Massachusetts does not allow a deduction for a Traditional IRA from taxable income. Therefore, when you receive distributions from a Traditional IRA from Massachusetts, you do not pay tax on any of the distributions until you have first distributed out your Massachusetts after-tax contributions. These are the contributions that you made while living in Massachusetts throughout the years that did not reduce your Massachusetts taxable income.
So for Question #1, you hopefully have a record of all the contributions you have made to the IRA while living in Massachusetts. Distributions that are a recovery of basis are not taxable in Massachusetts, (because they were never deducted originally). Growth, however, is taxed in Massachusetts, as is the recovery of contributions made while living in another state, because these contributions were never taxed in Massachusetts.
For Question #2, you are correct. You should enter in the distributions you had in previous years because Massachusetts wants to track your nondeductible contributions to recover these as nontaxable distributions. Once the original contribution basis has been fully recaptured, your IRA distributions from that point forward are taxed in Massachusetts.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
