What are unrecovered contributions part A line 4a

[lescarb]

this would be for a individual ira account

[fanfare]

NJ Unrecovered contributions: money you contributed into your IRA that you were not able to deduct on a New Jersey state tax return. You need to keep records, since this information is useful for tax purposes when you go to take money out of the IRA at retirement or at any other time.

See Worksheet C in the NJ Resident Return Instructions for how to avoid double taxation on that money (i.e. recover it) when you withdraw from your IRA. The first year you do the calculation it is the total of all contributions. Keep the worksheet for your records for future years.

OR, let TurboTax track it, but you may not use TurboTax forever.

[fanfare]

If the Pension exclusion eliminates your NJ retirement income taxation, there's not much point in worrying about unrecovered contributions. But that's certainly not the case for everybody.

[Khassinger]

why cant turbo tax input this as they did tax last year

[Khassinger]

why cant turbo tax input this information

[MendhamUser]

I've used a tax pro in prior years, so this is my first time submitting via TT.  Confused by what is presumably a NJ (state) "Pensions, Annuities and IRAs Withdrawals" worksheet.

Under "Unrecovered contributions: Complete either line 4a or line 4b"

TT is asking for an entry in Part A, Line 4a which is "First year of withdrawal from IRA".  Why the heck does that matter, and I don't know if my former tax pro had been filling this out or not.  Am I supposed to enter the year I first made a withdrawal.  Not sure I remember!  Will I need to calculate how much I had previously withdrawn from my IRA?  Yikes.

Any comments?

[fanfare]

You have a basis in your IRA as far as NJ is concerned because you did not deduct IRA contributions from your NJ taxable income in all those past years.

Those are unrecovered.

See Worksheet C in the NJ Resident Return Instructions for how to avoid double taxation on that money (i.e. recover it) when you withdraw from your IRA. There is a first year calculation, and then a calculation for all subsequent years. OR use TurboTax to do it, it is the same thing but in a different presentation.

You will need good records showing what you put in over the years, or some way to reconstruct that information.

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However, if the Retirement Income Exclusion eliminates your tax, the unrecovered calculation becomes moot.
You qualify for the pension exclusion if:

• You (and/or your spouse/civil union partner, if filing jointly) were 62 or older or disabled as defined by Social Security guidelines on the last day of the tax year (December 31 for calendar year filers); and
• Your total income for the entire year was $150,000 or less.

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If you just moved to NJ, you don't have any unrecovered contributions.

Or, if you find this too much bother, just pay the tax on the entire amount of your distribution.

[pjlk]

I agree with your "Yikes!"

i may be having brain fog, but I don't recall ever doing this before!

In their greed to get the money quicker, they made an impossible book keeping job for normal folks!

[fanfare]

When the NJ instructions say keep a copy of this Worksheet C for your records, they're not kidding.

If you don't want to do the bookkeeping, pay the NJ income tax on the entire IRA distribution.

[fanfare]

@pjlk 

The recovered amount calculation reduces your tax, so I don't see how you can blame greed for this.

NJ taxes are already high enough don't you think?

But not as high as some other states.