Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Quick NY Tax Question
Old 04-01-2015, 09:34 AM   #1
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,867
Quick NY Tax Question

I posted this in Bogleheads and got some good replies, but I thought I'd ask you folks, too.

It started as a small question about one topic but has since morphed into another, more important one related to it.


I am doing my (snake-bit) friend's NY State Income Tax return and I have a small question about it.

On Line 9 of Form IT-201 (the main tax form), I have to enter the taxable amount of his IRA distribution. The entire distribution is from an inherited IRA he received in late 2012 after his remaining parent (his mom) died. That is easy. But there is also a box to be checked if it is received as a beneficiary. Last year, I checked the box but I wonder if that was correct although he was not questioned on it. The IRA, as I stated above, is the result of his being a beneficiary after his mom's death but it is under his name only.

Should this box be checked even though it has no effect on his taxable income or his income tax bill? What purpose does this box serve?


I received several useful replies including a few which pointed to New York's Line 29, the one about excluding some Pensions and Annuity income from the overall income

I then read the instructions for Line 29 and I am wondering if he is entitled to exclude the RMD from his state income. If so, then I mistakenly failed to make this exclusion on his 2013 return. I could probably file an amended return to recover the money. I am checking with my friend's sister to see what she did on the 2013 return and what she is doing with the 2014 return.

Have any of you who live in NY with inherited IRAs excluded the RMDs from their NY income as long as the right conditions were met?
__________________

__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 04-01-2015, 09:53 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 1,050
I don't know the answer to your specific question, but I was looking at NY law and pensions. NY has a $20,000 exclusion on pension income. It doesn't apply to an annuity purchased by oneself, like SPIAs. Looks like it must come from your former employer to get the exclusion.
__________________

__________________
jim584672 is offline   Reply With Quote
Old 04-01-2015, 10:15 AM   #3
Recycles dryer sheets
 
Join Date: Sep 2012
Posts: 91
Jim, an IRA or 401K withdrawal are also eligible for the exclusion, as it effectively the same as a pension in this case. However, I am not certain that this would be true for an inherited IRA.

Scrabbler, have you tried digging through the Fairmark.com website? There are some good materials there and knowledgeable posters on the forum.
__________________
Likes_to_Lurk is offline   Reply With Quote
Old 04-01-2015, 01:24 PM   #4
Full time employment: Posting here.
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 992
Also, you have to be over 59 1/2 to qualify for that $20,000 exclusion. So unhappy with NYS now I'm getting the house ready for sale.

Sent from my Nexus 7 using Early Retirement Forum mobile app
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
GravitySucks is offline   Reply With Quote
Old 04-01-2015, 02:52 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,867
Quote:
Originally Posted by GravitySucks View Post
Also, you have to be over 59 1/2 to qualify for that $20,000 exclusion. So unhappy with NYS now I'm getting the house ready for sale.

Sent from my Nexus 7 using Early Retirement Forum mobile app
I saw that in the form's instructions. But.......then there's this about beneficiaries in the instructions to Line 29 (underlining mine):

Beneficiaries
If you received a decedent’s pension and annuity income, you
may make this subtraction if the decedent would have been
entitled to it, had the decedent continued to live, regardless of
your age. If the decedent would have become 59˝ during 2014,
enter only the amount received after the decedent would have
become 59˝, but not more than $20,000.
In addition, the pension and annuity income exclusion of the
decedent that you are eligible to claim as a beneficiary must first
be reduced by the amount subtracted on the decedent’s New
York State personal income tax return, if any. The total pension
and annuity income exclusion claimed by the decedent and the
decedent’s beneficiaries cannot exceed $20,000.


Earlier, the instructions states this (underlining mine):

Qualifying pension and annuity income includes:
• periodic payments for services you performed as an employee
before you retired;
periodic and lump-sum payments from an IRA, but
not payments derived from contributions made after you retired;


The decedent (my friend's mom) was in her 70s when she died, well over the 59.5, so any limitations related to her age would not apply. My friend's age doesn't seem to matter, either. Her RMD's when she was alive, were between $7,500 and $8,500, well below the $20,000 that might have been subject to capping. His RMD, thanks to his longer life expectancy, is under $3,000.

I looks more and more like the RMD can be excluded from NY Income taxes. His sister was not at home today but I did speak to her and she will check her 2013 return (2014 is in progress) when she returns.

If I have to file an amended 2013 return, I will be amending it for the second time. I had to file an amended 2013 return late last year for unrelated reasons.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 04-01-2015, 03:51 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,428
From what you wrote, it sounds like your friend can exclude it. Perhaps the beneficiary box is there to help them administer the rule you cited in post #5.

Can you call the NY Tax Dept and ask?

Finally, before you file an amended return, see if it is worth the effort/hassle though I suspect to reduce income by ~$3k it would be worth doing.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 04-01-2015, 05:16 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,867
My friend's sister checked her 2013 NY tax return (prepared by her accountant) and she took the exclusion. I will take the exclusion in my friend's 2014 return and amend his 2013 return to include it and file for a $180 refund for him.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 04-01-2015, 10:05 PM   #8
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,867
Quote:
Originally Posted by pb4uski View Post
From what you wrote, it sounds like your friend can exclude it. Perhaps the beneficiary box is there to help them administer the rule you cited in post #5.

Can you call the NY Tax Dept and ask?

Finally, before you file an amended return, see if it is worth the effort/hassle though I suspect to reduce income by ~$3k it would be worth doing.
I tend to agree with your speculation about the purpose of the beneficiary box.

My friend came over here earlier tonight and we finished both his federal and state returns. He was glad to see the amount he owed on his state return drop by about 40% as well as learning he will receive a check for $180 for 2013.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 04-04-2015, 05:06 PM   #9
Confused about dryer sheets
realpenguin's Avatar
 
Join Date: Apr 2015
Posts: 1
I live in NY and have inherited IRA distributions. I can report that TurboTax checks that box.
__________________

__________________
realpenguin is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Allocating tax deferred funds - a quick question seraphim FIRE and Money 8 03-29-2012 07:28 AM
Quick Tax-Loss Harvesting Question Amethyst FIRE and Money 3 11-11-2009 09:10 AM
How to get a quick, reliable answer to a tax question? soupcxan FIRE and Money 24 02-05-2009 10:35 PM
Quick Tax Question re Tuition Deduction TromboneAl FIRE and Money 19 01-31-2007 01:22 PM
Quick Tax Question -- SEP Without Deduction Benefit TromboneAl FIRE and Money 5 01-24-2007 02:43 PM

 

 
All times are GMT -6. The time now is 02:50 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.