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New Member
posted Jan 28, 2023 5:49:20 PM

Part time resident Alabama

I took out a lump sum withdrawal from my 401k during January while a resident/living in North Carolina.  Moved to Alabama in May as a permanent resident.  How do I exclude that amount on my Alabama state tax return, the instructions do not explain how to do this since the income was received while a resident in North Carolina.  The state return from Alabama tries to tax the amount.

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2 Replies
Expert Alumni
Jan 29, 2023 10:16:44 AM

Yes. You can exclude your 401(k) lump sum withdrawal from Alabama income because you received it while you were a resident of North Carolina.

 

To adjust your Alabama income for your 401(k) withdrawal:

 

  1. Tap State Taxes in the left column
  2. Tap Your State Returns
  3. Tap Continue next to Alabama
  4. Continue to the screen “About Your Retirement Distributions”
  5. Tap Edit next to your North Carolina distribution
  6. On “Alabama Special Handling of This Distribution” say NO to Is your distribution from one of the pension plan systems that is not taxed by Alabama?
  7. On “Some or All of Your Distribution is Taxable," change the Taxable Pension or IRA amount to $0

New Member
Jan 31, 2023 2:14:41 PM

Thanks for the info