Anyone know the "State" tax impact on a partial withdrawal from TSP? I took a good sized chunk from my TSP to purchase a house. Didn't think about the state tax implications as all the TSP pubs never referenced the state taxes or penalties. I'm pretty sure that I can get some of the 20% tax penalties back as it was for a house. Anyone come across this?
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State Taxes on partial withdrawal
- Thread starter Aireman
- Start date
Frixxxx
Moderator
Aireman,
The implications:
1. Is it considered income? If you took money out of a tax-deferred program and it is provided to you as income, then yes, you will have to pay taxes on it.
2. If there are programs in your state to handle exemptions, then ensure that you file with direction of a good tax prep service or have good filing for that year.
3. BEWARE, if you have lived in two different states during the withdrawal year, you may have to claim it on BOTH....
4. Get true financial advice. I hate to say it, but hire a professional for that tax year. It may cost you more up front, but it may protect you in the future.
Good Luck & Congrats on the new house!
The implications:
1. Is it considered income? If you took money out of a tax-deferred program and it is provided to you as income, then yes, you will have to pay taxes on it.
2. If there are programs in your state to handle exemptions, then ensure that you file with direction of a good tax prep service or have good filing for that year.
3. BEWARE, if you have lived in two different states during the withdrawal year, you may have to claim it on BOTH....
4. Get true financial advice. I hate to say it, but hire a professional for that tax year. It may cost you more up front, but it may protect you in the future.
Good Luck & Congrats on the new house!
