Pension & UC from different State

[John Valko]

I have a client that has lived in Alabama for almost 2 years. His wife still receives Unemployment Compensation from Wisconsin and he is getting a small pension from a company he worked for in Wisconsin. The 1099R and the 1099G both indicate WI in the state area of the form. Do they have to file the non-resident returns or can they include it in their Alabama income. All their other w-2's and pension statements indicate AL on the forms. Thanks.

[Gary2]

I have a client that has lived in Alabama for almost 2 years. His wife still receives Unemployment Compensation from Wisconsin and he is getting a small pension from a company he worked for in Wisconsin. The 1099R and the 1099G both indicate WI in the state area of the form. Do they have to file the non-resident returns or can they include it in their Alabama income. All their other w-2's and pension statements indicate AL on the forms. Thanks.

Most, but not all states consider Unemployment Compensation paid by that state to be in-state source income subject to their taxes. I don't recall ever hearing of a state that considers pension income from within that state to be in-state source income (and I half suspect that federal law concerning pensions and deferred compensation plans prohibit that).

The instructions for the non-resident returns for each state usually answer these questions clearly.

[S T]

Have a few every year

Sometimes Taxpayers forget to let their source of Retirement/Pensions - know that they changed State Residency

So they should probably contact the "administrator or issuer of Pensions" to let them know they are no longer a resident of WI and change to current Resident State

Not sure about WI, but a lot of States DO NOT tax Unemployment - only an includible item for Federal.

Sandy

[Davc]

Not sure about WI, but a lot of States DO NOT tax Unemployment

Oregon does. Since our timber communities were "revitalized" under the Clinton administration it's a major source of revenues for the state.

[jtclark]

See the 'All States' tax book

Part of Wisconsin's unemployment may be taxable. There is a worksheet in the All States tax book. It has a lot of moving parts so a simple estimate won't work.

As far as the 'source income' rules are concerned,it is an interesting question but I wouldn't be so sanguine about what the Feds will allow. A study of "Water's Edge" rules regarding collecting taxes from interstate businesses might be informative. The feds allow for income taxes to be paid to both states for income that can only logically be derived from one or the other. In fact, the sum total of these taxes can greatly exceed what the sum of taxes would have been had the liability derived from only one state or the other.

Research is your only friend on this one. The relevant web link is:

For general tax info: www.revenue.wi.gov

For legal info: www.legis.state.wi.us/rcb/code.htm