Ftb Pub. 1005 - Pension And Annuity Guidelines - Franchise Tax Board (Page 3 of 8) in pdf

After 12/31/95, your California IRA deduction is

Distribution

made before 1987 as nondeductible contribu-

the same as your federal IRA deduction, and you

tions. The nondeductible contributions made

Nonresidents of California After 12/31/95. Cali-

should not make an adjustment to your federal

before 1987 will be recovered as explained in the

fornia does not impose tax on retirement income,

AGI. Differences in the amount of IRA deduction

following paragraph. Compute the adjustment to

including income from an IRA, received by a non-

you could claim may have occurred prior to

federal AGI by comparing your federal taxable

resident after 12/31/95. If you are filing for a prior

1/1/96 if there was a difference between your

amount with the California taxable amount. If the

year and need to determine your California basis,

federal self-employment income and your Califor-

federal amount is greater, enter the difference on

see Example 5 on page 5 for information.

Schedule CA (540 or 540NR), line 15b, column

nia self-employment income.

Residents of California. Your IRA distribution is

B, or Form 540A, Side 2, Part I, line 5. If the fed-

If you file Form 540NR, your IRA deduction on

eral amount is less, enter the difference on

fully taxable if your IRA contributions were fully

Schedule CA (540NR), line 23, column E, is lim-

deductible. If your IRA contributions were partially

Schedule CA (540 or 540NR), line 15b,

ited to the lesser of:

column C.

or fully nondeductible, then the nondeductible

•

The IRA deduction allowed on your federal

contributions are not taxed when they are distrib-

Nondeductible Contributions Made Before

return; or

uted to you. Your basis is the amount of your

•

1987. If you made nondeductible contributions

The compensation reported on your

nondeductible contributions. How you recover

before 1987, none of your distribution is taxed

Schedule CA (540NR), column E.

your basis depends on when your nondeductible

until you have recovered your basis. Because all

contributions were made.

contributions made before 1987 were deductible

Example 1

for federal purposes, there may be a difference

IRA invested in U.S. Government securities. If

You are a nonresident of California. During the

your IRA was invested in U.S. Government secu-

in the California and federal taxable amounts. If

year, you worked temporarily in California. Your

there is a difference, you must make an adjust-

rities or in mutual funds that invested in U.S.

California compensation is $1,000, which you

Government securities, you may not reduce the

ment to reduce your federal AGI to the correct

reported on Schedule CA (540NR), column E.

taxable amount for California.

taxable portion of your IRA distribution by the

Your allowable IRA deduction on your federal

amount of interest attributable to the U.S. Gov-

Your adjustment is the lesser of your:

return is $2,000.

ernment securities.

•

Pre-1987 California basis; or

•

Determination: Your allowable IRA deduction

Nondeductible Contributions Made After 1986.

IRA distribution included in federal AGI.

that you must report on Schedule CA (540NR) is

If you made nondeductible contributions after

Use Worksheet 1 – Part A on page 8 to compute

$1,000. This is the lesser of (1) the $2,000 IRA

1986, a part of each distribution is considered a

your pre-1987 California basis. Then use

deduction allowed on your federal return or (2)

return of your basis and is not taxable. The Cali-

Worksheet I – Part B to compute your adjustment

the $1,000 of compensation you reported on your

fornia taxable amount will generally be the same

to federal AGI and your remaining pre-1987 Cali-

Schedule CA (540NR), column E.

as the federal taxable amount, and you should

fornia basis. Use Worksheet II as a summary of

not make an adjustment to your federal AGI on

your California basis and its recovery.

Schedule CA (540) or Schedule CA (540NR).

If you have more than one IRA account, combine

However, if you elected to treat a contribution dif-

all your IRAs to complete the worksheet. If both

ferently for federal purposes than for California

you and your spouse have IRAs, you each must

purposes, the taxable amounts will differ. Com-

complete a separate worksheet based on your

pute the California taxable amount using the fed-

own IRA contributions, deductions and

eral instructions. When making the computation,

distributions.

do not treat your nondeductible contributions

(continued on next page)

FTB Pub. 1005 (REV. 1998)

Page 3

Ftb Pub. 1005 - Pension And Annuity Guidelines - Franchise Tax Board Page 3

Related Articles

Related forms

Related Categories