I have a pension from NC. Moved to CO 5 years ago and to NV a year ago. I've been having NC taxes withheld from my pension. Should I have been having taxes withheld?

[DanielV01]

If you have moved out of North Carolina, you no longer need to have NC tax withheld.  If you did, you may want to submit NC nonresident returns with zero income to get a return of any withholdings if you have not already done so.  Pension income is only taxable in the state you live in, not where the company you worked in was located before retiring.  Since Nevada has no state tax, you shouldn't be paying state tax at all on the pension.

[droverman23]

Thank you. I just got off the phone with the North Carolina Dept of Revenue and they said my pension is considered income and SHOULD be taxed by NC.....  

So my next call is to the retirement system to see what they say.

[Critter]

Well it IS income and IS taxable just NOT to any state you do NOT live in any longer.   So fill out a new withholding form with the pension to remove ANY and ALL state taxes since you now live in NV.

[TomD8]

Did you explain to NC that you are now a legal resident of Nevada?

On Jan. 10, 1996, Congress enacted the Pension Source Tax Act of 1996 (P.L. 104-94). This law specifically stipulates that, "No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State."

[DanielV01]

North Carolina cannot tax your pension income if you were a full-year nonresident of North Carolina.  This was established in 1996 by the Pension Source Tax Act of 1996.  Clicking on the link provides a PDF document of the actual act.  To sum it up, the Act prohibits states:   "No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State."  If you are having issues with North Carolina for pension income you received while no longer a NC resident, send them a copy of proof of out-of-state residence as well as a reference to this Act.  That should take care of it.

[droverman23]

Thanks. And should I do an amended return with the state of NC? Can I get back 2 years worth of taxes I paid? If so, what exactly do I change? How do I add my 1099-R without it being seen as income?

[droverman23]

Yes, I did. They said it doesn't matter and that it's income. I only talked to one guy there who consulted with several other people, so could get a different answer from someone else. I've changed my withholding to not take out any state taxes. Now I'm trying to figure out how to do the amended return and what would be different on it.

[droverman23]

Okay, thanks so much. I'll check out the document.

[Critter]

Complete a NC non resident form and indicate that ZERO income belongs to NC so the entire withholding is refunded. 

[TomD8]

If NC was incorrectly withholding taxes for your time as a CO resident, you could file amended NC returns for a couple of those years too.  NC gives you three years from the due date of the original return to file an amended return.  https://www.ncdor.gov/taxes-forms/individual-income-tax/when-where-and-how-file-your-amended-individ...

Be aware that if you file amended NC returns and receive a refund of the incorrectly withheld NC taxes, and if you previously deducted those taxes on your federal return, the refund would be taxable at the federal level.