How do I amend my Alabama state return?
I filed my state and federal return on April 15th with FreeTaxUSA and just found out from the Alabama State Revenue Department that my state retirement is exempt from state tax. However, when I finished filling out the federal return online, that info was automatically transferred to the state return and I ended up paying state taxes on the retirement. Also, this happened with my FreeTaxUSA tax filings for 2022 and 2023 because I wasn't aware until recently that my retirement was exempt from state income tax. How can I correct this and get a refund on the state taxes that I paid that weren't due to be paid?
Answers
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Hello ZMan, welcome to the FreeTaxUSA Community!
Here is a link to the Alabama Department of Revenue (DOR) with a listing of the income that is exempt from Alabama income tax, so that you can confirm that the retirement is exempt:
https://www.revenue.alabama.gov/individual-corporate/income-exempt-from-alabama-income-taxation/
Here is another link to the Alabama DOR with a list of income that is subject to state income tax. Please note that not all income reported on a form 1099-R is exempt, for example, "Pensions, annuities, and endowments" are specifically included as taxable income
Amending the Tax Return
To claim a refund of the Alabama state income tax paid on the exempt income you will need to amend the applicable tax returns. Here are the instructions for starting the process for amending your tax return using FreeTaxUSA
- To amend a current year return, click on the website logo at the top of your screen and select "File an amended tax return." Or select the option, "Amend Tax Return" from the Account menu on the right. Your federal and state tax return must be accepted or mailed before you can start an amendment.
- To amend a prior-year return, use the Prior Year Products page by clicking on the Prepare a prior year return option from the home page or selecting prior returns in the account menu. Sign into your account with the prior year tax return and click on the website logo at the top of your screen and select "File an amended tax return." Or select the option, "Amend Tax Return" from the Account menu on the right.
- Once you select the option to amend your return, read the amendment instructions carefully then continue to change your return.
- Please note that most prior year amended returns cannot be e-filed, they must be mailed. You may be able to e-file a 2022 or 2023 amendment if you have an Identity Protection PIN from the IRS. When you feel your amended return is ready, select the Final Steps menu option and follow the screens to file your amended return with the IRS and/or your state.
Alabama Retirement Income
- After you have started the amended tax return in FreeTaxUSA, you will navigate to the Retirement Income screen
- Menu: State → Alabama → Retirement Income
- The retirement income that you entered from forms 1099-R will be listed
- If the retirement income is fully exempt from Alabama income, you will select "Yes" to the question, "Is this retirement income fully exempt from Alabama income?"
- If only part of the retirement income is exempt from Alabama income, you will select "No" to the question, "Is this retirement income fully exempt from Alabama income?" and then you will enter the amount that is taxable on the Alabama state income tax return.
- Save and Continue
If you have any specific questions related to your tax return, please contact Support after logging into your FreeTaxUSA account.
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