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February 20, 2025
Question

State Taxes Overpaid after Early Retirement Package?

  • February 20, 2025
  • 1 reply
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I took an early retirement package from my employer in Pennsylvania (Penn State) in late June 2024. The package amounted to a year's salary. Pennsylvania state taxes were withheld for the entire amount per my W2. BUT by the time I actually received the payout about a month later in mid-July (at that point, I was no longer a Penn State employee of course), I had already sold my Pennsylvania house, moved to my Florida house, and officially established residency there. (This process had been in the works for a while already, which is how I was able to do it all so quickly.) This leads me to believe that I have overpaid state taxes in Pennsylvania. Is this correct?

1 reply

February 20, 2025

No, the buyout would be Pennsylvania source income because it is directly resulted from your employment in Pennsylvania.  Nonresidents are required to report Pennsylvania source income.   See Brief Overview and Filing Requirements