Non resident LIRA withdrawal from State of California

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nisusavi
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Joined: Fri Oct 12, 2018 6:56 pm

Non resident LIRA withdrawal from State of California

Post by nisusavi » Mon Apr 15, 2019 3:00 pm

Hi All,
I looked up old posts for sample calculation of non residents residing in the state of California withdrawing LIRA after becoming non residents of Canada and did not find any. Am I getting the following right? Assume that I recorded LIRA at CAD 100K on my departure return and in the ensuing 2 years, the capital gains was CAD 20K, CRA taxes 25% of CAD 20K = CAD 6250 during withdrawal which will be used in federal tax returns against credits. Any additional federal taxes to be paid? In case of California state taxes, do I add the capital gains of 20K for the 2 year period to my income and then taxed at the marginal tax rate or does the entire CAD 120K get added to my income and taxed at the marginal tax rate?

nelsona
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Re: Non resident LIRA withdrawal from State of California

Post by nelsona » Tue Apr 16, 2019 12:26 pm

In both returns, only $20K will be taxed. For fed, the entire withdrawal is reported as pension, with $20K taxable, and then you apply the Cdn either to a 1116 for credit, or as foreign tax on your schedule A as an itemized deduction.

For California, which doesn't recognize these accounts, you would report the income as cap gains, dividends etc. But remember that you had to report these in the year(s) they occur, not only when you take distribution.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

nelsona
Posts: 16045
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Re: Non resident LIRA withdrawal from State of California

Post by nelsona » Tue Apr 16, 2019 12:27 pm

My example above was if you tool ALL your LIRA.
Nelsona Non grata. Non pro. Search previous posts. Happy Browsing :D

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