Withdrawing 401k funds prior to moving to another state but received in new state - do I pay taxes to new state?

Forum|Forum|7 years ago
February 1, 2019
3 replies
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I began the withdrawal process from my 401k while in Arizona and received it 6 weeks later while living in Oregon. Arizona state tax was withheld, according to my 1099-R. Do I need to include it in my part-of-the-year Oregon state return and have additional tax deducted? Wouldn't the state tax withheld from Arizona be sufficient?

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NCPERSON1

just do both AZ and OR in TurboTax - it will figure it out for you

C

clarysageAuthor

Employee

Thank for your reply.

Arizona does not ask the same questions for the IRA Distributions, Pensions and Annuities portion, thus the problem.

"Report the part of the following income that you received while you were an Oregon resident or that you've earned from Oregon sources." Do I type the entirety of my withdrawal, matching the "federal" amount box, or place it as 0, as it was already taxed on my 1099 by Arizona?

When I file my Arizona state tax, it does not ask this information.

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NCPERSON1

suggest answering the question as asked:

Report the part of the following income that you received while you were an Oregon resident or that you've earned from Oregon source

Were you a resident of Oregon when you actually received the payment?

Type the information on the Form 1099 EXACTLY as it was presented to you

it could turn out that while the withholdings went to Arizona it could result in significant taxes owed to Oregon but a significant refund from Arizona.

suggestion / advise: don't confuse "taxes owed" and "withholdings" - they are horses of a different color :-)

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clarysageAuthor

Employee

The problem is that I do not know how to appropriately fill out the forms. I was paying through the Arizona State Retirement System as a teacher but withdrew it prior to relocating. Does this mean that it is an Oregon pension withdrawal because I received my check at my new address a few weeks after moving?

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OldTaxDude

Employee

I'd go with the 1099. If it has AZ tax withheld, then report that as AZ pre-move.

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NCPERSON1

OldtaXdude - can you support your response with a link to Turbotax supporting that opinion?

normally, non-resident state taxes (AZ) are to be done first and then resident state taxes last (OR)

again, guessing at the approach and guessing wrong invalidates the Turbo Tax warrentee should tax and penalties later be owed.

Best to answer the questions as TT asks then since they are the experts which is why individuals buy their software and that expertise is baked u[p by the warrentee

thx