Retirement tax questions

"IRA distributions are not taxed by NJ."

 

This is incorrect. IRA distributions are taxable  income.

But, the NJ Retirement Income Exclusion could result in a reduction in your tax, as long as your total NJ taxable income is below the threshold of $100,000.


Also, 

You have a basis in your IRA as far as NJ is concerned because you did not deduct IRA contributions from your NJ taxable income in all those past years.

Those are unrecovered.

See Worksheet C in the NJ Resident Return Instructions for how to avoid double taxation on that money (i.e. recover it) when you withdraw from your IRA.There is a first year calculation, and then a calculation for all subsequent years. OR use TurboTax to do it, it is the same thing but in a different presentation.

You will need good records showing what you put in over the years, or some way to reconstruct that information.

However, if the Retirement Exclusion eliminates your tax, the unrecovered calculation becomes moot.

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