If you move after taking a 401K CARES act withdrawal and need to report the last year of the 3 year option, which states taxes the last 1/3. The state where you currently reside or the state that you lived in when you took the withdrawal in 2020?
The CARES Act withdrawal is taxed by the state where you resided at the time of the withdrawal.
I had a local accountant help me determine my estimated tax payment before the end of 2022. She told me that these types of withdrawals have an exception and are not treated like the regular income so are taxed in the state where you reside not the state where the withdrawal occurred that is why I'm double checking this.
You did receive the full amount of the distribution in the state where you resided in 2020.
The law only allows you to spread the taxation of the distribution over 2020, 2021 and 2022. So in 2022. you should pay the tax due on one-third of the distribution to the state where you resided in 2020.
@mlzeigler wrote:
I had a local accountant help me determine my estimated tax payment before the end of 2022. She told me that these types of withdrawals have an exception and are not treated like the regular income so are taxed in the state where you reside not the state where the withdrawal occurred that is why I'm double checking this.
You are taxed based on where you live when the withdrawal was made. Even though the withdrawal is reported over time (per the CARES act), the money was still actually withdrawn in 2020.
You will need to file a non-resident return for the state you lived at the time that reports only that income, and a resident return for the state you live now that reports all your world-wide income. Your current home state should give you a credit for taxes you pay to the other state. Note that when you have a non-resident state return, you must manually tell Turbotax what percentage of each item of income is assigned to each state, the program isn't smart enough to assume that for you.