Multiple State Taxes Questions regarding SS and 1099-R income for Retirees

[LHarrisonRE]

Hello,  We lived in Colorado for 7 months and NC for 5 months in 2022.   In filling out our returns for both states, we have a question.  Any help you all might have would be highly appreciated!!

For NC return, question about Income Taxed by Colorado.  

I need to enter the amount of "Income Earned in Colorado and subject to NC tax".   For SS, pension, and 1099-R income, how do we figure out the amounts for that question?  I could simply allocated 7/12 to Colorado, but I don't know if that is correct.

We have other questions but it will take time to write them out.

Thanks.

[AnnetteB6]

For Social Security and pension income received monthly throughout the year, it is considered to belong to the state where you reside when you receive the income.  So with two part-year resident returns, allocating your income by the number of months you lived in each state is correct.  

If you received a particular Form 1099-R distribution in a lump sum that you can tie to a single date, then that income would be allocated to the state where you lived when you received the distribution.  

The most common reason that someone would have income earned in Colorado and subject to North Carolina tax would be a resident of North Carolina still working in Colorado.  You should not need to worry about that situation based on the income items you listed.

[SteamTrain]

(not really clear which way you moved...but I'll assume CO-to-NC for the following discussion)

No....it is unusual for you to be taking an NC credit for taxes paid to CO by indicating anything was double-taxed.....that situation only arises if you became an NC resident, then went back to work in CO as a non-resident...or if you had a rental property, or business still located in CO after you moved to NC.

What you are supposed to do in the NC part-year resident tax return, Q&A, is to indicate what sub-part of your Federal total income was actually received by you during the time you were a NC resident.  Thus the sub-parts of interest, dividends, capital gains you received, or were credited with at the time you were an NC resident needs to be entered as NC part-year income.

Don't know how CO part-year works, but NC calculates a tax based on your total yearly income, then ratios the tax down based on what sub-part of your income was received while you were an NC resident.

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While I don't know CO tax forms...they shouldn't be actually taxing any of yoru retirement income while you were an NC resident, only the $$ received by you while still a CO resident.

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Here's what the NC apportionment screens looked like one year in the Desktop software...should be similar in the Online software: 

(Note that the NC income while non-resident tends to be all zeros.  Usually that is for people who worked in NC...before they actually lived there.   Most often that's for people living in states on NC's border, who work cross-border for part of the year...then move into NC during the same year.)

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[LHarrisonRE]

Thank you so much for your help!  Everything is clear but one question remains.   Our pensions are from having worked in NC government jobs  for decades before our yearlong stay in CO.   So it was NC to CO back to NC! Because the pension payer is NC government, do we need to allocate any of that to "NC Income while non-resident"?   Thanks again for your time!

[LHarrisonRE]

Thank you so much for the info!  It's very helpful!

[SteamTrain]

No....all pension income...no matter who you worked for to earn it, it is considered only income of the state you are permanently residing/domiciled in at the time the $$ are issued.

So while a CO "resident", it was not NC income.

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BUUUT....Other...only a year in CO?   yeah, it's a long time and you probably are responsible for part-year tax returns for both.    But hope you are not planning to do this again in the future, unless it is truly a permanent move to CO.

Example...you go to Colorado to work in a National Park for 3 months of the summer...then back to NC.   You are only there on a temporary basis....and only your work income there is taxed by CO, as a NON-Resident, Pensions and SS is not CO income in that case... ...no part-year stuff for either state, and full yr tax return for NC...as you didn't actually "move" with the intention of making it your permanent home.

But a stay over 6 month gets touchy..

[LHarrisonRE]

Thanks so much! Yes, we won't be moving again.  We wanted to be permanent in CO but missed NC!