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M
McK1234
March 20, 2024
Question

What state should be taxed for surrender of whole life policy?

  • March 20, 2024
  • 1 reply
  • 0 views

In 2023 i surrendered the cash value of a whole life policy.  The 1099r withheld state taxes for VA, which is the state the policy was originally purchased in.  The policy was transferred to me in 2023 (I live in Maryland) and i cashed in the policy.

 

Do i need to file a VA nonresident tax return and get the withholdings refunded to me from VA.  Then pay the money to MD?

    1 reply

    B
    BillM223
    March 21, 2024

    Yes.

     

    Once the state (VA) has your money, filing a tax return is the only way to get it back. 

     

    And then you will pay it to Maryland.

     

    Note that VA and MD are reciprocal states - but only on earned income.

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