What contributions to my IRAs do I include on Massachusetts Schedule X, Line 2 Worksheet under item 2, "Total contributions previously taxed by Massachusetts"? (1) Do I include contributions I made to Roth IRAs? (2) Do I include only those contributions to any kind of IRA that were over the limit? Somebody told me that, but the instructions don't seem to say so.
I have appended the text from the Schedule X instructions below. The issue is unrelated to Roth IRAs and those don't appear on Line 2. What is relevant is those IRA contributions that were deducted on the federal income tax but not on the MA state income tax. Just like nondeductible IRA contributions on the federal side, you have an MA cost basis in the IRA and that is not taxed when taken out later. MA traditional IRA distributions are deemed to come out of that original contribution tax free until it has been taken out completely. After that, the distributions become taxable just like federal IRA distributions. A Roth conversion of a traditional IRA that has a basis would include that basis in the Line 2 total as well since it constitutes a distribution out of a traditional IRA.
Line 2. Taxable IRA/Keogh, Qualified Charitable IRA Distributions and Roth IRA
Complete the Schedule X, Line 2 Worksheet to calculate the taxable portion of any amount you received from an Individual Retirement Account (IRA), Keogh, qualified charitable IRA distribution or Roth IRA conversion distribution. Since Massachusetts does not allow a deduction for amounts originally contributed to an IRA or Keogh, the distributions are not taxable until the full amount of your contributions which were previously subject to Massachusetts taxes are recovered.
Contributions made to Keogh accounts prior to 1975 were deductible when made. Therefore, no deduction may be taken from a Keogh distribution for amounts contributed before 1975.
Note: Contributions from a deferred plan, such as a 401(k), that were rolled over into an IRA are not considered pre-taxed contributions.