My mother recently passed away and left me a portion of her TIAA traditional and CREF retirement account. I have decided to take the full amount out all at once but I am also willing to follow the 10 year rule if the tax issue becomes too complicated. It’s about 27K. I am active duty military and my leave and earning statement (LES) still has me as a legal resident of Pennsylvania for state tax purposes for my military pay, which isn’t taxed. I have not filed taxes there in a very long time. The paper work I got from TIAA has my legal residence stated in Virginia, based on the information my mother gave them. Virginia is where I currently live, work and own a home. I have never filed state tax’s in Virginia. Is this something I can choose which state to pay the taxes on the inheritance in or is there a state I have to claim that money in and how do I find out which one is best. The only information I found is that Pennsylvania has a 4.5% inheritance tax and Virginia does not but both would apparently required the distribution to be counted as income which would be subject to state income tax. From what I read, Pennsylvania would tax me twice and Virginia would tax me once. This is very confusing though and I’m not even sure I’m on the track.
