Are Traditional IRA Contributions taxable in New York State?

Forum|Forum|2 years ago
March 13, 2024
2 replies
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I am a resident of Pennsylvania and work in the state of New York (Not New York City).

I do not participate in an employer 401k or 403b.

I would like to open a Traditional IRA before April 15, 2024 to take the deduction on my 2023 Federal Taxes to reduce my tax liability.

I would like to know if Traditional IRA Contributions are taxable in New York State taxes?

If Traditional IRA Contributions are not taxable in New York where do I enter the adjustment on the IT-203 and do I also need to fill in IT-225?

Does the same tax rule apply to New York State where if I open a traditional IRA before April 15, 2024 I can apply the deduction to 2023?

Does it matter that I am a resident of Pennsylvania but work in New York?

Thank you.

BillM223

1. "I would like to know if Traditional IRA Contributions are taxable in New York State taxes?" - No, they are deductible from NYS income.

2. "If Traditional IRA Contributions are not taxable in New York where do I enter the adjustment on the IT-203 and do I also need to fill in IT-225?" - Just enter the IRA contribution in the federal return, and it will flow down to the NYS return. To enter an IRA contribution, go to Wages & Income->Retirement and Investments->Traditional and Roth IRA contributions. Enter the amount of the contribution and the amount that was made for 2023 between January 1, 2024 and April 15, 2024. I don't know if there are NYS screens, but if so, just answer any questions you see, and come back here if you can't answer them.

3. "Does the same tax rule apply to New York State where if I open a traditional IRA before April 15, 2024 I can apply the deduction to 2023?" - Yes.

4. "Does it matter that I am a resident of Pennsylvania but work in New York?" - No.

NOTE: be dure to stress to the IRA custodian that your IRA contribution is for 2023, since their default is to make it for 2024.

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Ciao4Author

BillM223,

Thank you so much for your response.

I have the Traditional IRA listed in line 10 of the Federal 1040 (from Schedule 1, line 26).

As far as entering the Traditional IRA on the New York IT-203, I asked what line would the Traditional go on because I do 3 tax returns for my family in which 2 members work in different states with everyone still being a PA resident. Thus I would need to purchase 2 additional States. Since those returns are relatively simple I do them by hand.

If you happened to know what line to enter the Traditional IRA it would be great. I have the Traditional IRA on line 18 of the IT-203 in both columns Federal amount and New York State amount. Is this correct?

Lastly, as an additional question, are contributions to a ROTH IRA entered anywhere in TurboTax?

I know the Roth IRA is after tax so it should not appear anywhere in the Federal 1040 and the New York IT-203. Is this correct? Or does it still need to be entered into TT for other reasons?

THANK YOU VERY MUCH.

BillM223

Yes, the IRA deduction on the 1040 should be included on line 18 (IT-203).

And, yes, Roth contributions need to be entered into TurboTax, so that TurboTax can assess whether or not the taxpayer made excess contributions. Go to Wages & Income->Retirement and Investments->Traditional and Roth IRA Contributions (this navigation is from the desktop product, so your navigation may vary).

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Opus 17

Employee

New York says,

"Allocate to New York State any other adjustment to income that relates to wage or salary income earned partly in New York State, or to income from a business carried on both in and out of New York State, on the same basis as the income to which it relates. Some of these adjustments include IRA deduction, one-half of self-employment tax, and self-employed SEP, SIMPLE, and qualified plans."

In other words, it is a proportional adjustment.

To make an IRA contribution, you must have compensation from working. Compensation includes W-2 wages, self-employment income, and a few other things. If your only compensation is from your NY job, then you can include your entire IRA contribution as a New York adjustment. However, if your NY job is 80% of your compensation, and 20% of your compensation is from a part-time job or side hustle in PA, then only 80% of your IRA contributions would be allowed as a NY adjustment.

Ciao4Author

All compensation was earned in New York .

Therefore the entire IRA contribution should be reported on IT-203 Line 18.

The question is the entire IRA contribution reported in BOTH the Federal Amount column AND the New York State column of Line 18?

Thank you.

Opus 17

Employee

@Ciao4

Yes, that’s how you do it. The federal column must match your federal return, and the New York column is the New York allocation, which is calculated proportionally.