I receive a pension from one state but live in another state. Do I have to pay state taxes in both states

[rduan333]

I received no income from the state I reside in

[ToddL · Accepted solution]

You onl y pay state income tax to the state where you live, not the state where you earned or qualified for the pension.

Effective for retirement income received after December 31, 1995, federal law prohibits any state from taxing certain retirement income (mainly pension income) unless you are resident of, or domiciled in, that state. For example, if you receive a pension from your former California employer and you now reside in New Mexico, California may not tax your retirement income. Because you are now a New Mexico resident, your retirement income is taxable in New Mexico.

[henbran1]

similar question for mother but was told to file non-resident return for state where retirement came from. Was this correct?

[ToddL]

Not correct. You only report retirement income to the state where you reside when your receive it, not the state where you "earned" the retirement.

[gonzo-rex]

Ohio Police and Fire Pension Legal team has advised me that I am not required to change my tax deduction w/ them to the state I live in since they were the first to draw on the pension. When I lived in Arizona they did not make me pay taxes on my Ohio pension income. I have since moved to California and CA is telling me I have to pay taxes to them on my Ohio pension. Ohio already took their taxes. What is the correct answer?? OP&F legal team is telling me I do not have to pay CA state taxes on my pension income....

[ToddL]

You'd have to file a part-year or non-resident OH return to get a refund of the OH tax withheld.

You may not be REQUIRED to change your state tax withholding to CA, but the Ohio Police and Fire Pension Administrator IS REQUIRED to stop OH withholding upon a written request from you.

[eapconsulting]

If the taxayer is a resident of CA but the pension is coming from NM do I have to file a NM non resident return? I know it is not taxable by NM but wondering if I still need to file the return.

[MaryK4]

@eapconsulting The same rules apply, retirement income is taxed only in your resident state regardless of where you earned it or who pays it.  You do not have to file a NM nonresident return (unless you have other NM income).  

[RArrigo1957]

In that case, does my son have to pay NYS income tax on his pay from unused absences?  He live in Las Vegas throughout 2019, but received pay from NYS for unused abscesses.   Thx.

[SusanY1]

Income earned in NY (such as pay for unused absences) may be considered NY source income, and taxable in NY.   Pension income is taxable only in the resident state.    

@RArrigo1957 

[EDITED Feb 20, 2021 7:00 PM PST]

[poolshark333]

My mother lives now in New York but receives a Pension from where she worked (but retired) as a teacher in CA …. CA has withheld CA State withholdings (like $5k)… no issue filing a resident form for NY but how do I get back her CA withholdings if I don’t file a CA Non Resident tax return?

[Vanessa A]

In order to get back her CA withholdings, you would need to file a CA non-resident return. 

You may also want to contact her plan administrator to have taxes withheld for NY instead of CA for future years. 

[Msikes]

Retired MA teachers don’t pay state taxes

[SweetieJean]

@Msikes Income from any public employer pension (for example, the Massachusetts Teachers’ Retirement System) is exempt, but all other types of retirement income are taxable. If you plan on receiving income from a 401 (k), IRA or non-public pension, keep in mind that you will pay the state tax rate of 5% on most of that income. 

[mdouthit]

My pension from California is reported to the state of California by the source of my pension.  I was told by CALSTRS  that they have to report the income to the state from which it was earned despite my change of address.  I have lived in another state for over 3 years and pay state taxes on all income.  I have my taxes done at H & R Block and have been told there that I have to pay state taxes to Calif  as well as my domicile state if the income is reported to CA.  I end up paying taxes to both states and paying H&R block extra because of all the forms required.  How do I keep from paying both states?