Retirement tax questions

When you move in the middle of the year and change your permanent residence, you are a part-year resident of each state.  You are generally not a full-year resident of the state even if you lived there more than 183 days.  The 183 day rule applies to temporary residency--if you are a permanent resident of state A, but you live in state B more than half the year, you may be considered a resident of state B as well.  This is different from moving during the year and changing your permanent residence. 

 

You should have filed a part-year resident tax return for Maryland and a part-year resident return for the state you moved into.  Your MD part-year return would only report income you received while you were a permanent resident of MD (including wages, retirement payments that were taken while you were a MD resident, investment gains and dividends credited to your account in those months, and so on.)  When you do the part-year resident return in Turbotax, you have to manually allocate your income, so review your income sources, statements and payment dates so you can do this accurately.

 

Unfortunately it is quite common that a state or the IRS will disallow deductions (such as adjusting your personal exemption for your part-year status) but not adjust your income.  You have the burden of proof.  So instead of paying the assessment, you should prepare an amended 2022 tax return as a part-year resident, taking into account any taxes you paid or refund you received originally.  You will likely owe less or maybe be due an additional refund.   Send the amended return along with a letter of explanation (and a check if required) to the office that sent the assessment, not the usual address for amended returns.

 

And if you moved into a state with income tax, remember you also need to file a part-year return for that state, starting on the date your permanent residency in that state began.