How do I fix this: qualified Roth distribution, correctly classified as NON-TAXABLE on Federal return, is wrongly classified as taxable on NJ state return.

pcl1732 — Fri, 13 Feb 2026 04:31:41 GMT

Re: How do I fix this: qualified Roth distribution, correctly classified as NON-TAXABLE on Federa...

DaveF1006 — Thu, 19 Feb 2026 19:48:03 GMT

To fix this, you need to go into the New Jersey state interview (not the Federal section) and look for the specific retirement income adjustment screens.

Navigate to the New Jersey state return.
Continue until you reach the screen titled "Retirement Income" or "Pension and IRA Summary."
Look for a screen that asks about your Roth IRA distributions or a screen titled "Roth Conversion/Distribution for [Name]."
You will see a box asking for "Contributions Previously Taxed by New Jersey."
Enter the entire amount of the distribution in this box.

New Jersey law says that if you already paid NJ tax on the money going in, you don't pay it coming out. By entering the full amount as "previously taxed," you force the software to calculate the taxable gain as $0.

topic How do I fix this: qualified Roth distribution, correctly classified as NON-TAXABLE on Federal return, is wrongly classified as taxable on NJ state return. in Retirement tax questions

How do I fix this: qualified Roth distribution, correctly classified as NON-TAXABLE on Federal return, is wrongly classified as taxable on NJ state return.

Re: How do I fix this: qualified Roth distribution, correctly classified as NON-TAXABLE on Federa...