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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I will be taking a 401k distribution (early) in Illinois while

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I will be taking a 401k distribution (early) in Illinois while an Illinois resident (lease, job, etc. in IL). Later this year, I plan on moving to California. Will both California and Illinois tax me on the 401k withdrawal, or can only the state of residence where the withdrawal takes place claim taxes? I don't want hit with a double-taxation and penalty from two states.

If you take the distribution while an IL resident you will pay tax to IL State on this distribution. Since you are going to move to CA, you will file CA part year resident state tax return and you will pay tax on the CA state income. However the manner in which the tax is calculated is based on CA tax on your total federal income and than pro-rated to the CA state income for the year.



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Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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