Why is turbo tax placing 401k withdrawal as state income and taxing me again when I paid state tax on my initial contribution?

[Ashby]

Your 401k contributions through your paycheck are subtracted from taxable income. Unless you are in a state where 401k distributions are not taxed, this is taxable income.

[Ashby]

Let me know how I can be more helpful, but I will need additional relevant information.

[maritrenge]

if it the tax was already deducted when distributed why are they listing the full amount on my state return

[maritrenge]

shouldn't the state return have the amount after taxes were already withheld

[DavidS127]

Your 1099-R will report in box 1 the total distribution, before any taxes are deducted, and either that number or the box 2 number is the amount taxed by both the federal and state governments. 

If you made after-tax contributions to your 401(k), those amounts generally are not taxed at the federal or state level when withdrawn.  In that case, your 1099-R form should report the taxable amount in box 2, and that is generally what the IRS and state will tax.

Most contributions to a 401(k) are tax-deferred, however, and are generally taxed at both federal and state levels for the total taxable distribution before any income tax withholding.