Error in CA state tax return after Return of Roth IRA contributions

Forum|Forum|1 year ago
March 16, 2025
1 reply
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Request your confirmation on entries below, why the error is coming up and how to fix it. Thank you.

Context:

I had contributed $7k to Fidelity Roth IRA in Jan 2024 but realized that there is income limit as my salary increased to > $150k in March 2024. It had earned interest of $801.85.

I submitted Return of Excess contributions to Fidelity and got back $7,801.85.

I was New York resident for all of 2024, though I lived in CA until end of 2023. So I downloaded both New York and CA for TurboTax and am filling both sections. I entered 1099-R for Federal section which then had below:

"Did you use your IRA to pay for any of these expenses?" screen: "Corrective distributions made before the due date of the return": $802

Question:

California section has below. Please confirm if it is ok to change the default entries to below.

Screenshot 2025-03-15 at 7.10.11 PM.png

If I don't change it, I get additional tax screens and errors below.

Screenshot 2025-03-15 at 6.26.23 PM.png

ERROR

Screenshot 2025-03-15 at 6.37.48 PM.png

When I switch to Forms, it shows below in form 3805P. This should have been Yes, right? Please let me know what I missing. Thankyou.

Screenshot 2025-03-15 at 6.38.38 PM.png

MonikaK1

Since you indicated (including in another thread) that you lived in New York the entire year, in your own apartment, and are still living there, then you should file as a New York resident for 2024. You would file a nonresident California return IF you have California-sourced income. List your New York address on your return. You would prepare the nonresident return, if needed, first. Then, you may be able to claim a credit on your New York return for tax paid (liability on the tax return, not withholding) to California.

Please also see this TurboTax tips article for more information on filing returns with multiple states.

Since you currently still live in New York, and did for all of 2024, use your New York address. Update your address with the IRS and states when you move back to California.

If you are using a California address, the California tax agency may be more likely to audit you and propose that you have remained a California resident the whole time since you didn't change your address.

You can refer to this booklet from the California Franchise Tax Board about how to determine residency for tax purposes.

See also this New York FAQ page about residency.

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jackkganAuthor

Thank you!

I request your confirmation on the following question I had posted:

Context:

I had contributed $7k to Fidelity Roth IRA in Jan 2024 but realized that there is income limit as my salary increased to > $150k in March 2024. It had earned interest of $801.85.

I submitted Return of Excess contributions to Fidelity and got back $7,801.85.

"Did you use your IRA to pay for any of these expenses?" screen: "Corrective distributions made before the due date of the return": $802

Question:

Please confirm if Is it ok to change the default entries to below:

Screenshot 2025-03-20 at 5.26.30 PM.png

MonikaK1

Yes. Beginning on December 29, 2022, the 10% additional tax on early distributions will not apply to a corrective IRA distribution, which consists of an excessive contribution (a contribution greater than the IRA contribution limit) and any earnings allocable to the excessive contribution, as long as the corrective distribution is made on or before the due date (including extensions) of the income tax return.

See the IRS instructions for Form 5329 for more information.

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