PA form 40 and Local earned income tax in PA

[amfdonahue]

Hello - Ready to pull out my hair..so many different answers to the same question question - I appreciate your help. In 2014 - I used Turbo Tax to file a PA 40 - I also had a 401K distrbution =at the time I was 58 and 8 months old -but retired from the company holding my 401 K - My question is...turbo tax included my 401K distribtion on line 1 gross compenstion. As a result, years later the Local Earned Income tax collector in PA - is saying I am deluqinint and there was not enough $ taked out of my W2 for the 1.25 % local tax. So that lead to my research - some sites say - no 401K withdrawals is added to income  ie taxable in PA - then the next site says it is. SHould Turbo tax in PA add 401K withdrawals to my income ?? yes or no ...and also my 401 K contributions for that year find on my W2 - but my overall contributions are far more than what I withdrew. I appreciate the help TY

[Anonymous_]

@dmertz 

[dmertz]

I only know what I read in the instructions for PA Form 40:

Code 1 & 2 Early Distribution
This distribution is taxable for PA purposes, unless: (1) your pension or retirement plan was an eligible employer-sponsored retirement plan for PA tax purposes; and (2) you retired after meeting the age conditions of the plan or years of service conditions of the plan. If your plan was not an eligible employer-sponsored retirement plan, or if you have not attained the age or years of service required under the plan to retire, you must determine the PA-taxable amount of your distribution. You must use the cost recovery method to determine this amount. See Page 9 for additional information.

I have no idea how this relates to local taxes.

[SteamTrain]

Yeah, you might need a local professional to give you advice on that.

The TTX software will not normally include any pension/401k/IRA -exempt $$ as a part of box 1a of the form PA-40........

...BUT only IF..if you indicate that pension/401k/IRA distribution was exempt from PA taxation during the actual PA interview. 

That's a selection you have to make during the PA interview....and you may have missed doing that for 2014 ( or for 2013 if it was a 2013 PA-40 filed in 2014...you said you "used" it in 2014)

_________________

Problem is, I have no idea if your 401k distribution at age 58yrs8mos qualified.  I'm not conversant possible age issues.....or if that is immaterial for a 401k as long as you met the retirement requirements for that employer in question.

We used to have 1 or 2 Superusers/Champs who specialized in PA stuff...don't know if they are around anymore.

[amfdonahue]

Thank you for your advice and help