What is "Other Contributions Previously Taxed by Mass." in the "Taxable IRA/Keogh Distributions" section of Mass. state return? I maxed out a backdoor roth this year.

[mpduples]

The section says: "Total IRA/Keogh plan distributions received during 2020 are $6,000. To determine the taxable amount for Massachusetts, enter the following information...".  "Other Contributions Previously Tax by Massachusetts" - should this be $6,000 since I completed a Backdoor Roth so my $6,000 distributions were initially post-tax contributions to a Traditional IRA and then converted to a Roth IRA?

[JohnB5677]

Yes, those were previously taxed by Massachusetts, and it should be posted as such.. 

In addition, the IRS gives you a deduction when you make a contribution to a traditional IRA.  Massachusetts does not.  You must keep record of your IRA contributions and they can be deducted in Massachusetts when you start cashing out the IRA .

[Jdcasares129]

@JohnB5677 I have a quick followup question. My Taxable IRA/Keogh Distributions for 2020 was added up as $16,231. I believe the sum is from my withdrawal in 2020 of a 2018 excess Roth IRA contribution of $5,500; Code J in my 1099-R, and my conversion of my Traditional IRA contributions to a Roth IRA, which totaled $10,731; Code 2 in my 1099-R.

My traditional IRA contributions are taxable because of my income. Between 2018-2020, I contributed 17,400 in Roth and nondeductible Traditional IRA contributions. When it asks for 'Other contributions previously taxed by MA', should I enter in $17,400 or just the $16,231? 

[JohnB5677]

I believe it may be even more than that. 

You never got any deduction in Massachusetts for any contribution to either Traditional or ROTH IRA's.  The total should include all IRA contributions, not just the ones that the IRS gave you credit for. 

That number is probably significantly larger than the amount you withdrew.  TurboTax will carry it over any excess to the following year.

[Dianaboston]

I never saw this section before when doing my MA returns:    "Taxable IRA/Keogh Distributions".  Or I don't remember it from previous TT years. Doing my 2021 return now.  I'm one of those rare people who kept track of contributions to my IRA over the years that I already paid taxes on.  I never remember MA asking for this info, as I'd assumed it would carry over the figures from my federal 8606 forms.   In the MA form section "Other contributions previously taxed by MA" section I entered the amount from my 2021 8606 form (why didn't TT do this for me??).   Then below, there is a field "Total Distributions Received in Previous Years".... What does this mean?   The sum of TOTAL distributions from my IRA since I've been withdrawing the RMD each year?    And what does this sum do?   I notice my MA tax dropped almost 100 dollars when I entered the amount I previously paid taxes on.. However, when I entered the sum of total distributions from my IRA, it "took away" that 100 dollar "credit"...  I do NOT understand what is going on with this at all... Anyone have any ideas?   Thanks!  

[AmyC]

MA does not allow the federal IRA deduction but instead taxes it. So, if you lived in MA the whole time, the entire amount paid in would be the basis. If you lived elsewhere, it would not be the same. See Massachusetts Taxable IRA distributions - TurboTax Support for more details.

[Dianaboston]

Thanks Amy….   So, what information do I put in Question 1 “Other Contributions previously taxed by MA “.  I have entered the amount of my IRA distribution from my 8606 form, that I previously paid taxes on.   Is this not correct?    Or do I enter here the entire total of my non-deductible IRA contributions over the many decades that I paid taxes on?    This information I doubt I’d ever be able to re-create……

Also, I do not remember ever having to answer this question on my MA return when using TT to do my returns..  Is this something new? 

 And, for Question 2, “Total Distributions received in previous years”….  I assume this is the sum of total distributions since when I first starting taking the RMD from my IRA?

Thanks so much!

Diana 

[JohnB5677]

Massachusetts does not give you a tax deduction on traditional IRA's like you get from the federal.  You pay the tax when you put it into the IRA.

Therefore, every contribution that you made to an IRA while you lived in Massachusetts was already taxed. 

The first question is to determine how much you contributed.

The second question is to determine how much you've withdrawn, and how much is now taxable.

MA IRA Non Deduction

To post the Non-Deductible portion of Massachusetts IRA’s

1. Go to the Massachusetts return

2. Continue to the Recap Page

3. You’ve Finished Your Massachusetts Return

4. Select Adjustments

5. You will have to go through several screens.  

6. You will find:

• Taxable IRA/Keogh Distributions

• • Other contributions previously taxed by Massachusetts

    • You need to have a record of how much you contributed to the IRA in order to be able to answer the questions of how much of the IRA distribution was previously taxed.

