I've got a question about income reported on 1099-R

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I've got a question about income reported on 1099-R

Postby Browser » Sat Jan 26, 2013 11:04 pm

On Form 1099-R, Box 13 reports the State/Payer's State Number and Box 14 reports the amount of the State Distribution. Are these amounts reported by the Payer to the Tax Revenue Department of the State shown on the 1099-R? I want to file as a full-year resident in State A, but I have some income reported on 1099-Rs that shows State B in Box 13, and not State A. If I don't file a tax return in State B, will I get it trouble with them?
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Re: I've got a question about income reported on 1099-R

Postby BolderBoy » Sat Jan 26, 2013 11:38 pm

Ummm, were you a full year resident in State A?
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sat Jan 26, 2013 11:58 pm

If you are a full year resident of state A and work full time in state B, do you think both states want you to file tax returns? My guess is yes. Lots of people live here and work there and file taxes both here and there. That doesn't mean that your 1099-R income is taxable in the state that it came from. States like CA and NY used to tax retirement income that resulted from work in that state even if the person was a non-resident. A federal law clarified that they couldn't do that.

I suggest getting the forms and instructions for both states and see what they say. As hinted at by BolderBoy, you can't just invent a residence. Each state will have its own laws and definitions. With your luck, you could be a full year resident of both. :)
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 12:53 am

It's just a bit confusing. I have no employment income - all income is from IRA, 403(b), and Social Security. I believe I qualify as a full year resident of State A since I'm registered to vote there, have car and driver's license there and resided there more than 6 months last year (at a friend's home). I used to have my rental residence and mailing address in State A as well, but I changed my residence and mailing address to a family condo in State B in Jan 2012 (I don't own it) and updated my IRA, 403(b) accounts, Social Security, and Medicare with that new address. So that's how come State B shows up on all my 1099-R Forms. I figure I qualify as a full-year resident of State A for 2012 on the basis of everything but the mailing address in State B. However, I don't want State B coming after me if the income on my 1099-Rs is reported to them. Clear?
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 1:00 am

You clearly have not been following the adventures of ilovedogs.

viewtopic.php?f=11&t=104199

This will give you an appreciation of the folly of having a mailing address in a state you don't live in.

P.S. 7 months has never been a full year in my history of paying taxes. A full year is 12 months; 7 months is a part of a year. In most states you would file as a part year resident. Or are you using "more than 6" as a short cut notation for 12? Or does PA define a full year resident as someone who lives there more than half a year? As I mentioned, you have to follow the rules for the states involved.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 1:12 am

If you read ilovedogs's adventures, you will see that states participate in a information sharing program with the IRS (I hadn't realized that). The odds are really good you will be found out.
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Re: I've got a question about income reported on 1099-R

Postby Epsilon Delta » Sun Jan 27, 2013 1:34 am

sscritic wrote:If you read ilovedogs's adventures, you will see that states participate in a information sharing program with the IRS (I hadn't realized that).


It's right there on page 101 of the 1040 instructions how did you miss it?

On another note, many change of address forms (including Vanguard's) have an explicit distinction between home address and mailing address. It may avoid confusion if you use the institutions form rather than calling or using a generic change of address card. It might also help to use "care of" in an accommodation address, to make it clear you don't actually live there.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 1:49 am

Epsilon Delta wrote:It's right there on page 101 of the 1040 instructions how did you miss it?

I know, totally irresponsible of me. Where do I go for absolution? I just want to hear "ego te absolvo a peccatis tuis."
absolvo is first person present tense, so it goes with Ego. Te is accusative so it's the object. peccatis tuis is dative, the indirect object,
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Re: I've got a question about income reported on 1099-R

Postby bsteiner » Sun Jan 27, 2013 10:02 am

Different states have different rules for determining whether someone is taxable as a resident of that state, so it's possible for someone to be taxed as a resident in more than one state. In some cases, a person taxed as a resident in two states can get a credit in one state for the tax paid to the other state even on investment income, but more often the credit is limited to the tax on income earned in the other state.

In New York, for example, even if you're not domiciled in New York, if you have a permanent home in New York, and you're physically present in New York for more than 183 days, your taxed as a resident. The days don't have to be at the home. In a recent case, John Barker lived in Connecticut and worked in Manhattan, so he was physically present in New York for more than 183 days. He also had a small vacation home in the Hamptons and was there about 15 to 20 days. He was taxed as a resident. http://www.nysdta.org/Decisions/822324.dec.pdf , http://www.nysdta.org/Decisions/822324.dec2.pdf .

Since Mr. Barker would have been taxable in New York on his salary anyway, he presumably had some investment income. Typically these cases involve taxpayers who are domiciled in the suburbs and have apartments in Manhattan, where the stakes are the NYC income tax on NYC residents.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 10:49 am

I'm wondering if I should file as part-year resident in both states. Here are the specifics: Retired and all my income is non-employment income from IRA, 403(b), and Social Security. I was a full-year resident of Iowa for several years having an apartment and mailing address there , and wintered in Arizona. Last January I gave up my rental residence in Iowa, changed my mailing address to Arizona, and moved into a family condo there which I don't own. I didn't register my car in Arizona or register to vote there because I planned to return to Iowa in the Spring and live there with a friend. I left in May and returned to Iowa and resided there at the friend's home until the end of 2012. While I was there, I renewed my car registration and voter registration using my friend's address and voted in November elections. I'm thinking both states have a possible claim. I could file in Arizona as a 5-month resident and Iowa as a 7-month resident. Is this the correct way to go? I'm concerned that either state could claim me as a full-year resident.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 11:02 am

You won't know until you read the instructions for Iowa and Arizona. Even if both declared you full year residents, you should be able to get a credit in one state for the tax paid to the other as explained by bsteiner. You could find out if that was true by reading the instructions for Iowa and Arizona. In fact, I think you will find the answers to all your questions in the instructions for Iowa and Arizona.
I'm wondering if I should file as part-year resident in both states.

