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. 
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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