topic Part time resident Alabama in State tax filing

Part time resident Alabama

yogibearsanders — Mon, 23 Feb 2026 09:51:51 GMT

I took out a lump sum withdrawal from my 401k during January while a resident/living in North Carolina. Moved to Alabama in May as a permanent resident. How do I exclude that amount on my Alabama state tax return, the instructions do not explain how to do this since the income was received while a resident in North Carolina. The state return from Alabama tries to tax the amount.

Re: Part time resident Alabama

ErnieS0 — Sun, 29 Jan 2023 18:16:44 GMT

Yes. You can exclude your 401(k) lump sum withdrawal from Alabama income because you received it while you were a resident of North Carolina.

To adjust your Alabama income for your 401(k) withdrawal:

Tap State Taxes in the left column
Tap Your State Returns
Tap Continue next to Alabama
Continue to the screen “About Your Retirement Distributions”
Tap Edit next to your North Carolina distribution
On “Alabama Special Handling of This Distribution” say NO to Is your distribution from one of the pension plan systems that is not taxed by Alabama?
On “Some or All of Your Distribution is Taxable," change the Taxable Pension or IRA amount to $0

Re: Part time resident Alabama

yogibearsanders — Tue, 31 Jan 2023 22:14:41 GMT

Thanks for the info