I took a coronavirus-related distribution from my 401k in 2020 while living in Oregon. I then moved to another state (NY) during the same tax year (2020). I am paying the Federal tax on this distribution over 3 tax years, but I paid the State tax in full on my 2020 Oregon return. How, then, do I communicate to the State in which I currently live (NY) that I've already paid the State tax on that portion of my Federal AGI?
I am uncertain how to prevent NY from taxing that part of my income.
Under NY there is a section called, "Changes to Federal Income." The federal taxable amount of the 2020 withdrawal should appear under, "wage and retirement adjustment." If it is there, you would allocate zero dollars to New York.
If that doesn't work, go to "Credits and other taxes" within NY. From there, go to "Credits for Taxes Paid" and enter the amount paid to Oregon. The 2nd option wouldn't be the fairest, because NY has a higher tax bracket than Oregon. Instead of entering the amount paid put to Oregon, enter the amount NY is taxing you by.
Thank you for the response.
I'm not feeling that confident about attempting the suggested solutions on my own. But I would be more than willing to hire one of the TurboTax people to do the return for me.
Would they be knowledgable enough to try some of your suggestions?
Would it be necessary to also file a non-resident return for Oregon should I attempt one of your suggested solutions?
According to OR tax law, since you did not live in OR or conduct any business in OR or own any rental property or sell any OR property, you do not need to file an OR return.
OK, thank you.
I asked about that because I thought the OR non-resident return would be required in order to prove to NY that I earned the money in OR and paid the tax there.
But all that went down in 2020 and was taken care of on that year's return.
I'm not a tax person and feel out of my depth with this situation. I'm trying to figure out the technically 'proper' way to report this. I don't know if NY State's tax code has been amended to deal with a situation like mine, so I'm trying to get suggestions from those who may know work-arounds.
You will not need to file an OR return for 2021. You should keep your OR 2020 return in case the issue ever comes up with NY. You can use one of the options outlined by @ZoltanB45 to handle your NY return.