My wife and I are residents of OH. My wife also receives retirement income from GA, due to the death of a family member, with GA tax withheld. For years we have filed a GA return as a non-resident to receive this money back, and assumed this income is taxable to OH and filed our OH return as such.

However, when we use tax software (previously TurboTax, currently TaxAct), they always seem to input this income as taxable to GA. My questions are...

1. Are we correct in filing a GA return as non-residents to receive the complete refund?
2. Why does the tax software not automatically do this in its computations?

Thank you,

Kevin

Kevin:

You were correct to file as non-residents, but since the income is NOT earned income, and since you neither work nor live in Georgia, the state of Georgia has NO legal standing to tax your retirement income, even though the income originates in Georgia. The income IS subject to Ohio taxations, however.

That being the case, contact the organization that is sending you the retirement income and have them STOP withholding GA taxes and START withholding Ohio taxes. That way, no Georgia tax return will be required after 2011.