Hello, I am happy to try to help you with this, but I posted this question almost one year ago and so I am a bit rusty on this. I just looked at my 2022 tax software but I could not locate the place where this information is in play. So I will try a hypothetical example and you will have to wing it from there. Let's say that you made two $5000 IRA contributions in the past but they were not deductible on your state taxes. The total of $10,000 is your state tax basis in the IRA's. Let's say you got a distribution of $3,000 two years ago. It would not be taxable because you have not yet received your $10,000 back. Your remaining basis is $7.000. Last year you withdrew $8,000. Your taxable portion is $1,000 and the remaining $7,000 is the return of your original non-taxable contributions, or your net remaining basis. This is where the tax software confuses me. Unfortunately I cannot see the posting while I type this, so I cannot really see the details. But basically, you want to end up with $1,000 as taxable on your state return. Box 1 would be $8,000 (last year's distribution). Box 2 could be $10,000 (total original basis) and box 3 $3,000 (distributions received in years before last year). This should give the desired result of $1,000 taxable for the tax year you are working on. If for some reason this doesn't work, you could try the following: Box 1 $8,000, Box 2 $7,000, Box 3 $0. The net result should be $1,000 taxable for the tax year you are working on. Good luck.
