NY returns - IRA from PA where it was taxed

[schirallicpa]

Maybe I'm way out on a limb.  Please take it easy on me.  Client retired to NY.  (Nobody moves to NY to retire!!)  Previously lived entire working life in PA.  Has significant IRA withdrawals in 2017 as a NYS resident ($85000) which were taxed on PA returns when put into IRA.  (In NY we would have followed the IRS and had a deduction).  NY only lets me exclude $20000 from income in 2017.  So $65000 is taxed in NY.  My client is paying double tax.  Is there any where that I can take a credit for tax previously paid to PA.  (IT-112R seems to only let me take credit for taxes being paid in current year.)

[Pacun]

 "($85000) which were taxed on PA returns when put into IRA".

If he was taxed when money was put into IRA, then he will pay taxes only on the interest earned, correct?

 

[Jack from Ohio]

57 minutes ago, schirallicpa said:

Maybe I'm way out on a limb.  Please take it easy on me.  Client retired to NY.  (Nobody moves to NY to retire!!)  Previously lived entire working life in PA.  Has significant IRA withdrawals in 2017 as a NYS resident ($85000) which were taxed on PA returns when put into IRA.  (In NY we would have followed the IRS and had a deduction).  NY only lets me exclude $20000 from income in 2017.  So $65000 is taxed in NY.  My client is paying double tax.  Is there any where that I can take a credit for tax previously paid to PA.  (IT-112R seems to only let me take credit for taxes being paid in current year.)

It is the trap that the New England states use to keep people from moving away.  Double taxation is correct.  Tax it going in and tax it coming out, no matter where you live.  Nowhere to take credit for the taxes paid previously.

[jklcpa]

It is possible to have basis in the IRA for state purposes that differs from federal basis, if any, because some states' laws don't allow for the same rules for deducting the IRA contribution, and there are states that have specific rules to account for this difference.  I believe MA is one, and NJ might be another. Obviously, PA doesn't tax at the time of distribution as long as it isn't early.

I don't know if NY has any provision, and maybe someone else here from NY will answer, but if not, I'd research whether or not NY will recognize the basis your client has in the IRA made while a PA resident.

[Evan S. Golar]

Are you talking about a Traditional IRA or a ROTH IRA?

I can't figure out (as I'm unfamiliar with PA tax law) why if a Traditional - he'd be taxed on it in PA - if it's a deduction FROM income unless PA doesn't provide for Traditional IRA deductions.

ROTHs are only taxed on premature distributions - what's the age of the client?

If a ROTH, then the 1099-R should be coded that the distribution came from a ROTH.

[jklcpa]

PA doesn't allow IRA deductions.