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Posted by Drew Edmundson on April 12, 2006, 7:17 am
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> Here's my situation. Thank you in advance for your
> assistance.
>
> I live in Maryland. My mother, who lived in North Carolina,
> passed away in 2005. At the end of the year, the securities
> firm where her IRA resided told me that they needed to pay
> me her minimum annual IRA distribution. They issued a check
> to me for the munimum distribution, and then rolled the
> IRA's assets into a beneficiary IRA in my name. They
> withheld both federal and North Carolina taxes from the
> distribution paid to me.
>
> Trouble is, I don't live in NC and don't pay taxes there.
> Do I need to pay NC or MD taxes on this IRA distribution?
> If as I suspect it's MD, how do I get my withholding back
> from NC?
In theory you file a return with NC showing no NC source
income. Then they should refund the withholding.
Unfortunately it seems to be hit or miss these days. They
have told me several times that if the 1099-R, W-2, etc
shows NC earnings then it is NC earnings and nothing short
of a corrected form will satisfy them. So far the amounts
have been relatively minor and my clients have not wanted to
pay my fee to appeal this up the ladder.
The NC Department of Revenue used to be very reasonable and
I still find the auditors are, but the processing people
often only see black and white.
You should include the income on your MD return but not the
withholding.
---
Drew Edmundson, CPA
Cary, NC
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