If you received a distribution from an IRA, Keogh plan, qualified charitable IRA distribution, or Roth IRA conversion during the tax year, Massachusetts may tax the distribution differently than the federal return.
To determine the taxable amount for Massachusetts purposes, complete the Schedule X, Line 2 Worksheet.
Why Is a Separate Worksheet Needed?
Massachusetts generally does not allow a deduction for IRA and Keogh contributions when they are made. Because of this, contributions previously taxed by Massachusetts are not taxed again when distributed.
As a result, distributions are generally not taxable until you have recovered all contributions that were previously taxed by Massachusetts.
Information You'll Need
The worksheet asks for:
- Total IRA/Keogh plan distributions, qualified charitable IRA distributions, and Roth IRA conversion distributions received during the year
- Total contributions previously taxed by Massachusetts
- Total distributions received in prior years
- The remaining balance of previously taxed contributions
- The taxable portion of the current year's distributions
- Any qualified charitable IRA distributions included in the total
- The final taxable amount to report on Schedule X, Line 2
Important Notes
- Contributions previously taxed by Massachusetts are not taxed again when distributed.
- Contributions made to Keogh plans before 1975 were deductible when contributed and generally cannot be recovered tax-free.
- Amounts rolled from a traditional 401(k) or other deferred compensation plan into an IRA are generally fully taxable when distributed because those contributions were not previously taxed by Massachusetts.
- Amounts converted to a Roth IRA and taxed at the time of conversion may be treated as previously taxed contributions when later distributed.
Married Filing Jointly
If both spouses received:
- IRA distributions
- Keogh distributions
- Qualified charitable IRA distributions
- Roth IRA conversion distributions
Each spouse must complete a separate Schedule X, Line 2 Worksheet using their own contribution and distribution history.
Where Do I Enter This in the Program?
- State
- Massachusetts Return
- Additions to Income
- Taxable IRA/Keogh and Roth IRA Conversion Distributions Worksheet
Enter the requested information, and the software will calculate the taxable amount to report on your Massachusetts return.
Tip
Keep records of all IRA and Keogh contributions that were previously taxed by Massachusetts. These records are important because they determine how much of a future distribution can be received tax-free under Massachusetts law.