This is what I found in a TaxTips article called "Strategies for Managing Your Tax Bill on Deferred Compensation"on the TurboTax website. This also seems to confirm that the taxes would be paid in the state where the deferred compensation was earned if the installment period was less than 10 years. In my case the installment period is monthly for 5 years. I was a resident of Texas when the installment payments started, but became a resident of Montana a year in. Maybe this is why the program is asking me to enter a State and Amount when Yes is selected. Still, it doesn't answer the question of which state to select in the program, Texas the state where the money was earned or my current residence of Montana.
https://turbotax.intuit.com/tax-tips/tax-payments/strategies-for-managing-your-tax-bill-on-deferred-...
Residence can affect overall tax status
Your federal tax obligations for deferred compensation will be the same regardless of where you live when you receive the money. However, where you live could have a significant impact on your state tax liability—if your payments are structured the right way.
"Generally, deferred compensation is taxable in the state where the employee worked and earned the compensation, regardless of whether the employee moves after retirement," says David Walters of Palisades Hudson Financial Group in Portland, Oregon.
"However, if the employee has elected to take the deferred compensation payments over a period of 10 years or more, the deferred compensation payments are taxed in the state of residence when the payments are made." This can make a big difference if you move to a state that has no state income tax, such as Florida, Washington or Nevada, or at least to one with a lower income tax than where you earned the money.
