wrong state tax withholdings on pension

[trapprain]

Taxpayer moved from Massachusetts to a "no tax" state in 2021 but her pension providers still withheld MA state tax in 2022. I can obviously ask her to get a corrected 1099-R, showing no state tax,  but how do I claim the tax back for her?

If I put her on extension now (until the corrected 1099-rR), can Lecerte allocate the income correctly for a full year NH resident so that she gets the state tax back as a refund?

An alternative would be to file as shown now, and amend later to correct the state tax.

Any easier solutions?

[sjrcpa]

That state tax was actually withheld. There will not be a corrected 1099.

Taxpayer needs to inform payer to stop withholding state tax.

For 2022, file a nonresident MA return to get the withholding back.

[qbteachmt]

You need to research how that source of the pension is treated by MA:

https://www.mass.gov/info-details/learn-about-tax-treatment-of-pensions-in-massachusetts#nonresident...

You've made a couple of assumptions that the 1099-R is wrong (it's reality) and that this isn't taxable in MA. If the 1099-R has the right address for your taxpayer, then someone knows this person no longer lives in MA, and that's not likely the issue.

[trapprain]

Thank you for the suggestion. I think submitting documentation confirming the actual place of residence in 2022 along with the tax return is a good idea to try to avoid future Notices.

[BobKamman]

There is no way for the pension payer to know where a person resides, just by their mailing address. Mom could be in a nursing home in Massachusetts but getting her mail at son’s home in Vermont. But the federal law is clear that states can’t tax pensions paid to nonresidents.

4 U.S. Code § 114 - Limitation on State income taxation of certain pension income
(a) No State may impose an income tax on any retirement income of an individual who is not a resident or domiciliary of such State (as determined under the laws of such State).