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melissamarchlevs
New Member

I moved to OR and withdrew my pension from CA early, receiving 1 lump sum check in OR. Am I able to subtract what CA withhold from my check for my Oregon state taxes?

 
1 Reply
GeoffreyG
New Member

I moved to OR and withdrew my pension from CA early, receiving 1 lump sum check in OR. Am I able to subtract what CA withhold from my check for my Oregon state taxes?

Given your self-described circumstances, you will have to report and pay taxes on your pension lump sum withdrawal on your Oregon tax return.  Your pension company (or trustee) appears to have withheld California state income taxes in error, as pension income received by a nonresident of California (which you became after moving permanently to Oregon) is not taxable by California.  Please see Page 3 of the following California Franchise Tax Board publication for verification of this fact:

https://www.ftb.ca.gov/forms/2016/16_1005.pdf


Thus, your lump-sum pension withdrawal is not California-source income, per se, and you should be entitled to a full refund of that state tax amount paid . . . which you will claim by filing a California part-year (or nonresident) tax return.

In direct response to your original question, the answer to that is no -- you should not "subtract" your California state tax withholding from your Oregon tax return.  Instead, you should pay full Oregon (as well as federal) income taxes on the pension amount; but also then claim a refund of the taxes withheld by California.  That will be the "correct" way to handle this situation.  This item is not one of "mutually-taxed" or "double-taxed" income, eligible for a state taxes paid credit, as would the wage income of an Oregon resident working in California (or vice-versa).

While TurboTax can certainly compute all of this correctly, it can be tricky.  You might want to seek some professional tax assistance for just this one tax year, with such an unusual tax situation.  The taxation of your pension and other income should be much more straightforward in future tax years (Oregon and federal only, with no California nonresident return).

If you have further questions, encounter any difficulties, or just want to speak with a live tax expert who can walk you through the necessary TurboTax entries (including the ability to screen-share with your computer), please feel free to contact us.   You can even point the responding tax agent to this answer thread, which should help shorten their research time.  Here is a link where you can create a support ticket and reach us:

https://support.turbotax.intuit.com/contact/


Alternatively, seeking the preparation services of a local tax professional, such as a CPA, Enrolled Agent, or tax attorney, remains a viable option as well.  Thank you for asking this question, and we hope that you will enjoy your retirement.

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