Do I need to fill state taxes from Puerto Rico for a forfeited 401(k)?

Question

Around August last year, one of my 401(k) plans that I had with a previous employer was forfeited, and I received a check in the mail with the balance. I decided just to go and deposit the check on my bank account, knowing that I will need to pay the 10% penalty at tax time this year for early withdrawal.

What confuses me is which taxes do I need to fill. Right now, I am living in Florida, so I will be filling the federal taxes, but the 401(k) plan was from a previous job when I was working in Puerto Rico (Puerto Rico does not fill taxes at federal level, only at state level).

After I receive the 1099-R, do I need to report it by filling the state tax from Puerto Rico, or can I include it with my federal taxes?

Answer 1

You file state income taxes in the state in which you are currently a resident, not where you used to live. In Florida, that means you have lived in the state for at least 183 days out of the year for which the taxes are being filed.

The fact that this money was deposited into a 401(k) while living in Puerto Rico is irrelevant. You received some income (the 401(k) disbursement) while resident in Florida, so that would be income taxable by Florida. Puerto Rico has no claim to the income because you (presumably) aren't a resident there.

Fortunately for you, Florida does not have an income tax, so there is nothing to file. If you lived in another state, you would have to include this as income on a state tax return.

You will have to report the income on your federal tax return.