form 1099 distribution code 3-disability

[barbd78]

What is the name of your state (only U.S. law)? I live in virginia and I get a disability distribution. My question is, is this income taxable and if so why wouldn't the state of virginia take taxes out of this income? There is some federal tax taken out but no state tax taken out.

 

[LdiJ]

What is the name of your state (only U.S. law)? I live in virginia and I get a disability distribution. My question is, is this income taxable and if so why wouldn't the state of virginia take taxes out of this income? There is some federal tax taken out but no state tax taken out.

It is up to the company making the distribution to withhold or not withhold taxes...not the feds or the state.

Unfortunately, many companies that administer disability or retirement income plans either won't withhold state tax, or do so only if the taxpayer absolutely insists that they do so.

The reason why is because its fairly easy for them to handle federal tax withholding, but its a big pain in the butt to handling withholding for 52 states, plus all the county and city withholding that is often present.

Even the Post Office, a federal employer, only withholds federal and state withholding, they do not withhold any county or city tax.