  • Total distributions received in previous years.

[Dianaboston]

Thanks, but this section has completely baffled me... Now that I understand what TT is asking, for question 1 I entered my total IRA contributions in all the years while living in MA.    Then for question 2, I entered the total amount I have taken in distributionsl in previous years -- before 2021.   Whenever I "play" with these numbers, it is NOT changing my MA tax obligation at all..    I even put ridiculous numbers in both text fields and nothing changed as far as my MA tax obligation.   Is this correct?   Am I doing something wrong?  Looks like a problem in the software.

thanks!     Diana 

[AmyC]

It actually makes sense. Once your contribution amount is larger than your distribution, the meter is waiting to see how your distributions compare. If the difference between your contributions and distribution numbers is less that your current distribution, any variety of numbers could be entered without seeing a change.

Other contributions - everything you ever contributed

Total distributions - everything you took out

Difference in them is the key to the meter not changing.

Otherwise,  the more contributions, the tax basis is lowered and the refund goes up. As the prior distributions go up, the refund goes down.

It sounds like you have more contributions than distributions and this distribution is not being affected so your meter is stable. All is well!

[Dianaboston]

Thanks AmyC!

"It sounds like you have more contributions than distributions and this distribution is not being affected so your meter is stable."

Actually, I have made fewer contributions than distributions.   Here are some numbers I plugged in:

"Other Contributions previously taxed by MA"

Here I entered 63K in total IRA contributions until I had to start RMDs.

"Total distributions made in previous years"

Here I entered $247,548.

I used the figure from the start of RMDs up to 2020 since the question is:  "Total distributions made in PREVIOUS years" which I take to mean through 2020.  And because TT was displaying what my distribution was for 2021. 

The way I can get the meter to "change" and change my MA tax obligation/refund is to inflate my "Other contributions previously taxed by MA".   When I inflate this number very high, then my refund goes up very high, as you say.  However, when I put the correct numbers in, it shows an amount owed for MA taxes.     

However, my REAL question is if MA taxes all IRA contributions whether you've already paid taxes on them or not, why do we have to track this and why is this the very first year since I've been taking RMDs is TT asking for this information (amount contributed and amount distributed) on my MA return?    Wouldn't it just figure my distributions as ordinary income like on my federal return?

Sorry for my confusion (beyond confusing).

Diana 

[JohnB5677]

@AmyC gave an excellent description of the workings of Massachusetts IRA contributions,  and you seemed to have grasped it perfectly.

I'm from Massachusetts. and I have seen the input screen for this issue in TurboTax for years.  If you don't put an entry in it, it will calculate your taxes without an error.  You could have made all of your IRA contributions while you lived in another state. Those wouldn't be applicable for this section of the return.

@Dianaboston

[Dianaboston]

Thanks John!

Yes, I see when I remove any numbers from those two fields, it still calculates my taxes without any changes.

All my contributions were made in MA.....

Hmmm... What I do NOT understand is why I was never asked this question before in all the years of using TT to prepare my taxes.  And I, several years ago, withdrew the total amount I ever contributed (excluding proceeds from a 401K rollover into this particular IRA account) from my IRA.

Would the best advice then be to just not enter anything into this field since TT does not require it in order to complete and review my returns?    Or, does TT start to keep track of total distributions once you enter an amount into question #2.  

Diana

[JohnB5677]

A 401K rollover into an IRA is not the same as a direct IRA contribution. 

• You did get a deduction in Massachusetts for the original 401-K contribution. 
• Therefore, this rule would not apply to the rollover.
• Massachusetts never taxed the 401-K, so when you rolled it over to an IRA it had never been taxed.

Yes, you should enter the contributions that you made directly to your traditional IRA.  That portion will not be taxable.

Yes, TurboTax will keep track of it up to the point where you have withdrawn more than you contributed.

If you've made withdrawals in previous years from your traditional IRA (not the rollover), you should amend your state returns.  This will not affect your Federal tax return.

[Dianaboston]

Thanks!  What I still don’t understand is why this question came up now.  I withdrew more in RMDs than I ever contributed at least 5 years ago.  It is so complicated and confusing that I would probably pay an accountant more money to file amended returns than I would have ever gotten in refunds if I overpaid MA takes for the last several years.