No, this is neither a sales tax nor a real estate transfer tax. It is income tax withholding. The principle is similar to income tax withholding by employers. The buyer withholds Alabama income tax from the payment to the nonresident seller. The buyer is responsible for providing the seller with a copy of Form WNR and Form WNR-V. The seller will attach a copy of Form WNR to the appropriate Alabama income tax return to claim credit for the taxes paid. The taxes withheld and remitted by the buyer to the Alabama Department of Revenue will be considered as an estimated tax payment made on behalf of the seller.
Yes, once the withdrawal is made, it would be taxable on your Alabama income tax return.
The rollover is exempt from Alabama income tax.
Yes, the amount withdrawn is added back to the contributing taxpayer’s return, plus a 10 percent penalty.
No, the money is not taxable as long as the money is used to pay for higher education expenses.
The postmark date on your contribution will be accepted as the date of the contribution, as long as it is on or before December 31.  The contribution does not have to be received by the plan on or before December 31.
