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Are IRS Distributions taxable in NYS if taken before retirement age?
Hi! I know this is a bit off topic, but I have a question re: Traditional IRA Distributions before retirement age. I'm under 59 1/2 years old & I live in New York. I know that Traditional IRA distributions are taxable on the Federal level along with a penalty for being under retirement age. However, on the State level, specifically New York State, is there tax and a penalty due when you file? I found out that up to $20,000 of retirement income is tax free in New York, but does that apply when you take a distribution before retirement age? Feedback is appreciated! Thanks!
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Self employed
Hello Patrice1986, The $20,000 retirement income exclusion in NY is for those taxpayers that have reached 59 1/2. It is pro-rated if you turned 59 1/2 in Tax Year 2021. NY tax calculation starts with the Federal Adjusted Gross Income- then makes additions and subtractions, so the increase in income for the IRA withdrawal is already in your New York tax return as increased income. The penalty is at the Federal level. There may be penalty or interest on the additional income if NY tax was not withheld on the 1099-R.
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Self employed
Awesome! Thanks so much for your response Janis M1! This info helps me have a much clearer understanding 🙂