Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 4, 2019 8:15:44 PM

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

I received no income from the state I reside in

0 26 49056
1 Best answer
New Member
Jun 4, 2019 8:15:46 PM

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.

24 Replies
New Member
Jun 4, 2019 8:15:46 PM

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.

New Member
Jun 4, 2019 8:15:48 PM

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

New Member
Jun 4, 2019 8:15:49 PM

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.

New Member
Jun 4, 2019 8:15:51 PM

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....

New Member
Jun 4, 2019 8:15:52 PM

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.

New Member
Jun 4, 2019 8:15:54 PM

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.

Expert Alumni
Jan 20, 2020 10:29:00 AM

@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).  

Level 1
Jul 13, 2020 2:58:41 PM

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.

Expert Alumni
Jul 13, 2020 3:20:32 PM

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]

Level 2
Mar 21, 2022 4:04:35 AM

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?

Expert Alumni
Mar 21, 2022 4:53:53 AM

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. 

Returning Member
Apr 26, 2022 10:05:08 AM

Retired MA teachers don’t pay state taxes

Level 15
Apr 27, 2022 5:06:43 AM

@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. 

New Member
Mar 13, 2023 10:36:18 AM

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?

 

Expert Alumni
Mar 13, 2023 11:16:29 AM

No. Your pension income is only taxable on your resident state return. California does not tax the CalSTRS benefits of nonresidents

For Nonresident:

California does not tax the IRA distributions, qualified pension, profit sharing, and stock bonus plans of a nonresident. California taxes compensation received by a nonresident for performance of services in California. FTB Pub. 1100

California does not impose tax on retirement income received by a nonresident after December 31, 1995. FTB Publication1005

 

If you already filed CA nonresident return and claimed your pension income, you need to amend your CA return. 

New Member
Mar 20, 2023 9:40:47 AM

I spoke to someone at Calif. State Franchise Tax Board who said that since CALSTRS (State teachers retirement system) insists on completing box 15 on the 1099R with the state payer's no, the income is reported and I have to pay taxes on the income.  For over three years I have lived in Arkansas and pay taxes on my retirement income on a quarterly basis. there also.  After filing my taxes and paying to both states, Arkansas reimburses me a good portion of what I paid them, but essentially, I am being taxed by two states on the same income until I get my tax return.  I also have to pay more to get my taxes done as well as higher taxes in CA.  The guy at the CA. tax board told me that the only way to change it is to convince CALSTRS to amend the 1099R which I have unsuccessfully tried to do for two years now.

Level 15
Mar 20, 2023 9:51:23 AM

@mdouthit Whomever you spoke to at the California FTB either did not know the tax code, misunderstood your question or flat out lied to you.

 

See - https://finance.zacks.com/california-pension-income-taxable-outside-california-8191.html

On Jan. 10, 1996, P.L. 104-95 took effect. This federal law prohibits any state from taxing pension income of non-residents, even if the pension was earned within the state. Before the passage of this law, California, New York and several other states maintained a source tax on pension earned within the state. For example, a California teacher who retired to Nevada would have to continue paying the source tax on her California pension. Thanks to this law, people who earn a pension in California then move out of the state no longer have to pay taxes on these funds to California.

 

Are California state income taxes being withheld on your Form 1099-R?  They would be entered in box 14.  If they are not being withheld then you do not have to file a California state income tax return.

 

Level 3
Mar 22, 2023 1:16:38 PM

I have a similar issue. My ex-husband and I were both teachers in California. l retired in 2018 and moved to Georgia, and everything was ducky until my ex retired in 2022. I received 3 1099-Rs from California. My monthly pension and my portion of his did not have state tax deducted on the 1099-R. The lump sum distribution from his retirement generated a separate 1099-R, and that one shows a whopping $35.38 in box 14. I called CalSTRS, and they told me that some small check that went out in November had state tax deducted per my ex's request, and there's nothing I can do about that. I have absolutely no interest in getting that $35 back. Am I still required to file taxes in California as the TurboTax program is insisting I do? It will cost me more than the $35 to go through that extra headache, and I am hoping I do not need

 

Expert Alumni
Mar 22, 2023 1:40:34 PM

No, you are not required to file to get your $35 back.  If the TurboTax program keeps insisting on it delete the $35 from box 14 and you should be ok.

 

@FI60 

Level 3
Mar 22, 2023 1:49:46 PM

Hallelujah!!!! Thank you so much!

New Member
Apr 1, 2023 11:16:10 AM

Anyone know if Massachusetts and New Jersey have a reciprocal agreement regarding the taxation of teachers pensions? I receive a teachers pension from NJ and reside in MA. Cant find the answer online. Thank you!

Expert Alumni
Apr 1, 2023 11:30:10 AM

Since you are nonresident NJ your pension is not taxable in NJ.  Here is the NJ reference.  

 

@maryella 

New Member
Apr 1, 2023 12:22:24 PM

Thank you but I need to know if my NJ teachers pension is taxable in Massachusetts where I live

Expert Alumni
Apr 1, 2023 12:57:20 PM

Yes, the NJ pension income is taxable in MA.  MA allows an exclusion of pension income if the other state would exclude similar MA pension income.  In this case NJ would be taxing the MA pension income therefore MA will be taxing the NJ pension income.