Retired from the military

[seanfra]

I retired 1 November 2016 from the Army and I live in North Carolina. My state of residence was Pennsylvania but I was told that I can no longer claim PA as my state of residence. When I aanswer the questions of Turbo Tax about when I became an NC resident it reduces my PA tax because it thinks the W2 for active duty was for the whole year. I have a 1099 R that I haven't entered yet for November and December. Any guidance on what I should do?

[SteamTrain · Accepted solution]

Hard to know what you are looking at.

Some Guidance:

1) make sure you've entered your "move" date in the Personal Info section  (i.e. date of separation if you were already in NC). That will trigger the part-year tax returns for both states.

2) Ignore everything that is happening on your PA and NC refunds (or balances due) until you are entirely finished with every scrap of information in the Federal section.  The state sections don't yet knwo how you are going to "allocate" the various income amounts until you go thru each state's part-year interviews.  Those state interviews is where most of your income is divi'ed up between the two states.

3)  In the Federal section, when you do first enter your 1099-R, you will be asked about the"source" of the 1099-R as part of the followup questions.  This is for the NC tax return.  IF you were in-service at least 5 years before 12 Aug 1989, you choose "Bailey Settlement".  If you were not in service at least 5 years by that date, then you must choose "None of the above"  since someone retiring in 2016 would need to have enlisted/entered service in 1984-or-earlier in order to qualify for "Bailey" .  (Picture #1 below).

4)  when going thru the NC part-year interview, you will be presented with a table of your W-2 forms....you make sure your Military W-2 is tagged as NOT NC Source Income (since it is PA income)

5) Again, during the NC interview you will be asked to "allocate" your income while in NC.....you will be presented with a page like picture #2 below.....income from those two months as an NC resident go in that first column.  IF you go back to the Federal section to change anything, you must come back and re-do these columns (on several pages).....which is why I say you need to finish every scrap of the Federal section first to avoid all the jumping back and forth.

6)  I don't know the PA interview..sorry.

plan to spend a couple weeks on it. Part-year tax returns can be confusing and messy.  Work thru everything as best you can.  Print out your forms and go over them carefully, then re-adjust them a week later..and repeat for a couple weeks.

[Oliver7088]

Military retirement did not meet 10-10  rule. Divorce in state of Virginia.  Decree says treat as an asset in marriage each party pay your own taxes