NO! What you should do is read the instructions. If both sets of instructions tell you to file as a part-year resident, then yes. You could be

Full-part
Part-full
Full-full
Part-part

I think you can find out which applies to you if you read the instructions. There is no wondering about which filing status you can make up for yourself. I am single, but I don't get to file as married-joint just because I wonder if I could pay less in tax that way.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 12:00 pm

sscritic wrote:You won't know until you read the instructions for Iowa and Arizona. Even if both declared you full year residents, you should be able to get a credit in one state for the tax paid to the other as explained by bsteiner. You could find out if that was true by reading the instructions for Iowa and Arizona. In fact, I think you will find the answers to all your questions in the instructions for Iowa and Arizona.
I'm wondering if I should file as part-year resident in both states.

NO! What you should do is read the instructions. If both sets of instructions tell you to file as a part-year resident, then yes. You could be

Full-part
Part-full
Full-full
Part-part

I think you can find out which applies to you if you read the instructions. There is no wondering about which filing status you can make up for yourself. I am single, but I don't get to file as married-joint just because I wonder if I could pay less in tax that way.

Here's all there is:
You are a part-year resident if you moved to Iowa and became a resident during the tax year or you moved out of Iowa and became a resident of another state.

Got that? Everything clear now?
Trouble is, there's no definition of "resident" in the tax instructions that I know of - if you can find an example to the contrary let me know. States never want to put that in writing. Otherwise, it would be more difficult for them to deny resident status to students who want to claim residency to pay lower in-state tuition. Generally, the criteria for residency in a state are mailing address, vehicle registration, voter registration and such. People who live in RVs know all about this stuff and often claim residency in states with no state income tax, even though they never set foot there. My guess is that a state can claim you as a resident if they choose to do so and then it's up to you to successfully dispute the claim if it's made. Arizona could claim me as full-year based on the mailing address change last January. Iowa could claim me based on vehicle and voter registration. Like I said, I'd like to minimize the possibility of paying tax in one and having the other stalk me.
BTW, it's not a matter of paying lower state income tax. It's about the same for me in either state. I just don't want to end up paying tax in both states as a full-year resident.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 12:09 pm

That's not what I see:
A person can be a resident of only one state at any given time. Usually, it is clear which state that is. Normally, it is the state in which one lives and works. Occasionally, however, the question of residency can be a little more difficult to answer. If a person moves during the year, or for some reason spends an extended period of time outside the state, the actual state of residence may not always be as obvious.

The issue of residency hinges mainly on the intent of the individual. That intent is often clear and easy to determine. If a person moves from one state to another with the intent of changing residence, that person will take certain actions. He or she will typically take obvious steps to eliminate ties and contacts with the former state, and establish similar ties and contacts with the new state. In some cases, however, the actions taken by the individual may create some confusion as to the actual intent.

When a person’s intent is not readily apparent, several factors are used as a guide to measure that intent. No single factor can be used. All the facts and circumstances of the case must be weighed in their totality to determine a person’s intent and residency. Some of the factors used in this analysis are listed below:

• Are you registered to vote in Iowa?
• Have you voted in Iowa? (in person or by absentee ballot)
• Do you or any of your family attend Iowa schools?
• Do you have an Iowa telephone listing and service?
• Do you receive your mail in Iowa?
• Do you have an Iowa driver’s license?
• Is your automobile registered in Iowa? Do you have Iowa license plates?
• Do you own a home in Iowa?
• Do you claim homestead and/or military credits for property tax?
• Do you live in any other state for more days of the tax year than in Iowa?
• Do you receive income from an Iowa source?
• Do you receive services from doctors, dentists, attorneys, CPAs or any other professionals located in Iowa?
• Do you have an active membership in an Iowa church, club, professional or civic organization in Iowa, and participate as a result of the membership?
• Do you claim a benefit on the federal income tax return based on an Iowa home being the principal place of business?
• Do you have active checking or savings accounts or use of safe deposit boxes located in Iowa?
• Do you have a location of employment in Iowa or active participation in a business within Iowa?

Please keep in mind that no single factor will typically be sufficient to make a residency determination. When viewed as a whole, the answers to the above questions will generally give a good indication as to the individual’s intent, and therefore, to the state of residence.
For more details on the subject of residency, including several examples, please refer to Iowa Rule 701-38.17.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 12:32 pm

sscritic wrote:That's not what I see:
A person can be a resident of only one state at any given time. Usually, it is clear which state that is. Normally, it is the state in which one lives and works. Occasionally, however, the question of residency can be a little more difficult to answer. If a person moves during the year, or for some reason spends an extended period of time outside the state, the actual state of residence may not always be as obvious.

