Form IT-112 1 New York State Resident Credit Against Separate Tax on Lump-Sum Distributions Tax Year 2025

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Whats a lump-sum distribution? A lump-sum distribution is the distribution or payment within a single tax year of a plan participants entire balance from all of the employers qualified plans of one kind (for example, pension, profit-sharing, or stock bonus plans).
The state as a whole has a progressive income tax that ranges from 4. % to 10.9%, depending on an employees income level. There is also a supplemental withholding rate of 11.70% for bonuses and commissions.
If a 401(k) plan participant withdraws funds from their plan before age 59, they would be subject to a 10 percent early withdrawal penalty from the IRS. In California, taking early distributions from a 401(k) also means incurring an additional state tax.
Who should file Form IT-112-R? Your client should file this form to claim a credit against their New York State tax if they resided in New York for all or part of the year, and they had income sourced to and taxed by: Another state. A local government within another state.
Basically, any amount you withdraw from your 401(k) account has taxes withheld at 20%, and if youre under age 59, youll be taxed an additional 10% when you file your return. Any amount you withdraw from your 457 account has taxes withheld at 20%.

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With Roth 401(k)s, income taxes are not owed on the withdrawal of your contributions, but income taxes and the 10% penalty tax may apply on the withdrawal of earnings, unless an exception applies. Its important to keep taxes and penalties in mind when making an early withdrawal.
Is There Mandatory Withholding on Lump Sum Distributions? A 20% mandatory minimum withholding normally applies on taxable lump sum distributions paid directly to you from an employer retirement plan. This withholding applies to your income taxes for the year, and may be more or less than what you owe.
Are pensions or retirement income taxed in New York? Yes, money withdrawn from pensions and 401(k)s, 403(b)s and IRAs are combined and generally taxed as regular income to the same extent theyre taxed at the federal level. Tax rates run from 4 percent to 10.9 percent.

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