Is IRA distribution taxable in California, my non-resident state or only in Colorado, my resident state?

Forum|Forum|6 years ago
June 5, 2019
2 replies
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If only taxable in Colorado, how is it treated on Non-Resident CA (540NR) form.

TurboTax Deluxe Online

Best answer by MaryK1

Retirement income is only taxed in your state of residence. If you file a California nonresident return, the tax is determined using all of your income but you only pay on the California income. The percentage of CA income is applied to the determined tax.

MaryK1Answer

Employee

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theresa_z

How do I remove the Colorado retirement income to calculate the California income to determine the California tax?

bkinouye

I had a similar question, and found this in State of California Franchise Tax Board publication FTB-1031, "2018 Guidelines for Determining Resident Status". On page 8, under IRA distributions, it states:

"IRA, Roth IRA, SIMPLE IRA, SEP, and Keogh distributions received after becoming a nonresident are not taxable by California if received after December 31, 1995."

To me, it's clear that once you become a nonresident, or you've always been a nonresident, the distributions you receive are not taxable by California.

Critter

Employee

Correct...they are not directly taxable HOWEVER like many other states, CA used your total annual income to compute your taxes and then prorate them...this cannot be changed. Review the return line by line to see how it plays out.