rgrove,
While CA conforms to federal treatment of IRA there are a few differences. For example:
a) If you made a qualified distribution to a Health Savings Account (HSA), it is not taxed by the IRA but is taxed by CA.
b) If you were a CA resident that made contributions a long time ago (early 1980s) that were fully deductible at the federal level but only partially deductible at the state level, the CA tax due would be less on the distribution. (My wife and I are in that boat.)
A good place to look for such info is in CA's FTB publications 1001 () and 1005 () which are reference in TurboTax's own help for that screen:
IRA Distribution Adjustments
Does this apply to anyone who receives an IRA?
No, it only applies if in previous years you deducted a different amount on your California return than on your federal return. See below for common examples of this.
I previously reported otherwise deductible contributions as nondeductible. Do I need to make an adjustment?
If you designated the same amount for federal and state, then there is no adjustment. However, if you designated different amounts on state than federal, you probably need to make an adjustment. Take a look at your personal IRA records and also FTB Publication 1005, Pension and Annuity Guidelines, for instructions on how to determine the amount of any adjustment to enter here.
I deducted IRA contributions on my federal return before I moved to California. Do I need to make an adjustment?
Maybe. You may need to enter an adjustment unless you have made all allowable adjustments in prior years. Take a look at your personal IRA records and also FTB Publication 1005, Pension and Annuity Guidelines, for instructions on how to determine the amount of any adjustment to enter here.
I received a Qualified Disaster Distribution from my IRA and elected to spread the taxable portion over three years.
No. You do not need to enter any adjustment in California as they conformed to withdrawals from retirement plans for qualified hurricane distributions made after August 23, 2017 to Hurricane Harvey victims, after September 4, 2017 to Hurricane Irma victims, after September 16, 2017 to Hurricane Maria victims, and after October 8, 2017 to the victims of California wildfires. The distributions must have been made before January 1, 2019. Please review FTB Publication 1001, Supplemental Guidelines to California Adjustments, for more information about California conformity to federal law.
I contributed to an IRA before 1987 and deducted a different amount on federal than on state. Do I need to make an adjustment?
If you contributed to an IRA, and you deducted a larger amount on your federal return than on California, you may not need to pay tax on amounts not previously deducted on California. Your previous years' returns should provide a history of your federal and state contributions and deductions. For more information see FTB Publication 1005, specifically Worksheets I and II.
Why do you keep referring me to FTB Publication 1005?
Because this subject is too complicated to cover all the questions that may possibly be asked. We prefer not to oversimplify this important area but rather direct you to a source of information that covers all situations.
