NY says "after" 59 1/2 then it would be the day after
    >> not the day they turned 59 1/2.


    > I'd calculate it differently. The date someone turns any
    > age, including 59 1/2, it is the day after they have lived
    > 59 1/2 years. Whether you calculate from midnight or even
    > the exact time of birth, the anniversary is "after" the
    > requisite number of years.


    >> I am basing what NY says on
    >> your representation. Read the law carefully to see how it
    >> is phrased. But why not just wait the extra day to be safe?


    > Can't argue with that.


    There is a very good explanation of the IRS rules for calculating
    age in the 2003 archives at taxingsubjects.com.
    http://tinyurl.com/bcy86

    --
    Alan
    http://taxtopics.net

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    A.G. Kalman, Sep 17, 2005
    #11
  12. Victor Roberts

    Guest

    A.G. Kalman wrote:

    > There is a very good explanation of the IRS rules for
    > calculating age in the 2003 archives at taxingsubjects.com.
    > http://tinyurl.com/bcy86


    Be sure to read down to the paragraph that states:

    "However, according to the IRS, it does not apply for the
    attainment of age 59.5 or 70.5 or for any other half or
    partial age according to the IRS (see Regulations section
    1.401(a)(9)-2)." (Klunk!)

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    , Sep 20, 2005
    #12
  13. Drew Edmundson <> wrote:

    > For other purposes you turn an age on other dates. For
    > example a child turns 18 on her 18th birthday (see Rev. Rul.
    > 2003-72) but a senior turns 65 on the day before his 65th
    > birthday (it is my understanding this is based on common
    > law). See the 1040 instructions for an example for age 65.


    The common law rule (therefore not necessarly applicable in
    Louisiana) is that, when calculating any time period you
    include the first day and exclude the last. So when
    calculating whether someone has reached any particular age
    you include the date of birth and exclude the latest
    birthday. In other words on the birthday the person is
    "over" the number of years of his age.

    Stu

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    Stuart A. Bronstein, Sep 20, 2005
    #13
  14. Drew Edmundson <> wrote:

    > See Reg.1.401(a)(9)-2 for how to calculate age 70 1/2. As
    > this is a retirement regulation I believe it makes sense to
    > follow it for age 59 1/2.
    >
    > For other purposes you turn an age on other dates. For
    > example a child turns 18 on her 18th birthday (see Rev. Rul.
    > 2003-72) but a senior turns 65 on the day before his 65th
    > birthday (it is my understanding this is based on common
    > law). See the 1040 instructions for an example for age 65.


    Thanks!

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 20, 2005
    #14
  15. > By analogy, you turn 59 1/2 6 months after you turn 59,
    > which is 12-8-2009. As Drew states correctly, the law
    > counts months, not days. If it counted days, we would have
    > a serious debate about how many days constitute "6 months".
    > Is it 182? Is it 183? Is it 180? (Rhetorical questions.)


    I can't understand how anyone could justify 180 days, but
    the exact number of days for a non-leap year is 182.5 days,
    which I would be willing to round up to 183.

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 20, 2005
    #15
  16. >> Since NY says "after" 59 1/2 then it would be the day after
    >> not the day they turned 59 1/2.
    >> [....]
    >> You count months. So if you were born 6-8-1950 then you
    >> turn 59 1/2 on 12-8-2009. At least that is how IRS counts.


    > As evidenced by IRS Pub 575 states, which states: "You
    > reach age 70 1/2 on the date that is 6 calendar months after
    > the date of your 70th birthday. For example, if your 70th
    > birthday was on June 30, 2004, you reached age 70 1/2 on
    > December 30, 2004. If your 70th birthday was on July 1,
    > 2004, you reached age 70 1/2 on January 1, 2005."


    Well, I'm still looking for the law itself. I have cited two
    NY tax publications which have different statements
    regarding the pension exemption, and neither has the same
    wording as the New York Consolidated Law.

    Note that Social Security regulations do not use the term
    "59 1/2" which I believe is ambiguous. The Social Security
    regs state "59 years plus six months." Nice!

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

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    Victor Roberts, Sep 20, 2005
    #16
  17. Victor Roberts

    MTW Guest

    wrote:

    > In part, the answer depends on what you mean by the phrase
    > "midnight on 12-7-2009". I suspect you misstated what you
    > intended to say.


    Oops, your right! Thanks for your explanation. This stuff
    gives me fits.