The issue of residency hinges mainly on the intent of the individual. That intent is often clear and easy to determine. If a person moves from one state to another with the intent of changing residence, that person will take certain actions. He or she will typically take obvious steps to eliminate ties and contacts with the former state, and establish similar ties and contacts with the new state. In some cases, however, the actions taken by the individual may create some confusion as to the actual intent.

When a person’s intent is not readily apparent, several factors are used as a guide to measure that intent. No single factor can be used. All the facts and circumstances of the case must be weighed in their totality to determine a person’s intent and residency. Some of the factors used in this analysis are listed below:

• Are you registered to vote in Iowa?
• Have you voted in Iowa? (in person or by absentee ballot)
• Do you or any of your family attend Iowa schools?
• Do you have an Iowa telephone listing and service?
• Do you receive your mail in Iowa?
• Do you have an Iowa driver’s license?
• Is your automobile registered in Iowa? Do you have Iowa license plates?
• Do you own a home in Iowa?
• Do you claim homestead and/or military credits for property tax?
• Do you live in any other state for more days of the tax year than in Iowa?
• Do you receive income from an Iowa source?
• Do you receive services from doctors, dentists, attorneys, CPAs or any other professionals located in Iowa?
• Do you have an active membership in an Iowa church, club, professional or civic organization in Iowa, and participate as a result of the membership?
• Do you claim a benefit on the federal income tax return based on an Iowa home being the principal place of business?
• Do you have active checking or savings accounts or use of safe deposit boxes located in Iowa?
• Do you have a location of employment in Iowa or active participation in a business within Iowa?

Please keep in mind that no single factor will typically be sufficient to make a residency determination. When viewed as a whole, the answers to the above questions will generally give a good indication as to the individual’s intent, and therefore, to the state of residence.
For more details on the subject of residency, including several examples, please refer to Iowa Rule 701-38.17.

Did you get that from the Iowa tax instructions? Nonetheless, a very helpful document which helps to clarify things. There are several items that could be used by Iowa to establish Iowa residency: voter registration, voting in Iowa in November elections, Iowa driver's licence, Iowa vehicle registration and license plates, receipt of doctor, dentist, and attorney services in Iowa, an active checking account in Iowa, days spent in Iowa in 2012 exceed those spent anywhere else. Arizona can claim residency based on my mailing address and the 1099-R forms that list Arizona in Box 13 - which my original question addressed. Does the fact that I had an Arizona mailing address and 1099-R distributions are reported for Arizona mean that I need to file in Arizona or risk having them stalk me? I had intended to file in Iowa for 2012 and not Arizona. I think I have to file in Iowa or they'll come after me. But perhaps I should file in both states as a part-year resident in each one.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sun Jan 27, 2013 12:36 pm

Iowa instructions, admittedly the expanded instructions.
Iowa Individual Income Tax Expanded Instructions - Tax Year 2012
http://www.iowa.gov/tax/forms/2012IndIncInstr.pdf

Link found at the Iowa Department of Revenue Individual Income Tax Forms page
http://www.iowa.gov/tax/forms/indinc.html

All found while I am in my study thousands of miles from Iowa. :)
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Re: I've got a question about income reported on 1099-R

Postby HueyLD » Sun Jan 27, 2013 1:15 pm

Here are the official guidelines to determine one's Arizona residency status ( http://www.azdor.gov/LinkClick.aspx?fil ... XhRU%3D&... ):

"The term "resident" includes:
(a) Every individual who is in Arizona for other than a temporary or transitory purpose.

(b) Every individual domiciled in Arizona who is outside Arizona for a temporary or transitory purpose. Any individual who is a resident of Arizona continues to be a resident even though temporarily absent from Arizona.

(c) Every individual who spends, in the aggregate, more than nine months of the taxable year within Arizona is presumed to be a resident. The presumption may be overcome by competent evidence that the individual is in the state for a temporary or transitory purpose."

"Examples of actions which are considered in determining a person's residency are:

(1) physical presence of an individual, and his or her spouse and children, if any, in the new locality;

(2) registration of an automobile;

(3) application for a driver's license or renewing or relinquishing an old one;

(4) location of bank accounts and business connections;

(5) purchase of a home and/or sale of an old home;

(6) payment of personal or real property taxes;

(7) payment of state income taxes;

(8) registering to vote in the location of the new domicile and notifying voter registration officials in the old locality of such change of domicile;

(9) consistent use of new permanent address on all appropriate records and correspondence."


There are thousands of snowbirds (a/k/a winter visitors) in Arizona and you should be able to find a few near your Arizona residence to ask your questions?
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 1:25 pm

sscritic wrote:Iowa instructions, admittedly the expanded instructions.
Iowa Individual Income Tax Expanded Instructions - Tax Year 2012
http://www.iowa.gov/tax/forms/2012IndIncInstr.pdf

Link found at the Iowa Department of Revenue Individual Income Tax Forms page
http://www.iowa.gov/tax/forms/indinc.html

All found while I am in my study thousands of miles from Iowa. :)

