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State Penalties

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Byquish

L1: State PenaltiesI know a SEPP avoids the IRS penalties for early withdraw, but what about the states? I live in California and plan to start a SEPP.2005-04-12 14:45, By: quish, IP: [69.169.62.250]
L2: State PenaltiesHello quish:
There is good news and bad news: good — California is a “following form” state such that SEPP distributions are not subject to penalty at the state level; bad news — you still have to pay those outrageous California state regular income tax on SEPP distributions.
TheBadger
wjstecker@wispertel.net
2005-04-12 15:00, By: TheBadger, IP: [66.250.23.21]

L2: State PenaltiesAnd here’s some more bad news, unless CA has seen the light and changed their laws. If you leave the state their tax blood hounds try to follow youto collect taxes onpension and IRA distributions. Gosh I hope I’m wrong!
Jim2005-04-12 15:26, By: Jim, IP: [70.184.1.35]

L2: State PenaltiesHello Jim:
Yes you are wrong; but not by much. Starting about 10 years ago (I think) California did exactly as you suggested; e.g chasing ex-California residents who had CA earned income in earlier years and then moved to WA, MI, TX, FL; e.g. other states that have no income tax or materially shelter retirement income from taxation; all in an attempt to income tax retirement income that had not been previously taxed. Actually, CA was successful in collecting some taxes under this program.
Finally, about three years ago, the US Supreme Ct ruled against California citing “absence of nexus” and “non-applicability of inter-state commerce” statutes; e.g. once the ex-Californian is gone; they are gone and California may not tax that ex-resident going forward. This also thwarted similar programs underway in NY and NJ.
TheBadger
wjstecker@wispertel.net
P.S. CA is occassionally a nice place to visit; but I would never want to live there; just my opinion.
2005-04-12 15:36, By: TheBadger, IP: [66.250.23.21]

L2: State PenaltiesJust did my California taxes and came out to around 6% in my bracket for SEPP, as ordinary income. Calif. sales tax is over 8% too, Nevada is looking good. 2005-04-12 15:44, By: taxme, IP: [69.169.62.250]

L2: State PenaltiesThanks Bill.
Sometime it’s good to be wrong, then sometimes it’s GREAT to be wrong. On this subject I would say it’s a RED LETTER DAY!
Thanks and have a great evening … working on taxes like me!
Jim2005-04-12 16:31, By: Jim, IP: [70.184.1.35]

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