topic IRA distribution not showing up as taxable for Alabama in Retirement tax questions

IRA distribution not showing up as taxable for Alabama

bob_poynor — Wed, 31 Mar 2021 03:44:04 GMT

Alabama tax question. I rolled over my federal civil service TSP into a regular IRA in late December 2019 and started taking distributions in January 2020. When I plug the 1099R info into Turbotax, it says I owe Alabama nothing on state taxes. However, Alabama tax info clearly states it taxes IRA distributions. I know Alabama doesn't tax federal or state retirement pensions, but I thought this regular IRA would be taxed. Turbotax did present a longish list of retirement plans that aren't taxed. Did I fat-finger something incorrectly? Thanks!

Re: IRA distribution not showing up as taxable for Alabama

TomD8 — Wed, 31 Mar 2021 14:34:28 GMT

Look at Box 7 of your 1099-R. Is the IRA/SEP/Simple box checked? If so, did you check it when you entered the 1099-R into TurboTax?

Re: IRA distribution not showing up as taxable for Alabama

bob_poynor — Wed, 31 Mar 2021 17:55:26 GMT

Thanks for the help. Yes, the "IRA/SEP/Simple" box on my 1099R has an "X" in it, and I checked that appropriate box in Turbotax. But during state tax computation, it's showing that I don't owe tax on that, which doesn't sound right. The Alabama tax guide says regular IRA distributions are taxable. Does "IRA/SEP/Simple" change that?

Re: IRA distribution not showing up as taxable for Alabama

TomD8 — Wed, 31 Mar 2021 19:17:16 GMT

The IRA/SEP/Simple box is supposed to be checked. So the form is correct and you entered it correctly. Also, you are correct that Alabama does tax Traditional (but not Roth) IRA distributions. What Distribution Code is in Box 7 of your 1099-R?

On your Alabama Form 40, your taxable IRA distribution should appear on Page 2, Part 1, Line 4(b).

Re: IRA distribution not showing up as taxable for Alabama

DKB61 — Wed, 09 Apr 2025 21:52:31 GMT

You said that you rolled it over at the end of December 2019 and didn't receive distributions until January 2020.

If you're filing your 2019 taxes, then the rollover is not taxable. It should have code G in the box 7 for rollover. When you take money out of a retirement account, you usually have 60 days in which to put it into another retirement account to avoid taxation of that money.

Since you didn't take money out of the account until January 2020, the withdrawal or distribution should show up until you file your 2021 taxes. You should received a 1099-R for 2020 showing the amount withdrawn in January 2020 along with any other withdrawals from that account.

This is my thinking. Correct me if I'm wrong.