Cares act distribution and multiple states

[AngusIL]

I was a Wisconsin resident in 2020 when I took a Cares Act withdrawal of both my IRA and Pensions and Annuities (as defined by TT).   I claimed the 1/3rd process and claimed Wisconsin as my state in 2020.

In September 2021 I moved to Illinois.  Does it matter which state I choose to record the second third of income?  When I choose Wisconsin, the penalty is much higher than Illinois.

FYI:  I remained a resident of Illinois for the remainder of 2021.

[JamesG1 · Accepted solution]

I suspect that Wisconsin would argue that since you were a Wisconsin resident when you received the distribution, the second and third portions are also Wisconsin income.  

It sounds like you are filing part-year resident Wisconsin and part-year resident Illinois tax returns for 2021.

In 2022 you would report the income on a non-resident Wisconsin tax return.

See also here.

@AngusIL

[AngusIL]

Thanks.  I confirmed with another tax company that indeed the income has to be reported under the first state I was living in when I received the distribution.