I live in PA, work in DE. Have distribution from my 401K. I paid taxes on it to PA , but DE is using as part of my AGI. I owe state taxes to DE. How is that possible?

[lraschi2]

My company was bought out by another. I rolled 401K into IRA and took full distribution.  Paid federal taxes, paid PA taxes, but DE considers that in their calculation so I end up owing them money.  In essence I pay double the taxes on it that I should.  How is that possible or reasonable? 

[Critter]

Sorry but that is how DE calculates your tax liability by using your federal Income ...not fair but it is their way. You are not paying double but by doing it that way you are taxed at a higher rate .