IRA withdrawl?

Question

I am a PA. tax payer. I received a 1099-R from Ohio for an IRA that I cashed after my father passed away. Does this have to be reported to my PA. tax return and do I also have to pay estimated tax payments to Ohio for 2007? I use Turbotax. It changed my return from a $1500.00 refund for Pa to a $1100.00 payout. It also printed out 4 vouchers for tax payments to Ohio. Should I be paying taxes to both states?

Answer 1

You have to report it on your federal return as you know. Pa. does not tax distributions from retirement accounts no matter what. So don' report it to PA. You are not a resident of OH and the income is from something other than a trade or business or real estate located in OH. Because it is from an IRA it is not subject to tax in OH.
Also, since this is a distribution from an inherited IRA you are not subject to the 10% early withdrawal penalty on the federal return. The code in box 7 of the 1099R should indicate that the distribution is by reason of death and that make it penalty free if you are under 59 and one-half.

Answer 2

Oh dear that is a bad thing. We broke an IRA once and got hit about 40% of the amount!!
The feds are bad the state is worse! You need to call the state boards in both PA and Ohio.
Numbers in Ohio are:
Department of Taxation - Primary Phone Numbers
Individual Taxpayer Assistance......................[phone]
Business Taxpayer Assistance........................[phone]
Tell them the IRA owner is deceased that might make a difference. Good Luck!!