1040PRO Posted February 27, 2021 Report Posted February 27, 2021 As most of us know by now the IRS is allowing taxpayers to spread the distribution of IRA/PENSION for PANDEMIC reason over 3 years. I am not concern about the IRS, but rather if any STATE have conformed to IRS handling (most specifically Arizona) and i have not been able to find any guidance. At first I was not too concern, then I had a client that was 100% AZ state for 2020, pick up there file and stated to me they were all pack up and moving to Colorado. It then dawned on me about the states handling over the next 2 years. 1) they would now have a split return in 2021 and would the income from 8915E go on an AZ state return (100%) or a Colorado or both (in some prorated amount) and then in 2022 would it go all on the Colorado. (Don't get stuck on what state I use in the example *** SUBSTITUTE*** the states in the example for any ones you choose. 2) has anyone giving thought of the consequence of the state issue that come from this issue. All your thoughts please. and yes i have search my states data base for guidance. 1 Quote
Pacun Posted February 27, 2021 Report Posted February 27, 2021 Very interesting question. The first thing to check for your client is to see if AZ has a reciprocal agreement with CO. In my case people move among DC, MD and VA and there is no issue. How about this. For 30 years you deposit 10K on your 401k each year. You live in MD. So MD didn't tax you on $300K. When the client retires, moves to Colorado.... you don't keep filing MD taxes do you? Quote
Possi Posted February 27, 2021 Report Posted February 27, 2021 This hasn't been a blip on my radar, YET. Since my state follows the federal AGI, I wasn't concerned. I'm so close to retirement that if they move, they get a new preparer! LOL LOL 3 Quote
Lion EA Posted February 27, 2021 Report Posted February 27, 2021 Oh, yeah, and clients will ask. And, we really don't know, yet. Retirement income is taxed to the taxpayer's state of residence. But residence when? When the distribution is made? Or, when the distribution is taken into taxable income? I'm only guessing, the state when taxed. I think we'll see states litigate this. States like CT that lose retirees to FL with no income tax; CT will want tax on the whole distribution, not just 1/3 or even less. It's always one more thing! Quote
Possi Posted February 27, 2021 Report Posted February 27, 2021 1 hour ago, Lion EA said: It's always one more thing! "Job Security!" 2 Quote
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