Do I have to pay local tax on a cashed out profit-sharing account?

by Chad Schweighart, CPA | Feb 21, 2019
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I closed a profit-sharing account and cashed it out when I lost my job with a company after about 15 years. I received a 1099-R for it, and they withheld both federal and state taxes. I know I have to pay a 10 percent penalty on the federal side. My question is about the local 1.7 percent taxes. It has a Distribution Code of 1 on the 1099-R, and I don't know if I have to pay local taxes on it. I'm in the York Adams Tax Bureau, and its "answer" was more confusing than anything. Do I owe the 1.7 percent tax on cashing out the profit-sharing account?

No. Retirement income is not taxable at the local level.  

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Answered by: Chad Schweighart, CPA, is an accounting manager with Gift & Associates in Mechanicsburg, Pa.

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