How do I claim Illinois taxes on my IRA after retiring in Missouri?

[jjluke434]

We lived in Illinois all our working lives. We moved to Missouri after we retired.

How do we claim Illinois taxes already paid on our funds we withdrew from our IRA?

[xmasbaby0]

What IL taxes do you think you paid on the retirement fund?  Illinois does not tax retirement income.

[jjluke434]

They tax money that you put into your IRA/401K. The Federal government is the only taxing body (in Illinois) that doesn't tax retirement funds when you put the money in.

[Critter-3]

How do we claim Illinois taxes already paid on our funds we withdrew from our IRA?

Short answer is you don't ... you have no return to file with IL  since you don't live there any longer  and if Missouri taxes the retirement distributions  then you pay the taxes on it.  There is no way to negate them. 

[xmasbaby0]

Perhaps you misunderstood what you were doing all those years when you were putting PRETAX money into a retirement account.   The idea was you would not be taxed on that money until someday when you began to take it out of the retirement account.   The federal government taxes you on retirement money when you take it OUT of the account, and some states tax retirement income.   

If you live in MO now and are receiving money from your retirement account, you are subject to the tax laws in MO.

[jjluke434]

So you are saying that I will be double taxed, once from Illinois and once from Missouri.

I guess I need to get a tax accountant. This would be a reason for people not to move to other state when they retire. Somethings wrong!

[xmasbaby0]

Sorry-----when you put money into that 401k it was money that was never taxed to begin with.  It was not taxed by the feds and not taxed by IL .   You have never paid tax on that money.    You start paying tax on money from a retirement account when you retire and start taking the money OUT.   But if you are having too much trouble understanding that, then having a paid tax professional explain it to you is a good idea.

[jjluke434]

I guess I have a big tax bill!

Thanks!

[TomD8]

The rule with retirement income is that it is taxed by your state of residence at the time you receive it.  Doesn't matter in which state you earned it.

[Critter-3]

@jjluke434 

Contact the issuer and have MO taxes withheld so this doesn't happen again next year.   Or make quarterly estimates.  OR move back to IL.

[jjluke434]

Moving back to Illinois is not an option! I will pay quarterly or when I withdraw.

This was totally my mistake.  Thanks everyone for their input!