State tax filing
Yes. You can exclude your 401(k) lump sum withdrawal from Alabama income because you received it while you were a resident of North Carolina.
To adjust your Alabama income for your 401(k) withdrawal:
- Tap State Taxes in the left column
- Tap Your State Returns
- Tap Continue next to Alabama
- Continue to the screen “About Your Retirement Distributions”
- Tap Edit next to your North Carolina distribution
- On “Alabama Special Handling of This Distribution” say NO to Is your distribution from one of the pension plan systems that is not taxed by Alabama?
- On “Some or All of Your Distribution is Taxable," change the Taxable Pension or IRA amount to $0
