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Jason M. Tyra, CPA
Jason M. Tyra, CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 177
Experience:  Principal at Jason M. Tyra, CPA, PLLC
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I live in North Carolina and work in Virgina. I receive

Customer Question

I live in North Carolina and work in Virgina. I receive income from where I retired from a NC company. I also withdrew some money from my 401K (early with penalty).
I know for calculating Va state tax that I fill out a fed tax return as Single and only include my income from Va. Do I also need to report the 401K income on this tax return? I know I have to when I fill out my NC taxes
Submitted: 9 months ago.
Category: Tax
Expert:  Jason M. Tyra, CPA replied 9 months ago.

You should report any income you received during the year on your federal and state returns. You should have received a 1099-R for your 401(k) distribution. There will be a 10% penalty for the early withdrawal and you will owe ordinary income tax on the amount withdrawn.

Expert:  Jason M. Tyra, CPA replied 9 months ago.

You should report any income you received during the year on your federal and state returns. You should have received a 1099-R for your 401(k) distribution. There will be a 10% penalty for the early withdrawal and you will owe ordinary income tax on the amount withdrawn.

Expert:  Jason M. Tyra, CPA replied 9 months ago.

Not sure why that showed up as "Customer Response"? Please let me know if there is anything else I can do for you.

Customer: replied 9 months ago.
It is my understanding (as told to me by the IRS) that I would need to fill out a fed tax return as single, only include income from Virginia, all just to determine what my Virginia state tax would be. I wouldn't turn this fed tax form in. I would then fill out another fed tax return for NC (jointly with my wife) that would include all income and this one would get turned in. So the 401k distribution will be reportable on the VA fed tax return?
Expert:  Jason M. Tyra, CPA replied 9 months ago.

Many states incorporate parts of the federal tax code and federal tax forms be reference. So, when you file your state return, it is assumed that you have already filed or will file a federal return. Some tax preparation software packages allow you to allocate income without filling out multiple copies of the same form, but if you are doing the return manually you may not have a choice.

The 401(k) distribution is only taxable in the state where you live. If you live in Virginia, then that is where you should report the amount shown on the 1099-R that you received.

Expert:  Jason M. Tyra, CPA replied 9 months ago.

*by reference

Expert:  Jason M. Tyra, CPA replied 9 months ago.

An exception would be if the 1099-R shows withholding in another state besides the one where you live. You would need to file a return for that state as a non-resident to get the amount withheld refunded to you.

Customer: replied 9 months ago.
Thanks. I live in NC so I won't report the 401k on the Va fed form. One last question, does the same apply to my deductions? I can't put my home interest deduction or charity deductions on the Va fed form, only on my NC fed form?
Expert:  Jason M. Tyra, CPA replied 9 months ago.

Generally speaking, your deduction should be allocated only to the state where you live, unless you have a deduction that was connected to another state in some way. For example, your home mortgage interest was paid in the state where your home is located.

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