IRA 1099-R shows a Different State in Box 15

[inin2012]

Hello All,

We moved from CA to TX prior to 2023. We called Fidelity to change address during 2023, and apparently they didn't apply the change to the Roth and Traditional IRA accounts. So the 1099-R forms we received show CA and Payer's state number in box 15, and Fidelity are not able to correct it.  The IRA activities involved contribution to Traditional IRA, backdoor to Roth IRA, as well as partial recharacterization.

Question....Do we file 540NR non-resident tax return for California?  We do not have any income from CA, and we did not live there in the year of 2023.

Appreciate any feedback here. Thanks!

[DavidD66]

Unless there was California state tax withheld and reported on your Form 1099-R, you don't need to file a California return.  It is unlikely, but in the event you were to receive a letter from the California Franchise Tax Board because you did not file, you just need to respond to them and explain that you were not a resident of, and had no California sourced income; therefore you were not required to file a California return.  

[inin2012]

@DavidD66Hi David, thanks you for getting back to me.  It's my fault that I left an important history in my previous message.

We actually had the same issue last year (2022 tax year), our CPA filed 540NR for us. We ended up paying a small amount of tax to CA for the recharacterization portion (the money was recharacterized from Roth to Traditional, and eventually backdoor to Roth IRA). We didn't understand why because there was no tax withheld from CA, nor we made any income in CA. The contribution to IRA was after-tax money. But the CPA included it in the form Column E "CA Amounts".

We no longer use this CPA for other reasons so this year we are filing our own tax.

Given that we had this experience and reference from last year, is it still safe to say that we don't need to file 540NR because there is no ta withheld by CA?

Thank you and appreciate your feedback!

[DawnC]

Yes, it is more than safe to say that you do not need to file the CA nonresident return.   Had there been CA withholdings, you would need to file to recoup that.   Retirement income is allocated to your resident state.   So, any taxable transactions from your IRAs are sourced to your resident state, TX.   And TX has no income tax.   In the event CA sends you a letter (they like to do that:;, you can advise them of your move date - in 2022; they have no claim to tax your TX sourced retirement income.   

If you moved during 2022, it would make sense that a portion of your 2022 retirement income would be CA sourced, for the portion of 2022 that you were a CA resident.  

[inin2012]

@DawnC  Thank you so much for your help!!!