Yeah, but you're smart and I'm not. :beer

Based on the premise that you can only be a resident of one state at a time, I think the preponderance of the evidence of my "intent" establishes Iowa as my residence for all of 2012. I didn't actually change my residence from Iowa to Arizona by just changing my mailing address I don't believe, so I'm neither a full nor part-time resident of Arizona in 2012. The unresolved question is whether I need to file Non-Resident income tax forms in Arizona because Arizona is listed in Box 13 on my 1099-Rs. The criterion for filing non-resident income taxes is that you have Arizona-sourced income. I don't know whether IRA and 403(b) distributions can be viewed as Arizona-sourced income if AZ is listed in my 1099-R. Anybody know for sure?
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Re: I've got a question about income reported on 1099-R

Postby pshonore » Sun Jan 27, 2013 1:30 pm

How about requesting the 1099R Payor to issue a corrected 1099R showing Iowa as the state? Or as you say, you could do Iowa resident and Aizona non-res. Iowa will likely give you a credit for most if not all of any tax paid to Arizona. (Tha amount of the credit is generally limied to the tax Iowa would have charged on the same income earned in the other state)
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sun Jan 27, 2013 2:20 pm

Well, here's an interesting twist. I decided to run my tax as a Non-Resident for Arizona using HR Block. When the program performed the final accuracy check it issued a warning that the Arizona mailing address I used was inconsistent with non-resident status. "In order to be a non-resident you must have lived outside of Arizona for all of 2012" (i.e., have been a full-year resident of another state). If HR Block doesn't like the Arizona address on a non-resident tax filing, I'm guessing the Arizona revenoorers aren't going to like it either.
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Re: I've got a question about income reported on 1099-R

Postby Ken Reckers » Thu Jan 31, 2013 1:19 am

absolvo is first person present tense, so it goes with Ego. Te is accusative so it's the object. peccatis tuis is dative, the indirect object,


I disagree. Instead of dative, "a peccatis tuis" is the ablative of separation. You are being loosed or freed from your sins.

Relevance? Solvent = free from debts. Bogle states that Swensen "has an impeccable reputation for character and intellectual integrity."

And parsing Latin is similar to reading AZ residency requirements...
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Re: I've got a question about income reported on 1099-R

Postby grabiner » Thu Jan 31, 2013 2:12 am

Browser wrote:Based on the premise that you can only be a resident of one state at a time, I think the preponderance of the evidence of my "intent" establishes Iowa as my residence for all of 2012.


Unfortunately, this doesn't always work. According to Iowa law, you can only have residency (what most other states consider your "domicile") in one state at one time. But you might be a resident of another state under its tax laws; in particular, many states will tax you as a resident if you maintain a home and spend enough time in the state, even if your domicile is elsewhere. In addition, two states could disagree on the definition of domicile and both claim you. Therefore, you may have to pay tax to both states as residents (and claim credit for taxes paid to one state on the tax form of the other state).
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Re: I've got a question about income reported on 1099-R

Postby Browser » Thu Jan 31, 2013 2:35 am

grabiner wrote:
Browser wrote:Based on the premise that you can only be a resident of one state at a time, I think the preponderance of the evidence of my "intent" establishes Iowa as my residence for all of 2012.


Unfortunately, this doesn't always work. According to Iowa law, you can only have residency (what most other states consider your "domicile") in one state at one time. But you might be a resident of another state under its tax laws; in particular, many states will tax you as a resident if you maintain a home and spend enough time in the state, even if your domicile is elsewhere. In addition, two states could disagree on the definition of domicile and both claim you. Therefore, you may have to pay tax to both states as residents (and claim credit for taxes paid to one state on the tax form of the other state).

You have put your finger exactly on my dilemma. What I wonder about is your statement that I could take a credit for taxes paid to one state on the tax form of the other. Can you really do that? If Iowa says I'm a full-year resident there in 2012, why would they allow me to not pay income tax there because I can show that I paid income tax in Arizona? Could not they say "you owe us, and whether you paid taxes in Arizona is irrelevant. You should have paid us instead and claimed that as credit on your Arizona form." Don't states need to have some kind of reciprocal agreement in order for that to work? I seem to recall that some states do - I believe Iowa and Illinois do because they are adjoining and people live in one and work in the other.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Thu Jan 31, 2013 2:45 am

Browser wrote:You have put your finger exactly on my dilemma. What I wonder about is your statement that I could take a credit for taxes paid to one state on the tax form of the other. Can you really do that?

Yes, if the instructions for that state say you can. The instructions will even tell you how to compute it and where it put it on your return. I have done it, grabiner has done it, millions of people do it every year.

You can believe us or not. You can follow the instructions or not. It is your choice. There is no dilemma if you follow the instructions.

P.S. Paying taxes to two states on the same income is not a dilemma. If it should occur, it is the result of you picking the wrong two states for your two "residencies."
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Re: I've got a question about income reported on 1099-R

Postby Browser » Thu Jan 31, 2013 11:20 am

sscritic wrote:
Browser wrote:You have put your finger exactly on my dilemma. What I wonder about is your statement that I could take a credit for taxes paid to one state on the tax form of the other. Can you really do that?

Yes, if the instructions for that state say you can. The instructions will even tell you how to compute it and where it put it on your return. I have done it, grabiner has done it, millions of people do it every year.

You can believe us or not. You can follow the instructions or not. It is your choice. There is no dilemma if you follow the instructions.

P.S. Paying taxes to two states on the same income is not a dilemma. If it should occur, it is the result of you picking the wrong two states for your two "residencies."

