Massachusetts IRA distribution


J

joetaxpayer

I don't know how other states handle this, but MA does not
allow a deduction. Therefore, it exempts all distributions
that are the deposits to one's IRA (i.e. they will start
taxing only after all deposits are withdrawn). The form's
question is "total contributions previously taxed by
Massachusetts".

So, unlike Non-deductable IRA deposits, which are tracked
via 8606, how would this be handled? There is no form that
tracked this over the years. Hoping a fellow bean-towner or
someone living in a similar state (in both senses) can set
me straight.

JOE
 
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R

Rich Carreiro

[poster describes how MA does not allow a deduction
for IRA contributions, even when federally-deductible.
For completeness, I note that MA also disallows deductions
for contributions to sole proprietors' qualified plans (SEP,
Keogh, solo 401(k), etc).]
So, unlike Non-deductable IRA deposits, which are tracked
via 8606, how would this be handled?
You keep track, on your own spreadsheet/piece of paper/etc.
all the contributions you've made to an IRA/SEP/Keogh/etc.
while you've been a MA taxpayer.
There is no form that tracked this over the years.
Correct. So roll your own.
 
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D

Dan Lanciani

I don't know how other states handle this, but MA does not
allow a deduction. Therefore, it exempts all distributions
that are the deposits to one's IRA (i.e. they will start
taxing only after all deposits are withdrawn). The form's
question is "total contributions previously taxed by
Massachusetts".

So, unlike Non-deductable IRA deposits, which are tracked
via 8606, how would this be handled? There is no form that
tracked this over the years. Hoping a fellow bean-towner or
someone living in a similar state (in both senses) can set
me straight.
Massachusetts audited me on this issue. (They didn't bother
to tell me that they were auditing me; they just sent me a
notice of intent to assess.) Speaking with the rep I got
the feeling that that they expected me to pay rather than
document the basis. They kept talking about 1099's as if
those showed contributions. They didn't seem to know about
5498's (not that they would have gone far enough back to
help much). And they really couldn't explain how I was
supposed to document my (lack of) previous withdrawals.

I sent them copies of brokerage statements for 20+ years
showing my contributions (and by implication lack of
withdrawals) along with a summary and balance. About a week
before the deadline I called to see if they were happy.
They couldn't tell me anything because the person who
answers the phone--while part of the same "audit unit"--is
in a different city from (and cannot communicate with) the
people who receive the responses. He kept assuring me that
I would get timely credit for my payment as long as I had
proof that it had been received by the deadline. I kept
explaining that I hadn't sent a payment but documentation of
why I didn't owe anything along with a request for meeting
if the evidence was not adequate.

After a few iterations I proposed that I should send another
copy of my response return-receipt. He said that I
absolutely shouldn't do that because it would confuse them.
I sent another copy of my response return-receipt and about
a week after I received the receipt I received a notice that
the notice of intent to assess had been rescinded.

Dan Lanciani
[email protected]*com
 
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M

Mark Bole

joetaxpayer said:
I don't know how other states handle this, but MA does not
allow a deduction. Therefore, it exempts all distributions
that are the deposits to one's IRA (i.e. they will start
taxing only after all deposits are withdrawn). The form's
question is "total contributions previously taxed by
Massachusetts".

So, unlike Non-deductable IRA deposits, which are tracked
via 8606, how would this be handled? There is no form that
tracked this over the years. Hoping a fellow bean-towner or
someone living in a similar state (in both senses) can set
me straight.
In California, in the past there have been different
deductible amounts for IRA's vs. federal (in other words,
non-conformance).

This sounds like your situation, only a difference in
percent deduction disallowed (100% vs. a lesser percent).

This is simply shown as an adjustment on schedule CA (540),
California Adjustments. Suppose the IRA distribution for
federal purposes was $10,000, but only $8,000 was previously
tax-deductible for CA -- then you would simply show a
"subtraction" adjustment of $2,000 on line 15 of the CA
schedule.

It could be tracked by a self-prepared worksheet, but no
official form that I know of.

-Mark Bole
 
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J

joetaxpayer

Rich said:
[poster describes how MA does not allow a deduction
for IRA contributions, even when federally-deductible.
For completeness, I note that MA also disallows deductions
for contributions to sole proprietors' qualified plans (SEP,
Keogh, solo 401(k), etc).]

You keep track, on your own spreadsheet/piece of paper/etc.
all the contributions you've made to an IRA/SEP/Keogh/etc.
while you've been a MA taxpayer.
There is no form that tracked this over the years.
Correct. So roll your own.
(Thanks for summarizing my post) So if a client comes in at
70, and has the 3 years returns that one saves (or even 7,
no difference I guess), do you just go back and research the
year IRAs started ($2,000 right?) and add up the assumed
deposits, declaring that to be the MA 'basis'? If not that,
what? I can't be the first to run into this. (you'd think
the MA forms would track deposits) I understand your
response, and suppose this would be a warning I'd give
people just starting out, but it's the first this problem
has come up for me.

