What does the NJ state return mean when it asks if this is the first withdrawal from this IRA, and then for the Value of all IRA's on 12/31/2020?

[Jordan40]

My wife is forced to take a Required Minimum Distribution (RMD) from an IRA she inherited from her great grandmother (?). Why does NJ care what the value of "all IRA's" are? What does this even mean, exactly? The value of all IRAs in my wife's name? In either of our names? 

This is keeping me from submitting, and now I have missed the 10/15 midnight deadline ...

[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.

For an Inherited IRA, the NJ basis is the basis of the original owner from whom you are the beneficiary.

You probably don't have this information so you pay tax on the entire distribution.

Inherited IRAs must be treated separately form your own IRAs.

If the original owner was not an NJ resident there is no NJ unrecovered contribution.

[Jordan40]

Fanfare: thank you for your clear explanation. 

Very real question: isn't the whole point of using TurboTax that we don't have to have to use worksheets or figure out ourselves how to avoid double taxation? Isn't that what TurboTax is supposed to do?

Back to substantive matters ...

The original owner was not an NJ resident. We were not NJ residents either until last year. Which is why this question was so confusing.

Also, maybe I misunderstand, but I don't think you answered the part of the question about what IRAs they are referring to  when they ask for the "Value of all IRA's"?

[fanfare]

"isn't the whole point of using TurboTax that we don't have to have to use worksheets or figure out ourselves how to avoid double taxation? Isn't that what TurboTax is supposed to do?"

Welcome to TurboTax.

TurboTax has chosen to present the question in a manner that differs from the NJ worksheet. The result should be the same.

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I did answer that: your inherited IRAS have to be treated separately.

Therefore the total value is the value of the inherited IRA.

To get the correct result (no recovery amount on Line 20b) Enter a prior unrecovered contributions value of zero. Or a total contributions value of zero. 

This depends on how TurboTax 2020 does it. I don't have the program for this year to try it out for you.

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Now that you reside in NJ, if you make contributions to your own IRA. you should keep accurate records of the amounts.

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The option to recover your contributions was added to the NJ Tax code around 2013. Before that, you were double taxed on your distributions, but after that time, you could begin to recover that, using the worksheet, if you lived so long.

generally, you can't recover all the basis until the IRA is exhausted.