Should I be paying state tax on my federal thrift savings plan distribution. If so how would I go about it?

[IreneS]

Did you get a 1099-R or a 1099-MISC for the distribution?  What state are you in and were state taxes withheld?

[d-coulombe]

yes. I received two. One for the "mistake" made when transferring funds for a disbursement and one for the normal monthly disbursements. I paid Federal tax on the "mistake" but not on monthly payments. No Massachusetts State tax was paid on either.

[IreneS]

No - You do not have to pay MA state tax on your thrift plan distributions.

According to the instructions for MA Form 1:

Massachusetts gross income does not include:  Pension income received from a contributory annuity, pension, endowment or retirement fund of the U.S. government or the Commonwealth of Massachuseys and its political subdivisions.

[sbond808]

How about HI state?   Do you have to pay state tax for a lump sum distribution of my federal thrift savings plan?

[paulgoodrich32]

You are subject to fines and penalties for not paying Massachusetts tax on payments or withdrawals from a Federal Thrift Savings Plan (TSP)  

Go to: https://www.mass.gov/service-details/view-government-pensions#Thrift

Federal employee Thrift Savings Plan (TSP)

The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer. This plan is similar to private sector 401(k) plans. You can defer tax on part of your wages by contributing it to your accounts in the plan.

As an employee:

• Contributions made by an employer to a thrift savings plan are excluded from your gross income in the year contributed. See the "Current year exclusion amounts" table below for elective deferrals, including "catch-up" provisions.
• Income earned on the contributions while in the thrift savings plan account is excluded from gross income.
• Distributions made to the retiree from the plan are fully taxable in the year paid.

See Mass. Gov Website https://www.mass.gov/service-details/view-tax-treatment-of-retirement-plan-contributions-and-distrib...

Retirement plan Contribution to plan MA vs. federal wages when contributing Income from retirement plan

Federal employee thrift savings plan	Deferred/not taxable		Taxable

[vze2nn4r]

no

[KC mail mom]

State if Missouri. I’m retired. I took a withdrawal from my Thrift Savings Plan in 2021.  Last year I did not owe any Missouri state tax. Am I required to make an estimated tax payment to Missouri, because I made a withdrawal from my Plan? 

[treesh58]

this is an incorrect answer - once the funds are disbursed back to the account holder they will be taxed in the year paid out!!!

Watch your taxes that year and plan to pay MA state taxes either quarterly (ahead) or be penalized if you do not have compensating deductions.

I believe MA suggest a w2 to make deductions.

[KC mail mom]

First of all, I said MISSOURI (MO).  I am not in Massachusetts (MA).  I did find out, that if I had NO Missouri tax liability in the prior year, but incur a Missouri tax liability the following year, I will NOT incur penalties for not making quarterly payments.  This would NOT be the case if I would have had a tax liability to the state of Missouri the previous year.  For 2022 and 2023, I had no tax liability to the state of Missouri.  In 2024, I do have a tax liability to the state of Missouri, and I had NO TAX PENALTY in 2024.  For 2025, if I again have a tax liability to the State of Missouri, I better make some tax payments to Missouri during the year to avoid a penalty for 2025 income. 

Maybe you just used the wrong state abbreviation. 

[fanfare]

IRS has a formula for "Required Annual Payment" of Estimated Tax plus withholding.

Your state has a similar formula.

you should find it in the instructions for filing a tax return on the MO tax revenue website.

@KC mail mom