Ask Terry Questions Taxes on pension

Taxes on pension

By Terry Savage on June 26, 2019 | Financial Planning / Retirement

I moved from Illinois to Oregon last September. I have a pension from the Chicago Teachers Pension Fund. Oregon has no sales tax but does tax income. I had to pay Oregon taxes for the time I lived here in 2018. For 2019 should I have my pension fund start withdrawing taxes from my monthly check or should I just start putting money aside on my own to pay for 2019 next April? Thanks.

Terry Says

That’s an interesting twist on the state tax issue.  Illinois does not tax pension or retirement withdrawal income — yet!

They won’t withhold for out-of-state state income taxes.  You should consult a tax advisor (CPA) in Oregon and set up a quarterly state estimated tax payment to avoid penalties and interest.  And since you also owe Federal income taxes on this pension, you should set up quarterly Federal estimates, as well.

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