topic Taxed on IRA distributions after moving? in Retirement tax questions

Taxed on IRA distributions after moving?

Diver4242 — Mon, 24 Jun 2019 11:31:53 GMT

I'm 61 and moved in March of this year (2019) from NJ to PA. If I start drawing from my IRA now (June) will I be taxed on these distributions in NJ when I go to file my 2019 taxes? Is it by calendar year or timeline that the decision is based on?

Re: Taxed on IRA distributions after moving?

DoninGA — Mon, 24 Jun 2019 11:42:07 GMT

Any taxable income you receive while a New Jersey resident would be reported on the NJ 2019 tax return, including the taxable amount of the IRA distribution.

Re: Taxed on IRA distributions after moving?

Diver4242 — Mon, 24 Jun 2019 12:29:29 GMT

Thanks for your fast reply. So that means that these withdrawals would not show up on my NJ 2019 tax statements from Fidelity or Vanguard, since I changed my address of residence with them as of when we moved (March).

Re: Taxed on IRA distributions after moving?

macuser_22 — Mon, 24 Jun 2019 13:53:44 GMT

There are two separate issues here:

1) The state that will tax you depends on the state of residence when the distribution is taken ans state law. That is done on your state tax return(s) when you file in 2020.

2) What the financial institution reports on a 1099-R for state tax withheld, depends on the instructions that you give them if any state tax is withheld at all and how much. Withholding on a 1099-R is not paying the tax - it is money that is withheld (just like W-2 withholding) that is sent to the state to apply to the tax for that state. If too much is withheld then you might get a refund, if not enough then you owe additional. If sent to the wrong state the you file a state non-resident tax return for a refund.

For IRA distributions tax withholding is not mandatory and you tell the financial institution how much to withhold - if anything.

Re: Taxed on IRA distributions after moving?

re2boys — Mon, 24 Jun 2019 14:53:29 GMT

You will need to file two part-year returns, one for each state. You will need to divide your income based upon which state you were a resident of at the time you earned or received the income.

Regarding your IRA distributions..........if received while a resident of NJ, it is taxable by NJ..........received while a resident of PA, it is taxable by PA. Since you are 61 years old, the IRA distribution should be box 7 coded as a 7:normal distribution and is not taxable by PA. (a code of 7D is taxable by PA).

It is strongly recommended that you have, by your actions, not left your residency as ambiguous, ie, having some things indicating NJ residency, some others indicating PA residency. This is to avoid the situation where both states have evidence that you intend to be a resident of their state. Address such things as driver's license, auto registrations, voting registration, etc . Of course, having only one home is also a good indicator.