Schedule G-1 - California Tax On Lump-Sum Distributions - 2015 Page 2

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2015 Instructions for Schedule G-1
Tax on Lump-Sum Distributions
General Information
Form 541, California Fiduciary Income Tax
E When You Can Choose
Return, to:
You can file Schedule G-1 with either an
California does not impose tax on distributions
• Choose the 5 .5% capital gain method by
original tax return or an amended tax return .
from qualified retirement plans received by
completing Part II .
Generally, you have 4 years from the later of
nonresidents after December 31, 1995 .
• Choose the 10-year averaging method by
the due date of your tax return or the date you
Under California and federal law, the $5,000
completing Part III .
filed your tax return to choose to use any part
employer-provided death benefit exclusion was
• Figure tax using the 10-year averaging
of Schedule G-1 .
repealed . Payments received in 2015 on behalf
method, which taxes the ordinary income
F Capital Gain Election
of decedents dying on or after August 21, 1996,
part of the lump-sum distribution in the
do not qualify for the exclusion .
The plan participant must have been born
current year as if you received it in equal
before January 2, 1936, to be eligible for
A Purpose
parts over 10 years .
the capital gain election . Only the taxable
If you received a qualified lump-sum
10-Year Averaging Method & Capital Gain
amount of distributions resulting from
distribution in 2015, and were born before
Election. If the participant was born before
pre-1974 participation qualifies for capital gain
January 2, 1936, you can use Schedule G-1,
January 2, 1936, use Part III to choose the
treatment . The amount that qualifies for capital
Tax on Lump-Sum Distributions, to figure your
10-year averaging method to figure your tax
gain treatment should be shown in federal
tax by special methods that may result in less
on the lump-sum distribution . You may choose
Form 1099-R, box 3 . If there is an amount in
tax . You pay the tax only once, for the year you
this option whether or not you make the 5 .5%
federal Form 1099-R, box 6 NUA, part of it may
receive the distribution, not over the next 10
capital gain election described in General
also qualify for capital gain treatment . See the
years . The separate tax is added to the regular
Information F, Capital Gain Election .
NUA Worksheet in the instructions for federal
tax figured on your other income .
Form 4972, page 3, to figure the capital gain
Distribution Statement. The payer should have
California law regarding the capital gain
part of NUA . Figure the tax using 5 .5% instead
given you federal Form 1099-R, Distributions
election and the 10-year averaging method
of the 20% used for federal purposes .
From Pensions, Annuities, Retirement or Profit-
on lump-sum distributions is generally the
Sharing Plans, IRAs, Insurance Contracts, etc .,
If your distribution includes capital gain, you
same as federal law . However, your California
or other statement that shows the separate
can either:
basis in your pension plan may differ from
parts of your distribution . The amounts you
• Make the 5 .5% capital gain election in Part II
your federal basis . If you received a lump-sum
will use from federal Form 1099-R in filling
of Schedule G-1 .
distribution from a Keogh plan, your California
out Schedule G-1 are capital gain (box 3);
• Treat the capital gain as ordinary income .
basis includes the contributions that were not
ordinary income (box 2a minus box 3); total of
deductible for California purposes because
G Tax on Prior Year Lump-Sum
ordinary income plus capital gain (box 2a); net
they exceeded the California deduction limit
unrealized appreciation (NUA) in employer’s
Distributions
for years prior to 1987 . Get FTB Pub . 1005,
securities (box 6); and, if it applies, the current
In some circumstances, the federal rules for
Pension and Annuity Guidelines, for more
actuarial value of an annuity (box 8) and/or
multiple lump-sum distributions do not apply
information .
your percentage of total distribution (box 9a) .
for California . Under California law, if you
If you do not have a statement that shows this
For federal purposes, any capital gain is
received a lump-sum distribution before 1987
information, ask the payer for one that does
reduced by the amount of related estate
and you received a lump-sum distribution in
tax . However, California does not have a
show it .
2015 that is the only lump-sum distribution
comparable reduction .
D How Often You Can Choose
you received after 1986, figure your tax on
Early Distribution. If you received an early
the lump-sum distribution for 2015 separately
After 1986, use Schedule G-1 only once for
distribution from a qualified retirement plan,
on Schedule G -1 . Do not include the lump-
each plan participant . If you receive more
you may have to pay an additional 2½%
sum distribution you received before 1987 on
than one lump-sum distribution for the same
tax, unless the distribution meets one of the
Schedule G-1 .
plan participant in one tax year, treat all of the
exceptions . Get form FTB 3805P, Additional
distributions in the same way . Combine the
Specific Line Instructions
Taxes on Qualified Plans (Including IRAs)
distributions on a single Schedule G-1 .
If you received more than one qualified
and Other Tax-Favored Accounts, for more
If you make an election as a beneficiary of a
distribution for the same plan participant, add
information .
deceased participant, it does not affect any
them and figure the tax on the total amount .
B Who Can Use the Form
election you can make for qualified lump-sum
If you and your spouse/RDP file a joint tax
distributions from your own plan . You can also
If you received a qualified lump-sum
return and each has received a lump-sum
make a separate election as the beneficiary of
distribution and were born before January 2,
distribution, complete and file a separate
1936, you can use Schedule G-1 . If you
more than one qualifying person .
Schedule G-1 for each spouse’s/RDP’s election
received a qualifying distribution as a
Example: Your mother and father died and
and combine the tax on Form 540, line 34 or
beneficiary after a participant’s death, the
each was born before January 2, 1936 . Each
Long Form 540NR, line 41 .
deceased must have been born before
participated in a qualified plan of which you are
January 2, 1936, for you to use this form for
Part II
the beneficiary . You also received a qualified
that distribution .
Line 6
lump-sum distribution from your own plan
Enter zero (-0-) and go to Part III if your
and you were born before January 2, 1936 .
To determine if the distribution qualifies, see
distribution does not include capital gain, or
the instructions for federal Form 4972, Tax on
You may make a separate election for each
if you are not making the 5 .5% capital gain
of the distributions; one for yourself, one as
Lump-Sum Distributions .
election .
your mother’s beneficiary, and one as your
C How to Use the Form
father’s beneficiary . It does not matter if the
If you make the 5 .5% capital gain election but
Use Schedule G-1 with Form 540, California
distributions all occur in the same year or in
do not take a death benefit exclusion, enter
Resident Income Tax Return; Long
different years . File a separate Schedule G-1 for
on line 6 the entire capital gain amount from
Form 540NR, California Nonresident or
each participant’s distribution .
federal Form 1099-R, box 3 .
Part-Year Resident Income Tax Return; or
Page 1 Schedule G-1 Instructions 2015

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