NJ tax form: Pensions, Annuities, and IRAs Wks- TP/part A Line 4a?

[Cmorgan08108]

what is supposed to be entered in NJ tax form: Pensions, Annuities, and IRAs Wks- TP/part A Line 4a?

I’ve been on the worksheet and can’t find what needs to be entered there.  Can’t find a place that tells me what the box means.

[Irene2805]

On the NJ Pensions, Annuities, and IRAs Wks, Part A, line 4a is asking for the total of IRA contributions previously taxed.  This is the total amount of IRA contributions you have made over the years (while a NJ resident).

IRA contributions are not deductible in New Jersey; therefore IRA withdrawals include:

• a nontaxable part (your contributions); and
• a taxable part (earnings).

In general, contributions are taxed when they were made in New Jersey. Interest, dividends, or other earnings credited to the IRA account are subject to tax when withdrawn.

[Cmorgan08108]

In confusion still,  I'm guessing:  This has only to do with my IRA?  Yes or No?  (I also have 403b accounts and I want to make sure this is not involving them.)   Could I have copied something incorrectly off my 1099 R form?     Where might I find the total amount of my contributions over the years?  I recall we purchased a $2000 IRA when my wife's father died many years ago.  Should I put down the $2000 cost?  I don't recall adding any other contributions. 

Sorry, but I'm totally confused and don't want to make any mistakes.

Sincerely,

Craig Morgan

[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.

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 $100,000 or less.

[fanfare]

Part A Line 4a is used in the first year of calculation, only.

[Cmorgan08108]

Hi again,

I'm still trying to get this straight in my mind.  I'm 74 years old and have been taking the RMD out for the past few years (was told to do so.)  These items have not come up on my taxes ever before that I am aware of.  I thought (who knows if I was correct) this worked by: buying the IRA (I'm assuming the $2000 allowed me to pay lower taxes for the year I purchased it), let it sit for 20 + years collecting interest and then paid taxes on the money as I removed it from the IRA at a later time (at hopefully a lower rate).  I have added nothing (no contributions from me other than that initial contribution of $2000) over the years.  

Where am I going wrong? I don't understand this part at all. 

"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."   

Sorry, but things aren't fitting together for me.  Especially since I haven't made any contributions past the initial amount.  Did I check something wrong on the Turbo Tax form?

Sincerely,

Craig Morgan

[fanfare]

the statement is still true even if "all those past years" only amounts to one particular year in your situation.

Your unrecovered contributions are $2,000 and that goes into turbotax.

That amount will be pro-rated and TurboTax will hold the numbers for next year.

If you're not going to use turbotax next year you should get the Worksheet C from the NJ Instruction booklet.

as I said also, with the recent establishment of the NJ Retirement Income Exclusion, unless your income is over $100,000, you don't have to worry about this. you don't have to track unrecovered contributions. just enter zero for Part A/line 4a.

[fanfare]

when you took that $2,000 deduction, your taxes were lowered on your federal return but not on your NJ return

[fanfare]

If your total income is over $100,000 the prorated deduction on $2,000 is down in the noise, so again it's not worth bothering with.

[Cmorgan08108]

Thanks for your help.  Sorry to be a pain.   You guys must be going crazy at this time.  Stay healthy.

Craig Morgan

[fanfare]

@Cmorgan08108 You're welcome. I'm just a regular NJ taxpayer, like you, but already crazy.

[whitewatch88]

I'm struggling with this problem.  From https://www.state.nj.us/treasury/taxation/njit8.shtml I see "An Individual Retirement Account (IRA) is a personal savings plan that consists of your contributions and earnings plus certain amounts rolled over from pension plans. In general, your contributions were taxed when you made them and are not taxed by New Jersey when withdrawn. Interest, dividends, rollovers from tax-free pension plans, and earnings credited to an IRA are taxable when withdrawn."  which I interpret to mean that my IRA basis is not taxed on withdrawl, only the gains should be taxed.

 But on the NJ TurboTax Deluxe program, on the Pensions, Annuities and IRA Withdrawals form I have entered the Value of all IRA's on 12/31/2019 (line 1a) and I want to put my basis on "Enter the total of IRA contributions previously taxed (line 4a) but Turbo Tax keeps complaining "Pensions, Annuities and IRAs Wks - SP: Part A, Line 4a and Part A, line 4b should not both be entered." Note that 4b has a 0 that I did not put that that I cannot remove.

I don't think the previous postabout contributions being taxable is right but I don't know how to resolve this problem using the program as written.

Can some explain what I am doing wrong?  Or offer a workaround other than filing by paper and requesting a refund on my NJ efile fee?

[fanfare]

an example of what can happen if you fiddle with the worksheets.

If it is your first time at this, 4b should be empty not zero. to clear 4b I think you have to clear the  unrecovered amount field, if I remember correctly.

4a is used the first time.

Turbotax will prorate that  and save the numbers for next year.

you'll  never use 4a again, unless you are starting over.

Try using the Q&A and read the questions carefully.; It may straighten itself out.

[fanfare]

On the other hand if the numbers under 4b are correct, then it is not the first time and  4a that must be cleared.

Turbotax keeps track of your NJ basis.

[whitewatch88]

Ok, so I now understand that I need to fill out line 4a or 4b and not both. 2019 was the first year so 4a should be filled in. 4b has a 0 and turbotax will not let me change it and will not let me file with a value there.

I tried deleting the whole form, but I don't see how to get there via the step by step.  So I re-added the form.  I seems like the IRA contributions from previous years should be entered on line 3 which refers to a a Schedule k-1.  But when I click on the magnifying glass and pick source, I get "Add Sch K-1 Partnership Additional Info 1"  What?

Can I just fill in 4a, print out my taxes, send in the paper and request a refund on filing from turbo tax?  Is that the best plan?