Received 1099R with wrong state tax withheld.

Forum|Forum|7 years ago
June 5, 2019
21 replies
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TurboTax Premier Online

Anonymous

If the wrong state income tax was withheld from your 1099-R, you will have to file a nonresident income tax return for that state, to get that money back.

The first thing you want to do is make sure you've filled out the Personal Info section correctly:

With your return open, click the first tab, Personal Info.
Continue to the Your Personal Info Summary screen.
Scroll down to the last section, Other State Income, and click Edit.
At the Did you make money in any other states? question, answer Yes and make sure your nonresident state(s) are selected from the drop-down.
Click Continue to return to the Your Personal Info Summary screen.

After you finish your federal return, you'll automatically move to the State Taxes tab, where you'll see your nonresident state(s) listed in addition to your resident state.

To ensure accurate calculations, we strongly recommend preparing your nonresident state return before you prepare any resident or part-year state returns. More tips:

Select the long form (if the option is available) even if TurboTax defaults to the short form.
Only report the income attributable to the nonresident state.
If preparing a nonresident return solely to recover erroneous tax withholdings, enter 0 on the screen that asks for the amount of income earned in that state. This will eliminate your tax liability for that state, resulting in a full refund.
If you live in a reciprocal state, consider submitting an exemption form to your employer so you don't have to file a nonresident return next year.

Related Information:

LRM4006

Level 2

On the Indiana return, the withholdings form 1099-R, line 11 on the Tax Payment worksheets shows the amount correctly. This was the amount the IRA company sent to Indiana in error. However, the end result is $0 refund. Shouldn't it be the full amount on the 1099-R?

RobertB4444

Level 15

Not necessarily, Indiana taxes non-resident income earned from Indiana sources.

You need to make sure that you are doing the Indiana return first, before you do your home state return. If you did it out of order delete them both and then start over.

Indiana has reciprocal agreements with several states and if yours is one of them (Kentucky, Michigan, Ohio, Pennsylvania or Wisconsin) then you may not have to pay any taxes in Indiana at all.

Either way if you do have to pay taxes to Indiana for the income that you earn there then your home state will give you a credit on your state tax return for the amount that you pay Indiana. That's why you want to do the Indiana return first.

@LRM4006

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LRM4006

Level 2

I deleted both Wisconsin and Indiana states from turbotax and did Indiana first.

NO change. Still shows $0 refund from Indiana.

Again, I did not earn any money from Indiana employment. TD Ameritrade paid Indiana over $1000 in state withholding by error. Their error and they admit to the error.

The Form screen, IN state, Tax Payments Worksheet, line 11 Withholding on form 1099-R, and line 14 Total Income Tax withheld shows the CORRECT 1099-R amount of over $1000.

DianeW777

Level 15

Yes, you should get the full amount of the refund. If the Indiana (IN) return is not allowing you to make an adjustment to the income you can follow the steps here to correct the tax return.

When you are in the federal section of your return and on the Form 1099-R screen, make sure your state income amount is zero (Box 16) but leave the withholding amount in Box 14.

The key is to make sure the tax returns are accurately reflected and reported. This will not create any issue for you and it will properly allocate the income and the withholding.

Please update here if you need further assistance.

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