IRA distribution, Partial year residency

[kcampbell13]

I received an IRA distribution and converted it into a ROTH IRA in Feb 2021 ( no state taxes withheld)  and had no other major source of income during 2021(just some interest < $1000).  I moved from Virginia  to TN in March 2021.  

Will I need to pay Virginia tax on the the  FULL IRA distribution?

Do I need to file both  VIrignia partial and non resident tax forms?  

Thanks!!

[JohnB5677]

If you received 100% of both the interest and the 1099-R while in Virginia you will only have to file a Virginia return, and it will be a partial and nonresident tax form.

If a portion of any income came in while you lived in Tennessee you can reduce your taxable income in Virginia.  Tennessee does not have an income tax.

[kcampbell13]

Partial and Nonresident are 2 different forms ..  

Part-Year Resident -- A person who moves into Virginia during the year with the intent of becoming a resident, or a person who moves out of Virginia during the year to become a resident of another state, is a part-year resident for income tax purposes. Part-year residents generally file Form 760PY. 

Nonresident -- A person who is not a resident or part-year resident, but who receives taxable income from Virginia sources is a nonresident for income tax purposes. Nonresidents file Form 763. 

Will I need to fill out 1 or both?

Will Turbo Tax handle that ?

[JohnB5677]

You will only have to fill out one. You will prepare the Part-year resident form (760PY) for Virginia. 

[kcampbell13]

If the distribution (IRA to ROTH IRA) did not occur until after I moved to TN, will I still need to file VA taxes?  

[DaveF1006]

@kcampbell13   To get an answer for your question, there is a question in the Virginia state tax return as you prepare it. There is a screen that deals with Part-Year Allocation. In this screen it states that you should enter a portion of the IRA distribution earned or received while a Virginia resident.

In reading the learn more link, It suggest allocating the distribution to the time that you lived in Virginia, which would begin on the date you became a Tennessee resident. So let's use March 15 for sake of argument. If you count all the days from 01/01 to 03/15, for a total of 74 DAYS.

Now say if you have a $20,000 distribution. To determine your VA allocation you will take $20,000 X 74/365 = $4055. This is what you record for your Va allocation and you may be taxed on that amount If you are over the filing threshold for Virginia.

Your numbers will be different but I only mention this to illustrate how the Virginia part year allocation will work.