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No IL income tax on IRA distributions?

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E

efflandt

Senior Member
What is the name of your state? IL

I figured federal withholding (W-4 adjustment) very close considering my assortment of itemized deductions, interest, dividends, short term loss, and IRA to Roth conversions (I owe $140). But when figuring IL income tax, I was expecting to have to fork over hundreds of dollars for the ~$14k IRA to Roth conversion. But if I read the IL-1040 instructions right, that IRA distribution for the conversion is an IL subtraction from federal AGI (untaxed by IL), so I actually calculated a $266 refund.

http://www.revenue.state.il.us/TaxForms/Incm2006/ind/IL-1040-Instr.pdf page 6 for line 5 says:

You may subtract most retirement income if it is included in IL-1040, Line 1 [1040 line 37]. This includes income from [and one of list is]

Individual Retirement Accounts or self-employment retirement plans listed on U.S. 1040, Line 15b or U.S 1040, Line 11b.
Click to expand...
If Illinois does not tax IRA distributions, that would be wonderful. But I wonder if I am overlooking some detail or qualification?
 


LdiJ

LdiJ

Senior Member
efflandt said:
What is the name of your state? IL

I figured federal withholding (W-4 adjustment) very close considering my assortment of itemized deductions, interest, dividends, short term loss, and IRA to Roth conversions (I owe $140). But when figuring IL income tax, I was expecting to have to fork over hundreds of dollars for the ~$14k IRA to Roth conversion. But if I read the IL-1040 instructions right, that IRA distribution for the conversion is an IL subtraction from federal AGI (untaxed by IL), so I actually calculated a $266 refund.

http://www.revenue.state.il.us/TaxForms/Incm2006/ind/IL-1040-Instr.pdf page 6 for line 5 says:



If Illinois does not tax IRA distributions, that would be wonderful. But I wonder if I am overlooking some detail or qualification?
Click to expand...
I don't think that there is anyone here who practises in IL. You should probably consider this to be a year that you need to use a tax professional to handle your return.
 
E

efflandt

Senior Member
Well I e-filed at IL Dept of Revenue website and instructions for that entry (subtraction) noted that it includes IRA to Roth IRA conversions. So I will take it that IL does not tax regular IRA distributions (for now). Good news for seniors.

Although, they give no break for long term capital gains for taxable accounts (other than general flat 3% tax rate).
 
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