Well then, it certainly sounds like that's the way to go - filing as though I had two "residencies" in 2012, which is really the case. Sounds like I have a choice between paying Arizona and short-shirting Iowa or vice versa. I'm thinking it's more important to file in Iowa for 2012, so I have a choice between also filing in Arizona now, or filing only if they come after me later and claiming the Iowa tax as a credit when I do so, which would cover my tax liability in Arizona so there shouldn't be any late filing penalty. Any advice?
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Re: I've got a question about income reported on 1099-R

Postby MarkNYC » Thu Jan 31, 2013 2:03 pm

Based on the information provided, you should NOT be filing an AZ tax return for 2012.

Prior to 2012, Iowa was your domicile. In Jan 2012 you left temporarily for AZ, with the intent to return to Iowa, which you did 5 months later. Iowa remains your domicile and permanent residence and you should be filing a 2012 full-year resident return for Iowa. Based on the AZ residency criteria posted above by Huey, you were neither a full-year nor part-year resident of AZ for 2012. Since nonresident states are not permitted to tax SS or pension income, you have no AZ source income for 2012, therefore you should not be filing an AZ nonresident return. Residency is determined by the relevant facts, not by an address or state coding that shows on a 1099.

You may eventually receive a notice from AZ requesting that you file a 2012 return based on the 1099-R coding, in which case you send a letter of explanation that you were only in AZ temporarily for 5 months, that you were a full-year resident of Iowa for 2012, that the coding was an error caused by temporarily changing your mailing address so that you could receive your tax documents prior to April 15th. Enclose a copy of page one of your 2012 Iowa tax return as evidence, and offer to provide further evidence upon request, of your permanent Iowa residency for 2012. I doubt AZ will give you a hard time, and I believe this is the right way to proceed.
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Re: I've got a question about income reported on 1099-R

Postby grabiner » Thu Jan 31, 2013 11:29 pm

Browser wrote:You have put your finger exactly on my dilemma. What I wonder about is your statement that I could take a credit for taxes paid to one state on the tax form of the other. Can you really do that? If Iowa says I'm a full-year resident there in 2012, why would they allow me to not pay income tax there because I can show that I paid income tax in Arizona? Could not they say "you owe us, and whether you paid taxes in Arizona is irrelevant. You should have paid us instead and claimed that as credit on your Arizona form." Don't states need to have some kind of reciprocal agreement in order for that to work? I seem to recall that some states do - I believe Iowa and Illinois do because they are adjoining and people live in one and work in the other.


If you live in state X and have income taxed by state Y, the states allow you a credit equal to the lesser of the tax paid to state Y, or your state X tax multipled by the fraction of income taxed by both states. The rules in the states govern which state you take the credit against; in most states, the credit is taken against the income in your state of residency, but some states have agreements to go the other way. (You don't always get a full benefit from the credit; some states do not allow the credit on investment income, and states have different rules for claiming credit on taxes from each other's cities and counties.) If AZ considers you a resident (and it shouldn't), or if you earned any income from AZ (for example, if you had a job there), then you'll have to look up the rules for how AZ and IA handle credits for taxes paid to other states.

The reciprocity is a different situation. If you live in a state and work in another state with reciprocity, the state in which you work does not tax your salary at all; you pay taxes only to your home state and do not need to file a form for a credit. For example, I live in NJ, which has reciprocity with PA but not NY. NJ residents who work in PA pay no PA tax on their salary, and do not file a PA tax form unless they have other income taxed from PA (for example, rental properties in PA). NJ residents who work in NY pay NY tax on their salary, and then claim a NJ tax credit.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Fri Feb 01, 2013 12:45 am

Thanks Mark and Grabiner for your astute comments. I really appreciate your help figuring this out. I think you have a good handle on my situation, and that I should probably file as full year resident in Iowa, and not file in Arizona for 2012. If Arizona sends an inquiry I can provide evidence of Iowa domicile in 2012.

In case I might end up eventually having to pay tax in Arizona for 2012, I was playing around with Arizona's Form 309D, which I'd have to file in order to figure the tax credit in Arizona for taxes paid in Iowa. This was a frustrating experience, so I hope I never have to complete it. It looks like the tax credit in Arizona is based on tax paid to the other state on income that is "sourced" in that state. I guess all of my income for 2012 would be regarded as sourced in Iowa [IRA and 403(b) distributions and Social Security] since I would be classified as a full year resident there for 2012, but I'm not really sure.

The examples they give of income that is sourced in another state are things like wages from working in that state, rental income from property in that state, etc. I don't know what the heck you are supposed to do with retirement account distributions and social security payments. Since these sources of income are not really attributable to a "source" in either state, maybe you're supposed to prorate those payments based on time spent in each state- I can't figure it out. That's just one of the confusing things about it so I wasn't able to get through it to figure out what my tax liability could end up being in Arizona if they force me to file there down the road.
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Re: I've got a question about income reported on 1099-R

Postby grabiner » Fri Feb 01, 2013 1:13 am

Browser wrote:It looks like the tax credit in Arizona is based on tax paid to the other state on income that is "sourced" in that state. I guess all of my income for 2012 would be regarded as sourced in Iowa [IRA and 403(b) distributions and Social Security] since I would be classified as a full year resident there for 2012, but I'm not really sure.

