What state should be taxed for surrender of whole life policy?

[McK1234]

In 2023 i surrendered the cash value of a whole life policy.  The 1099r withheld state taxes for VA, which is the state the policy was originally purchased in.  The policy was transferred to me in 2023 (I live in Maryland) and i cashed in the policy.

Do i need to file a VA nonresident tax return and get the withholdings refunded to me from VA.  Then pay the money to MD?

[BillM223]

Yes.

Once the state (VA) has your money, filing a tax return is the only way to get it back. 

And then you will pay it to Maryland.

Note that VA and MD are reciprocal states - but only on earned income.