LOANS ON TSP TO WHICH STATE?

[Possi]

My client got out of the military June 20, 2018 and went from a CO home of record (wages not taxable due to active duty) to a VA resident. 

He had borrowed money from his TSP before leaving the military. They became taxable when he separated from the military. 

Are they taxable to CO or to VA? 

They have CO on the 1099R, but those aren't always true. ZERO state withholding. 

[mwrightea]

Colorado Department of Revenue will want their share.  I would do a part year and allocate as such.  If taxpayer was 55 or over it may not be taxed in Colorado depending on the amount.

 

[Possi]

20 minutes ago, mwrightea said:

Colorado Department of Revenue will want their share.  I would do a part year and allocate as such.  If taxpayer was 55 or over it may not be taxed in Colorado depending on the amount.

 

Early distributions, taxable. There were 2  1099R's to CO and 2 to VA. So, I'll throw them where the 1099R states. Thanks!

 

[Possi]

40 minutes ago, mwrightea said:

Colorado Department of Revenue will want their share.  I would do a part year and allocate as such.  If taxpayer was 55 or over it may not be taxed in Colorado depending on the amount.

 

Well, I'm still stumped. The wages were earned as a "non-resident" as far as the military goes. As such, they are not taxable to CO. But I have to file as a "non-resident" in order to exclude

"Nonresident status. A service member who is a full-year Colorado resident and spends at least 305 days of the tax year stationed outside of the United States for active military duty may file as a nonresident of Colorado.1 Nonresident service persons are not required to report or pay state income taxes on their military income, but are required to pay taxes on any nonmilitary income that is earned in Colorado or from a Colorado business."

When I do that, the pension becomes non-taxable. I'm back where I started from. 

I'll call them on Monday. I've camped out on this and going cross-eyed. 

thanks! 

[mwrightea]

Colorado will probably look at the 1099R early distribution as non military pay and taxable since your client separated from the military and was a resident for 1 to 60 days.  CDOR is great at revenue raising and matching forms about 3-4 years after the fact.   The department will bill for as little as a dollar with penalty and interest after the fact, I kid you not.  Just looking at the Non resident status, what pops out to me is the "full-year Colorado resident" and "nonmilitary income".  Also be aware that the Colorado Department of Revenue hardly ever answers their phone, not even the practitioner line.