The examples they give of income that is sourced in another state are things like wages from working in that state, rental income from property in that state, etc. I don't know what the heck you are supposed to do with retirement account distributions and social security payments. Since these sources of income are not really attributable to a "source" in either state, maybe you're supposed to prorate those payments based on time spent in each state- I can't figure it out.


Income from intangible sources such as investments and Social Security is sourced in your state of residence; therefore, a non-resident state cannot tax it, but you may have a problem as a dual resident if neither state allows you to take credit because each one considers the income to be sourced to itself. I checked the forms, and it looks like IA allows a dual resident to take a credit on all dual-taxed income while AZ doesn't; however, this is not tax advice, and if it matters, you need to check with a tax advisor who understands your situation.

The proration would only apply to income which actually does have a source in multiple states. For example, if you have two regular work locations, and work Monday-Thursday at the State X location and Friday at the State Y location, State Y would probably tax you on 1/5 of your salary (since you presumably can't identify exactly which parts of your salary were earned while working in State Y).
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Re: I've got a question about income reported on 1099-R

Postby Browser » Fri Feb 01, 2013 1:22 am

grabiner wrote:
Browser wrote:It looks like the tax credit in Arizona is based on tax paid to the other state on income that is "sourced" in that state. I guess all of my income for 2012 would be regarded as sourced in Iowa [IRA and 403(b) distributions and Social Security] since I would be classified as a full year resident there for 2012, but I'm not really sure.

The examples they give of income that is sourced in another state are things like wages from working in that state, rental income from property in that state, etc. I don't know what the heck you are supposed to do with retirement account distributions and social security payments. Since these sources of income are not really attributable to a "source" in either state, maybe you're supposed to prorate those payments based on time spent in each state- I can't figure it out.


Income from intangible sources such as investments and Social Security is sourced in your state of residence; therefore, a non-resident state cannot tax it, but you may have a problem as a dual resident if neither state allows you to take credit because each one considers the income to be sourced to itself.

The proration would only apply to income which actually does have a source in multiple states. For example, if you have two regular work locations, and work Monday-Thursday at the State X location and Friday at the State Y location, State Y would probably tax you on 1/5 of your salary (since you presumably can't identify exactly which parts of your salary were earned while working in State Y).

Thanks. I guess you said that before and I overlooked it. Arizona actually uses the term "dual resident" and apparently recognizes this status. If you are a dual resident you're supposed to file in Arizona and complete Form 309D to calculate any credit for taxes paid to the other state of residency. This is the form that I can't figure out - it looks like you need a degree in accounting and taxation to fill the danged thing out. And it's far from clear how to treat intangible sources of income. On the other hand, Iowa doesn't seem to recognize "dual residency". Their process seems very simple, if I understand it correctly. You simply take the tax paid to another state as a credit against your tax liability in Iowa. There's no horsing around with this "sourcing" business as far as I can tell. It seems too simple, so I probably don't have it right...
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Re: I've got a question about income reported on 1099-R

Postby Browser » Fri Feb 01, 2013 1:11 pm

grabiner wrote:
Income from intangible sources such as investments and Social Security is sourced in your state of residence; therefore, a non-resident state cannot tax it, but you may have a problem as a dual resident if neither state allows you to take credit because each one considers the income to be sourced to itself. I checked the forms, and it looks like IA allows a dual resident to take a credit on all dual-taxed income while AZ doesn't; however, this is not tax advice, and if it matters, you need to check with a tax advisor who understands your situation.

Let me check if I understand correctly your above comments. Looking at the Arizona Form 309D Arizona Tax Credits for Dual Residents, you are instructed to allocate (e.g. "source") your income between Arizona and the Other State according to the following instructions from the Form:
Amount entered in
column (c) that
would be sourced to
your statutory state of
residence as income of a
nonresident of that state.

In other words, I can source income to Iowa (state of statutory residence) only if that income would be taxed in Iowa as a nonresident. As I understand your comments in the quote above, intangible income such as IRA and Pension distributions, and Social Security cannot be sourced to any state in which you are a non-resident. Therefore, for purposes of determining the tax credit, Arizona is considering those sources of income to be sourced to itself and not Iowa. If this is correct, the tax credit allowed for taxes paid in Iowa is nil. Is this basically what you are referring to in the above quote? :confused :confused :confused
Last edited by Browser on Fri Feb 01, 2013 4:06 pm, edited 1 time in total.
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Re: I've got a question about income reported on 1099-R

Postby rallenal » Fri Feb 01, 2013 1:57 pm

Nothing is clear. I recently moved and was confronted with a list of events like has been posted from some states. Trouble was that all of the events occurred at different times as I went through the move process. I would imagine this is typical for most people. Registering to vote is not a priority until the election draws near but getting license plates transferred is a priority when the old ones expire. Paying property taxes is mandatory. I picked the DL event as that seemed most significant and was in the middle of the pack in terms of date but I suppose someone could quibble about it. It was impossible to contact the Dept. of Revenue either by phone or email to ask questions. I do have everything consistent for 2012 but for 2011, though it is clear I moved, the date is arguable. I have a different mailing address because the USPS would not do what I needed but it is in the same state as the residence.
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Re: I've got a question about income reported on 1099-R

Postby MarkNYC » Fri Feb 01, 2013 2:39 pm

rallenal wrote:Nothing is clear. I recently moved and was confronted with a list of events like has been posted from some states. Trouble was that all of the events occurred at different times as I went through the move process. I would imagine this is typical for most people. Registering to vote is not a priority until the election draws near but getting license plates transferred is a priority when the old ones expire. Paying property taxes is mandatory. I picked the DL event as that seemed most significant and was in the middle of the pack in terms of date but I suppose someone could quibble about it. It was impossible to contact the Dept. of Revenue either by phone or email to ask questions. I do have everything consistent for 2012 but for 2011, though it is clear I moved, the date is arguable.

