For tax year 2023, I converted $30K from my SEP IRA into my Roth IRA. This is the first time I have done this and it appears I am being charge NJ tax on the withdrawal. My understanding is my contributions were taxed when I made them and are not taxed by New Jersey when withdrawn. Interest, dividends, and other earnings credited to my SEP are taxable when withdrawn. I have managed and track these numbers, but it appears Turbo Tax is not recognizing it as my previously taxed income.
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You didn't indicate that the SEP IRA was a ROTH, so I expect that it was NOT.
We'd love to help you complete your tax return, but need more information. Can you please clarify your question?
You have a basis in your IRA as far as NJ is concerned because you did not/could 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.
The nontaxable part is prorated, similar to Form8606, so there will always be some NJ tax.
However, if the Retirement Income Exclusion eliminates your tax, the unrecovered calculation becomes moot.
You qualify for the pension exclusion if:
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