my son, fulltime college student, permanent resident in PA.
Part year resident in MA. worked in MA. got a W2.
Worked in Ca. for 75 days got another W2.
he also withdrew from an inherited IRA into a Roth?
how do I avoid double taxation ?
is the IRA withdrawal taxable in PA, if so how do I avoid other states taxing it also if its now income?
thank you everyone.
Yes. If he is a PA resident, then the IRA withdrawal is taxable in PA.
As you walk through the other states, you will be given the opportunity to remove income that should not be taxed by MA or CA. In both of these states you will simply select that that is not income allocable to those states.
For the work in MA and Ca, you will file the non resident returns first claiming only the income earned in those states. Then you would take a credit on your PA return for taxes paid to MA and CA.
Why do you say he is a MA resident and a PA resident? Is he only temporarily in MA?
Multiple States
I was unclear about the residency.
he was working while at school in MA. the MA return calls him a part year resident.
the Ca. allows a non resident filing.
The MA. return has a confusing question about 5% income tax in from other states.
The PA. return is guiding me into a "Im eligible not taxable in PA."option when doing the step by step.
he got the IRA initially as a gift after my moms passing. I thought that was the only free transfer and that withdrawals after that would be taxable?
Usually a college student is the same residence as the parents. If he is only in MA for school, he is not a resident. If his license, voting, etc is PA, he is a PA resident. MA is nonresident, his days there do not count when school related. When you file nonresident, the questions about other state income should go away.
MA taxes earned income (salaries, wages, tips, commissions) and unearned (interest, dividends, etc) income at 5% with some exceptions to capital gains.
A 1099-R that was transferred with no money taken is not taxable. It should be marked as code 4 inherited along with a rollover code. When you answered the questions after entering the form, you had to select that you rolled it over instead of cashing it out.