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wpmbze6
New Member

I paid federal taxes on my retirement, why do i have to pay federal taxes again in the state I live in?

I paid federal taxes on my retirement fund when I closed the account, why do i have to pay federal taxes again to the state that I live in?

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xmasbaby0
Level 15

I paid federal taxes on my retirement, why do i have to pay federal taxes again in the state I live in?

"why do i have to pay federal taxes again to the state "   You do not pay federal taxes to your state.  You pay federal taxes to the federal government.  State taxes are paid to the state.  Do you live in a state that taxes retirement income?

Or did you still owe some federal tax on the retirement fund?  The amount withheld was only an estimate.  When that money is added to your other income, you could still owe some federal tax.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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2 Replies
xmasbaby0
Level 15

I paid federal taxes on my retirement, why do i have to pay federal taxes again in the state I live in?

"why do i have to pay federal taxes again to the state "   You do not pay federal taxes to your state.  You pay federal taxes to the federal government.  State taxes are paid to the state.  Do you live in a state that taxes retirement income?

Or did you still owe some federal tax on the retirement fund?  The amount withheld was only an estimate.  When that money is added to your other income, you could still owe some federal tax.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
VolvoGirl
Level 15

I paid federal taxes on my retirement, why do i have to pay federal taxes again in the state I live in?

What kind of plan did you cash out? 401K or IRA?  And how old are you?  Did you roll it or convert it to another plan?  

You didn't actually pay the tax or 10% penalty (you pay a 10% early withdrawal penalty if you are under 59 ½).  You had taxes withheld like from your paycheck. You still have to enter the whole gross original amount (before taxes were withheld) with your other income to figure out the total tax (and it may put you into a higher tax bracket) and then the withholding is subtracted from the total tax to figure your refund or tax due.  The withholding will show up on 1040 line 64 or 1040A line 40.  The 10% penalty is on 1040 line 59.

Why did you close it?  If you are under 59 1/2 you might have an exception tontje penalty.
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