    MTW

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    MTW, Sep 20, 2005
    #17
  18. Drew Edmundson <> wrote:

    [snip]

    > See Reg.1.401(a)(9)-2 for how to calculate age 70 1/2. As
    > this is a retirement regulation I believe it makes sense to
    > follow it for age 59 1/2.


    Thanks.

    > For other purposes you turn an age on other dates. For
    > example a child turns 18 on her 18th birthday (see Rev. Rul.
    > 2003-72) but a senior turns 65 on the day before his 65th
    > birthday (it is my understanding this is based on common
    > law). See the 1040 instructions for an example for age 65.


    The "day before 65" rule seems to be used only for year-end
    purposes. As far as I can tell this is not written into the
    law, which I believe says "attained" but the IRS had decided
    that you "attain" 65 on December 31 if you were born on
    January 1.

    I have been taught here that tax regulations are not
    necessarily logical; but logical or not, I believe they
    should be consistent. Using the "day before" rule for
    attainment of agree 65 at year end, while not using it for
    "attainment" of age 18 or 70 1/2 or 59 1/2 seems to be the
    height of inconsistency.

    --
    Vic Roberts
    Replace xxx with vdr in e-mail address.

    Moderator:
    Consistency would be nice. As Mister Spock would say
    "It is logical". But you are referring to the work
    product of the Congress of the United States which has
    less respect for consistency and logic than I have for
    precedent.

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    Victor Roberts, Sep 20, 2005
    #18
  19. Victor Roberts

    MTW Guest

    wrote:

    > In any case, if you are born on 6-8-1950, then you "turn 59"
    > on 6-8-2009. I hope you agree with that. If not, we have a
    > serious "fail-ure to com-muni-cate". I think you would be
    > out of step with everyone else.


    Actually, I think the answer to that is "it depends."
    According to the so-called common law rule (which I ineptly
    referred to earlier), you "attain" a particular age at the
    earliest moment (midnight?) on the day BEFORE your
    birthdate.

    It appears that the IRS follows this approach with respect
    to age 65. I note that the Social Security Administration
    ALSO follows this approach. However, for all other age
    measurements it appears that the IRS interprets "attainment"
    as occurring ON your birthdate (or six months later as in
    your case).

    The problem with this, as someone noted, is that the common
    law approach probably SHOULD prevail in the absence of
    specific statutory language that calls for a different
    result. I don't see such language in the case of most age
    definitions in the IRC. So, go figure. <grin>

    MTW

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    MTW, Sep 20, 2005
    #19
  20. Victor Roberts <> wrote:
    > Drew Edmundson <> wrote:


    > [snip]


    >> See Reg.1.401(a)(9)-2 for how to calculate age 70 1/2. As
    >> this is a retirement regulation I believe it makes sense to
    >> follow it for age 59 1/2.


    > Thanks.


    >> For other purposes you turn an age on other dates. For
    >> example a child turns 18 on her 18th birthday (see Rev. Rul.
    >> 2003-72) but a senior turns 65 on the day before his 65th
    >> birthday (it is my understanding this is based on common
    >> law). See the 1040 instructions for an example for age 65.


    > The "day before 65" rule seems to be used only for year-end
    > purposes. As far as I can tell this is not written into the
    > law, which I believe says "attained" but the IRS had decided
    > that you "attain" 65 on December 31 if you were born on
    > January 1.
    >
    > I have been taught here that tax regulations are not
    > necessarily logical; but logical or not, I believe they
    > should be consistent. Using the "day before" rule for
    > attainment of agree 65 at year end, while not using it for
    > "attainment" of age 18 or 70 1/2 or 59 1/2 seems to be the
    > height of inconsistency.


    Well the IRS used to use the same rule for 18, 17, etc. All
    but for the half years. There was a big stink a few years
    ago where some kids birthdays on 1-1 made them 17 for the
    prior year and eliminated the child credit. So IRS nicely
    changed the rule. That is when the 2003 Rev. Rul. came out.

    But they couldn't change the 65 year test or it would upset
    the seniors born on 1-1. People want simple until it comes
    to themselves. Then simple is "unfair."

    << ======================================================= >>
    << The foregoing is intended for educational purposes only >>
    << and does NOT constitute legal OR professional advice. >>
    << >>
    << The Charter and the Guidelines for submitting >>
    << messages to this newsgroup are at www.asktax.org. >>
    << Copyright (2005) - All rights reserved. >>
    << ======================================================= >>
     
    Drew Edmundson, Sep 21, 2005
    #20
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