State Tax on retirement income (Kernersville, Bailey: house, income tax, exemption)

[b1zck1v]

My wife and I live in PA. I am retiring in two weeks and when our house sells we will be moving to Kernersville area. I just heard today that N.C. charges a state tax on retirement income. Pa does not. Can somebody pease give me the details---like the percent----Thank You

[mm34b]

Originally Posted by b1zck1v

My wife and I live in PA. I am retiring in two weeks and when our house sells we will be moving to Kernersville area. I just heard today that N.C. charges a state tax on retirement income. Pa does not. Can somebody pease give me the details---like the percent----Thank You

Does NC tax retirement income? - Yes and no.

It depends on the source of your retirement income. Some retirement pensions are totally tax-free.

http://www.dornc.com/practitioner/in...06.pdf#page=29

Depending upon your filing status and your taxable income from your Federal return, the North Carolina income tax rate ranges from 6% to 7.75% for tax year 2008.

North Carolina does not have a local income tax like some other parts of the U.S.

[shelf]

my husband gets a federal retirement and there is no NC state tax taken out of it

[LRoyal10900]

Originally Posted by shelf

my husband gets a federal retirement and there is no NC state tax taken out of it

Like mm44b stated, it depends on the source of the retirement income.

[mm34b]

Originally Posted by shelf

my husband gets a federal retirement and there is no NC state tax taken out of it

Some former Feds are exempt from NC income tax, while others are not. Depends on dates of service. Details in post #2 web link.

[Jimrob1]

I read the information from #2 post weblink. Thanks. I just have a question if anyone knows the answer because it is confusing. I read in a retirement magazine that NC only allows a $4000 exemption on the Federal pension when filing NC income tax. It is confusing because the article mentions both military and Federal Civil Service and Im thinking the military pension is the one that is tax exempt. According to the weblink here it appears the federal civil service pension is fully exempt if there was 5 years vesting before 1989. So for anyone with a federal Employee Pension how does it work when you file your taxes. I know for me when I retired I had 31 years and started long before 1989. Thank you.

[mm34b]

Originally Posted by Jimrob1

I read the information from #2 post weblink. Thanks. I just have a question if anyone knows the answer because it is confusing. I read in a retirement magazine that NC only allows a $4000 exemption on the Federal pension when filing NC income tax. It is confusing because the article mentions both military and Federal Civil Service and Im thinking the military pension is the one that is tax exempt. According to the weblink here it appears the federal civil service pension is fully exempt if there was 5 years vesting before 1989. So for anyone with a federal Employee Pension how does it work when you file your taxes. I know for me when I retired I had 31 years and started long before 1989. Thank you.

There's a question on the state income tax form to claim your total income as tax exempt under the provisions of the Bailey Settlement. However, not all military and federal civil service retirees meet the Bailey qualification requirements. I do, since I had 5+ years of service completed under the old Civil Service Retirement System (CSRS) prior to August 12, 1989. I file a state income tax return every year, but have nothing withheld during the year or have any tax liability at the end of the year.

[Jimrob1]

Originally Posted by mm34b

There's a question on the state income tax form to claim your total income as tax exempt under the provisions of the Bailey Settlement. However, not all military and federal civil service retirees meet the Bailey qualification requirements. I do, since I had 5+ years of service completed under the old Civil Service Retirement System (CSRS) prior to August 12, 1989. I file a state income tax return every year, but have nothing withheld during the year or have any tax liability at the end of the year.

Thank you, You answered my question perfectly. I am under that Retirement System also and had the 5+ years before 89. So thanks. Im just trying to put together all the criterias I have for retirement locations.

[faabala]

I retired from the military last summer and had 5 years of service prior to the cut-off. I did not withhold anything for NC and did not include that income on my return.

I guess i'll find out later if that is the way it works. I was also a part year resident changing from South Dakota when I retired here.