In most situations, it is not that complicated. When you permanently move from state A to state B, the date(s) that you change your driver license, auto and voter registration, etc. to state B are not that important. Those actions are simply evidence that the move was intended to be permanent. For tax purposes, the date of residence change is the date you physically move.

If you retain a residence in A after moving to B, then it is potentially more complicated because the "permanent" intention is not always clear.
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Re: I've got a question about income reported on 1099-R

Postby billern » Fri Feb 01, 2013 2:52 pm

MarkNYC wrote:
rallenal wrote:Nothing is clear. I recently moved and was confronted with a list of events like has been posted from some states. Trouble was that all of the events occurred at different times as I went through the move process. I would imagine this is typical for most people. Registering to vote is not a priority until the election draws near but getting license plates transferred is a priority when the old ones expire. Paying property taxes is mandatory. I picked the DL event as that seemed most significant and was in the middle of the pack in terms of date but I suppose someone could quibble about it. It was impossible to contact the Dept. of Revenue either by phone or email to ask questions. I do have everything consistent for 2012 but for 2011, though it is clear I moved, the date is arguable.

In most situations, it is not that complicated. When you permanently move from state A to state B, the date(s) that you change your driver license, auto and voter registration, etc. to state B are not that important. Those actions are simply evidence that the move was intended to be permanent. For tax purposes, the date of residence change is the date you physically move.

If you retain a residence in A after moving to B, then it is potentially more complicated because the "permanent" intention is not always clear.
The states do not agree with you. It is not as simple as physical presence. They look at your drivers license, auto and voter registration, property ownership in the states, where you go to the doctor, etc to determine residency.
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Re: I've got a question about income reported on 1099-R

Postby MarkNYC » Fri Feb 01, 2013 3:08 pm

billern wrote:
MarkNYC wrote:
rallenal wrote:Nothing is clear. I recently moved and was confronted with a list of events like has been posted from some states. Trouble was that all of the events occurred at different times as I went through the move process. I would imagine this is typical for most people. Registering to vote is not a priority until the election draws near but getting license plates transferred is a priority when the old ones expire. Paying property taxes is mandatory. I picked the DL event as that seemed most significant and was in the middle of the pack in terms of date but I suppose someone could quibble about it. It was impossible to contact the Dept. of Revenue either by phone or email to ask questions. I do have everything consistent for 2012 but for 2011, though it is clear I moved, the date is arguable.

In most situations, it is not that complicated. When you permanently move from state A to state B, the date(s) that you change your driver license, auto and voter registration, etc. to state B are not that important. Those actions are simply evidence that the move was intended to be permanent. For tax purposes, the date of residence change is the date you physically move.

If you retain a residence in A after moving to B, then it is potentially more complicated because the "permanent" intention is not always clear.
The states do not agree with you. It is not as simple as physical presence. They look at your drivers license, auto and voter registration, property ownership in the states, where you go to the doctor, etc to determine residency.

I thought the question was not whether a change of residence occurred, but rather when a change clearly takes place, what determines the date of change for tax purposes.
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Fri Feb 01, 2013 3:10 pm

billern wrote:
MarkNYC wrote:In most situations, it is not that complicated. When you permanently move from state A to state B, the date(s) that you change your driver license, auto and voter registration, etc. to state B are not that important. Those actions are simply evidence that the move was intended to be permanent. For tax purposes, the date of residence change is the date you physically move.

If you retain a residence in A after moving to B, then it is potentially more complicated because the "permanent" intention is not always clear.
The states do not agree with you. It is not as simple as physical presence. They look at your drivers license, auto and voter registration, property ownership in the states, where you go to the doctor, etc to determine residency.

Read Mark again. The issue is the intent:
Here is Mark
Those actions are simply evidence that the move was intended to be permanent.

Here is the state of Iowa.
The issue of residency hinges mainly on the intent of the individual.

Everything we are talking about are mere evidences of intent. That evidence can be spread out over several months, but usually the first of them would mark the date of the intent. All the others are just back ups.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Fri Feb 01, 2013 6:16 pm

When you move from one state to another (where you have previously filed your tax return as a full-year resident) and file a part-year resident tax return in the state you departed, you might receive an inquiry from that state to document that you actually left and were a legitimate part-year resident. Several years ago that happened to me when I moved from Kentucky to Iowa. Kentucky wanted proof that I really was a part-year resident and had paid tax to another state as a part-year resident or they were going to make me file as a full-year resident in Kentucky. As I recall, they seemed a little abrasive about it and I recall being a little nervous about what they were going to do. But my departure date was easily documented, since it was based on my starting employment date in Iowa. So, if you move during the year, you need to decide what date you are going to declare you became a resident of another state and file part-year tax returns in both states based on your income split based on that date. Sans an employment date in the new state, the dates of actions to establish residency in the new state, such as changing your mailing address, vehicle registration, voter registration and so forth are all possible bases of documentation.
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Re: I've got a question about income reported on 1099-R

Postby grabiner » Fri Feb 01, 2013 11:54 pm

Browser wrote:Let me check if I understand correctly your above comments. Looking at the Arizona Form 309D Arizona Tax Credits for Dual Residents, you are instructed to allocate (e.g. "source") your income between Arizona and the Other State according to the following instructions from the Form:
Amount entered in
column (c) that
would be sourced to
your statutory state of
residence as income of a
nonresident of that state.