JOE
 
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S

Seth Breidbart

Dan Lanciani said:
After a few iterations I proposed that I should send another
copy of my response return-receipt. He said that I
absolutely shouldn't do that because it would confuse them.
Why are you supposed to consider that a bad thing?

Seth
 
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H

Harlan Lunsford

joetaxpayer said:
Rich said:
[poster describes how MA does not allow a deduction
for IRA contributions, even when federally-deductible.
For completeness, I note that MA also disallows deductions
for contributions to sole proprietors' qualified plans (SEP,
Keogh, solo 401(k), etc).]

You keep track, on your own spreadsheet/piece of paper/etc.
all the contributions you've made to an IRA/SEP/Keogh/etc.
while you've been a MA taxpayer.
There is no form that tracked this over the years.
Correct. So roll your own.
(Thanks for summarizing my post) So if a client comes in at
70, and has the 3 years returns that one saves (or even 7,
no difference I guess), do you just go back and research the
year IRAs started ($2,000 right?) and add up the assumed
deposits, declaring that to be the MA 'basis'? If not that,
what? I can't be the first to run into this. (you'd think
the MA forms would track deposits) I understand your
response, and suppose this would be a warning I'd give
people just starting out, but it's the first this problem
has come up for me.
You might get your client to come up with forms 5498 he's
gotten over the years from the IRA custodian. Or maybe the
brokerage house/bank end of year statements which would show
contributions. That's a start.

ChEAr$,
Harlan Lunsford, EA n LA
 
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B

Bill B

do you just go back and research the
year IRAs started ($2,000 right?) and add up the assumed
deposits, declaring that to be the MA 'basis'? If not that,
what? I can't be the first to run into this. (you'd think
the MA forms would track deposits) I understand your
response, and suppose this would be a warning I'd give
people just starting out, but it's the first this problem
has come up for me.
A lot of old timers here that I'm sure remember IRA's
started in 1974 as 1500.00 and changed to 2000.00 in 1981.

I've always kept a list of IRA contributions for this
purpose and I always advise my clients to keep all tax
returns forever.

40 days left, but who's counting!

Bill in Taxachusetts
 
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D

Dan Lanciani

Why are you supposed to consider that a bad thing?
I suppose I was to assume that such confusion would work
against me. I thought it was a rather odd thing to say (let
alone to repeat) but then we didn't seem to be communicating
too well. I actually included a cover letter indicating
that all the attached material duplicated my previous
submission. Just in case.

Dan Lanciani
[email protected]*com
 
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M

Missy

do you just go back and research the
A lot of old timers here that I'm sure remember IRA's
started in 1974 as 1500.00 and changed to 2000.00 in 1981.

I've always kept a list of IRA contributions for this
purpose and I always advise my clients to keep all tax
returns forever.
Bill, are you calling me an old timer??? I just got on
medicare, so I am not that old.... I remember it well...

Missy Doyle

Moderator:
And I'm 17 - only my body aged.
 
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N

news.verizon.net

do you just go back and research the
A lot of old timers here that I'm sure remember IRA's
started in 1974 as 1500.00 and changed to 2000.00 in 1981.

I've always kept a list of IRA contributions for this
purpose and I always advise my clients to keep all tax
returns forever.

40 days left, but who's counting!

Bill in Taxachusetts
Was there also a complication when stay-at-home spouses
could claim contributions? Some time ago our group had
calculated the maximum possible contributions and the timing
of their introductions so that we could help clients
reconstruct their MA taxed contributions but we have since
lost that information.
 
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J

joetaxpayer

do you just go back and research the
Was there also a complication when stay-at-home spouses
could claim contributions? Some time ago our group had
calculated the maximum possible contributions and the timing
of their introductions so that we could help clients
reconstruct their MA taxed contributions but we have since
lost that information.
If someone can post a good reference for this (the annual
IRA limits) that would be much appreciated. I now see that
"schedules X and Y" one form for input on TurboTax, flow to
the main forms, but this form doesn't print, even as a
backup/worksheet.

My person is nearly 80, and doesn't have records going
beyond 7 years as all advice givers told her that was the
limit of what she needed to save. Her now deceased husband
had been taking RMDs for 15 years and so 8 years of
withdrawals are now lost.

JOE
 
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N

news.verizon.net

If someone can post a good reference for this (the annual
IRA limits) that would be much appreciated....
The limits are available by googling: "Legislative History
of IRAs". The CBO site gives a complete set of limits.
 
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K

Katie

If someone can post a good reference for this (the annual
The limits are available by googling: "Legislative History
of IRAs". The CBO site gives a complete set of limits.
Hey, that's a great reference! Thanks!

Katie in San Diego
 
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