What should I do if I overpaid taxes on a state pension?

by Elizabeth W. Kidd, CPA | Mar 03, 2014
askacpaiconI included an out-of-state pension on my 2006 state return. I overpaid by $800 to the state. Can I recoup this payment?
 
Pennsylvania has a three-year statute of limitation on claims for refund of taxes overpaid. The statute runs from the original or extended due date for the return. The tax return for 2006 would have been due in 2007, which is more than three years ago. Unfortunately, you will not be able to recoup this payment.
 
Although it is commonly thought that Pennsylvania does not tax pension income, that is not totally correct. Pennsylvania does not tax retirement income. Distributions from pension sources prior to retirement may be taxable in Pennsylvania.
 
It is important when moving into a new taxing jurisdiction to use a qualified tax preparer who is aware of taxation differences from state to state to avoid such issues.

Answer By: Elizabeth W. Kidd, CPA, is vice president of finance for Early Connections Inc. in Erie, Pa. 
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