Overpaid state taxes

[jeffplaysmoog]

I have an inherited IRA and I live in NY.  My financial institution messed up and paid $650 state taxes on a $4000 withdrawal from 2024, but I should not have to pay taxes to the state (due to low amount of withdrawal), only federal.  I want that money back! Hehe.  Do I have a way to say that when I am filing (not finding it yet) or do I have to submit a separate form later on?

[KrisD15]

No, you don't say what amount of tax you want refunded from where. 

You would file a New York return and if too much in state tax was withheld, you'll get the excess refunded. 

All the state tax paid is lumped into one amount, you don't separate what was withheld from a 1099 from what is withheld from something else, like a W-2. 

Your state tax liability is calculated on all your income. 

Your state refund is the tax withheld, less your tax liability.

[jeffplaysmoog]

Well, NY isn’t refunding the amount - it was already paid, of course, and I should get the entire amount back as my RMD was not to be taxed at all by NY state.  No matter what I do my NY return does not change.  My NY return makes no mention of this excess paid tax at all…

[MaryK4]

Can you clarify why the distribution should not be taxed by the state?  @jeffplaysmoog 

[jeffplaysmoog]

The entire amount of $650 sent to NY from my money managers (they sent the estimated taxes to NY when I did my withdrawal earlier in the year).  I used to live in MA, in MA you do have to pay those taxes, in NY if is under 10k/20k you do not (I always take below this limit).  So, I expect the entire $650 back.

[KeshaH]

You're correct that your retirement income would be nontaxable in NY under a certain threshold. If you qualify for that exclusion, your distribution should be removed from your return. However, as @KrisD15 mentioned, the taxes that were withheld would be pooled together and applied to your tax liability on any other income you may have. If your return is currently showing a refund, it would already include the $650 tax that was paid from the retirement distribution. If your refund is less than $650, this means that you would likely have had a balance due if you hadn't had the extra $650 withheld.

We can look at your return and see exactly what you see to verify that the return is calculating your refund as it should. The return will be scrubbed and won't include any of your personal details.

If you're using TurboTax Online:

Once you're logged in to your account,

- on the left hand panel, click on Tax Tools and then choose Tools

- on the pop up window, select Share my file with Agent

- you'll see a message saying you'll give us a copy of your tax return. Your personal information will be changed so we can't see any private information.

- click okay and you'll get another message with a token

If you're using TurboTax Desktop:

• Click on Online in the top menu of TurboTax Desktop for Windows
• Select 'Send Tax File to Agent'
• Write down or send an image of your token number and state then place in this issue.
• We can then review your exact scenario for a solution

Please reply to this message with your token so that we can further assist you. Let us know all other states, if any, that are included on the return.