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February 7, 2023
Question

While living in Florida the first half of '22, I took an early 401k distribution. I moved to Alabama in Sept. Is the early distribution taxable on my Alabama return?

  • February 7, 2023
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1 reply

February 7, 2023

No, you don't have to enter your 401K distribution on your AL income tax return since you received the distribution in Florida, where you were a resident.

 

Please see the information below from the TurboTax FAQ How do I allocate (split) income for a part-year state return?

Allocating unearned income is pretty straightforward: just allocate it to the state you were a resident of when you received it. Here are some examples:

  • You received three quarterly dividend payments while living in Arkansas, and the remaining dividend while living in Oklahoma. Allocate the first three payments to Arkansas and the last payment to Oklahoma
  • You sold some stocks right after you moved to Iowa. Allocate the gain to Iowa.
  • You closed an interest-bearing account while still living in California, so you'd allocate 100% of the interest to California
    • On the other hand, if the account remains open, you'd allocate the interest you earned as California resident to California, and the remainder to your new state. An easy allocation method is to divide the year's interest by 12, and then multiply the figure by the number of months you lived in each state

 

 

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