Q regarding "IRA distribution received as a beneficiary"

[surfinagin]

Doing 2024 Fed/NYS taxes for a relative who previously had a paid preparer.

They have RMD's from an Inherited IRA, and from (4) TIRA's.

Entered all 1099-R info, then answered related TT Q's regarding the Inherited IRA (decedent, DOD, etc).

During final checks, TT routed me back to the Pensions/Annuities/IRAs Worksheet, requesting "X" for:

IRAs/Pensions Received as a Beneficiary Question (IT-201/IT-203, line 9 and line 10).

1 Were any IRA distribution(s) received as a beneficiary?        Yes No
2 Were any pension distribution(s) received as a beneficiary  Yes No

#2:  "No" -no pension.

#1: Apparently could also be worded "Were any IRA distributions received from an Inherited IRA"(?)  

Confused regarding #2  -Q's:

Why doesn't TT put an X in the correct box based on the Inherited IRA info documented in TT?

For 2023, Paid Preparer said "No" -they didn't mark an X on the related NY IT-201 Line 9 "If received as a beneficiary, mark an X in the box." Would assume that's right, but they erred by not reporting income from U.S. Govt Bonds therefore could be wrong here also. 

Both decedent DOD and Inherited IRA established in 2022. 

What is the purpose of this X?  That's what confuses me.

Is the X is used only for the first time reporting an RMD from a new Inherited IRA?

Total 2024 RMD's is well below NYS $20K taxation limit, therefore assume no impact whether X marks "Yes" or "No"(?) -but want to understand this and get it right.

Do I mark X for "Yes" or for "No" for "Were any IRA distributions received as a beneficiary?

Thanks for your time!

[surfinagin]

1 day bump. 

Anyone?

[KrisD15 · Accepted solution]

New York does give a 20,000 exclusion to retirement income, however if the income was inherited, the exclusion (for the inherited distributions) could be reduced. 

The exclusion could be reduced if the original owner had multiple accounts and/or multiple beneficiaries. 

The original account holder's 20,000 exclusion is transferred to ALL the beneficiaries by their share of the funds inherited. 

If the inherited funds were split evenly between two beneficiaries, they each can claim only up to 10,000 annual exclusion on the distributions from the inherited IRA (and still only up to 20,000 each total). So if one of them took a 9,000 distribution from their eligible personal account and also a 13,000 from the inherited account, they would only be allowed to exclude 19,000. 

If there was only one beneficiary, there would be no reduction.