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1099-Rs getting state tax refunded?

ARK

I have an uncle who passed in his late 60s. Inherited some retirement accounts which I cashed out. PA state tax was deducted from all of them automatically. Inputting them into FreeTaxUSA, it claims I should be refunded all of the PA tax. This doesn’t seem correct. Ideas?

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MatthewD

Hello Ark,

Pennsylvania does not tax retirement income. This would explain why you are getting a refund of the PA taxes withheld.

You may want to contact Customer Support though the Support Center to review your entries.

ARK

Thank you for the response! I do know PA doesn’t tax your own retirement income, but this income was inherited. I’ve found this statement on a tax lawyer site when googling it:

“While IRAs are generally non-probate assets (not controlled by the decedent’s Will), IRAs, both traditional and Roth, may be subject to PA inheritance tax, (in addition to income tax for beneficiaries of traditional IRAs when drawn upon).”

That part in paranthesis is what’s confusing me. I cashed out the inherited traditional IRA. Is it not subject to PA income tax?

MatthewD

Hi Ark,

In our PA state software there is page titled, "Your PA Miscellaneous Income". On that page it says, "Pension and IRA distribution income are usually taxable on your Pennsylvania return if you're not retired when you receive the distribution."

Click on the button, "Add Miscellaneous Income" and fill out the page to include the inherited retirement income to you PA return.