In other words, I can source income to Iowa (state of statutory residence) only if that income would be taxed in Iowa as a nonresident. As I understand your comments in the quote above, intangible income such as IRA and Pension distributions, and Social Security cannot be sourced to any state in which you are a non-resident. Therefore, for purposes of determining the tax credit, Arizona is considering those sources of income to be sourced to itself and not Iowa. If this is correct, the tax credit allowed for taxes paid in Iowa is nil. Is this basically what you are referring to in the above quote? :confused :confused :confused


That appears to be how Arizona works, although I couldn't understand the wording either. It does appear that Arizona's intention is to allow the same credit to a dual resident that it would allow to an AZ-only resident. If you are a resident of Arizona and earn income in Iowa, you are entitled to an Arizona credit for the tax paid on your income in Iowa, whether Iowa considers you a resident or non-resident. If you are a resident of Arizona and earn intangible income such as an IRA, that income would not be sourced to Iowa if you were an Iowa nonresident, so you cannot take an Arizona tax credit even if Iowa did tax it.

And as far as I can tell, Iowa doesn't have any such rule; you just take a credit for the income taxed by both states. Thus, if you are a resident of both states, first check with your tax advisor to be sure you have the rules right, then pay Arizona tax on all your income, and then pay Iowa tax with a credit for the Arizona tax.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sat Feb 02, 2013 12:55 am

grabiner wrote:
Browser wrote:Let me check if I understand correctly your above comments. Looking at the Arizona Form 309D Arizona Tax Credits for Dual Residents, you are instructed to allocate (e.g. "source") your income between Arizona and the Other State according to the following instructions from the Form:
Amount entered in
column (c) that
would be sourced to
your statutory state of
residence as income of a
nonresident of that state.

In other words, I can source income to Iowa (state of statutory residence) only if that income would be taxed in Iowa as a nonresident. As I understand your comments in the quote above, intangible income such as IRA and Pension distributions, and Social Security cannot be sourced to any state in which you are a non-resident. Therefore, for purposes of determining the tax credit, Arizona is considering those sources of income to be sourced to itself and not Iowa. If this is correct, the tax credit allowed for taxes paid in Iowa is nil. Is this basically what you are referring to in the above quote? :confused :confused :confused


That appears to be how Arizona works, although I couldn't understand the wording either. It does appear that Arizona's intention is to allow the same credit to a dual resident that it would allow to an AZ-only resident. If you are a resident of Arizona and earn income in Iowa, you are entitled to an Arizona credit for the tax paid on your income in Iowa, whether Iowa considers you a resident or non-resident. If you are a resident of Arizona and earn intangible income such as an IRA, that income would not be sourced to Iowa if you were an Iowa nonresident, so you cannot take an Arizona tax credit even if Iowa did tax it.

And as far as I can tell, Iowa doesn't have any such rule; you just take a credit for the income taxed by both states. Thus, if you are a resident of both states, first check with your tax advisor to be sure you have the rules right, then pay Arizona tax on all your income, and then pay Iowa tax with a credit for the Arizona tax.

Thanks for taking a look at this. I spent the better part of the day reading the instructions for Arizona form 309D to see how to figure out the Arizona tax credit if I pay in Iowa as a full-year resident. I still don't understand it. I'm afraid that you might be correct that I might not get a tax credit in Arizona, if I have to file there, for tax paid in Iowa on most of my income, which is from intangible sources. [Memo to sscritic: sometimes reading the instructions isn't enough - they have to be understandable. :wink:]
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Re: I've got a question about income reported on 1099-R

Postby sscritic » Sat Feb 02, 2013 1:15 am

Browser wrote:[Memo to sscritic: sometimes reading the instructions isn't enough - they have to be understandable. :wink:]

True, but look how far you have come from your first post in this thread with grabiner's help (and some others) and a lot of reading on your own part.
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Re: I've got a question about income reported on 1099-R

Postby Browser » Sat Feb 02, 2013 1:23 am

sscritic wrote:
Browser wrote:[Memo to sscritic: sometimes reading the instructions isn't enough - they have to be understandable. :wink:]

True, but look how far you have come from your first post in this thread with grabiner's help (and some others) and a lot of reading on your own part.

The journey is one thing - I'd like to eventually wind up at a destination. :shock:
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Re: I've got a question about income reported on 1099-R

Postby grabiner » Sat Feb 02, 2013 9:56 pm

sscritic wrote:
Browser wrote:[Memo to sscritic: sometimes reading the instructions isn't enough - they have to be understandable. :wink:]

True, but look how far you have come from your first post in this thread with grabiner's help (and some others) and a lot of reading on your own part.


And I have encountered worse examples than this one in state tax regulations. I filed CA state taxes one year and claimed two tax credits, each of which specified that you must compute all other tax credits first.
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