NC state income tax on deferred comp earned in another state

[shreiff]

I am new to NC. I have deferred comp earned in PA, along with pension from PA. Former employer has withheld tax from distributions and have W2s from company on deferred comp and 1099 for pension distribution. Both have PA and local taxes withheld.

Are either taxable in NC? 

[SteamTrain]

I don't have an answer on the Deferred Comp. W-2.

BUT

If you moved to NC in 2021, then part of the 1099-R distribution will likely be NC-taxable (unless it was distributed as a lump sum before you moved to NC).

Pension income is only taxable according to the laws of the state you are a resident of at the time you received the $$.

So if you moved to NC during 2021, and received monthly pension payments during the year, then any $$ distributed to you after you moved to NC are considered NC income, and are taxable by NC .  You would have to allocate those $$ between the two states in each state's Part-Year tax returns.

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IF you are continuing to get pension payments from that employer's plan, make sure they know you are residing in NC now, and start NC withholding to offset any taxes you may owe to NC.

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The only exceptions to NC taxing those pension $$ are for certain Federal pensions (5-year vested by 12 Aug of 1989), and most standard Military pensions.

[shreiff]

Deferred comp is W2 in PA - PA withholding

1099-R is pension and PA withholding

both paid in Jan - we have not lived in PA for 4 years - previously in TX before NC

[SteamTrain]

I'm still clueless about how Deferred compensation on W-2 is supposed to be handled.....whether considered as having been earned while in PA and taxed as such.... or not..

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If the pension was paid out only in Jan of 2021, and you were a NC resident at that time,, then it is only reportable on an NC tax return, and taxable by NC if you did not roll the $$ over to another retirement account, like a 401k or IRA account withing 60 days.   Then you would have to file a PA non-resident tax return to declare ZERO PA distribution to get all PA withholding back.  (might require you to paper-file the non--resident PA tax return since some states require paper-mail filing if withholding exceeds declared distribution for that state).

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You'll have to get other responses about the deferred comp...or seek local professional help.  Someone else here might know..

@dmertz    ??