File part-year year income tax returns for Pennsylvania and Maryland.
Maryland does collect Baltimore city tax. It’s included as part of your Maryland return. TurboTax will ask what city you lived and worked in. Your City of Baltimore W-2 should have local wages and tax in Boxes 18-20.
In answer to your questions:
- Since you don’t have any overlapping income, the order you prepare returns does not matter. Most people find it easier to prepare the returns in order — PA first, then MD, but you can do either.
- TurboTax asks whether you were a public safety officer because some states give tax breaks for certain types of pensions. Pennsylvania does not. It is not related to Social Security. IRS defines “retired public safety officer” as a "law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew."
- As a part-year resident of two states, income earned while living and working in PA is Pennsylvania income. Income living and working in MD is Maryland income. Both state sections will ask you to split your income. Maryland will ask you to subtract your non-Maryland income (income earned in PA). PA will ask you to list your PA income.
- Your 1099-R Box 2a is the amount you’ll be taxed on. You will pay tax to the state you were living in unless you moved this money into another retirement plan. Generally, you have 60 days to roll over your money, so it’s probably too late. If you did roll over $7,900 you would have had to add $1,580 because that was sent to IRS and can’t be rolled over. You could roll over $7,900 - $1,580 and pay tax on $1,580.
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