How should retirement income be recorded for NY residency if employer paid it to another state (Iowa)?

[jeffdnzr]

My wife and I are temporarily living in different states. She is in NY and I am in Iowa. She is a resident of NY and I am a resident in Iowa. She had retirement income come to Iowa for the month of December as she plans to move back to Iowa soon. Which state should this income be recorded?  The 1099-R form has an IA code on box 13 so it was recorded as Iowa income and I get an error on the NY state forms?

[MaryK1 · Accepted solution]

Retirement income is taxable to the state of residence when it was received, regardless of where it was earned or who pays it.  In this case, if your wife was a New York resident in December (if she is filing a full year return) she would have to report it to New York.  If she pays in New York, she can exclude it from Iowa but will have to file a nonresident return to get a refund of the withholding.  I would assume Iowa tax was withheld if she had it sent to Iowa because she is in the process of moving.