Does Kansas charge income tax on qualified Roth IRA distributions?

Plain-English summary

A taxpayer asked whether Kansas taxes qualified Roth IRA distributions. The Department's answer: no — a Roth IRA distribution that is tax-free under federal law is also free from Kansas income tax.

Kansas income tax uses your federal adjusted gross income as the starting point, and applies additions or subtractions only where Kansas law provides one. Kansas has no special modification for Roth IRAs, so the federal tax treatment "flows through" to Kansas. Because a qualified Roth IRA distribution is exempt from federal income tax, it is likewise exempt from Kansas income tax; if part of a withdrawal were taxable federally, that part would be taxable in Kansas.

What this means for you

Kansas retirees and savers

Qualified withdrawals from your Roth IRA are not taxed by Kansas, just as they are not taxed federally. There is no separate Kansas add-back for Roth distributions.

Tax preparers

Because Kansas conforms to federal AGI and has no Roth-specific modification, the Kansas result simply tracks the federal treatment of the distribution. A non-qualified Roth distribution that is taxable federally would be taxable in Kansas to the same extent.

Common questions

Q: Does Kansas tax qualified Roth IRA distributions?
A: No. Kansas has no Roth-specific modification, so a distribution that is federally tax-free is also Kansas tax-free.

Q: What if my Roth distribution is partly taxable federally?
A: The taxable portion flows through to Kansas and is subject to Kansas income tax; the tax-free portion is not.

Q: Does Kansas treat Roth IRAs differently from the IRS?
A: No. Kansas starts from federal income and provides no special Roth modification, so it follows the federal treatment.

Q: Does this ruling apply to me?
A: A Kansas private letter ruling addresses only the requesting taxpayer's facts and cannot be relied on as precedent by others, though it shows how the Department reasons.

Citations and references

• Kansas income tax uses federal adjusted gross income as its starting point, with additions or subtractions only where Kansas law provides one. The ruling relies on this federal-conformity principle and does not cite a specific statute section.

Source

• Landing page: Kansas Department of Revenue Policy Information Library
• Original document: P-2016-006

Original ruling text

Private Letter Ruling

Body:

August 16, 2016

XXXXXXXXXX
XXXXXXXXXX

Re: Kansas Income Tax

Dear XXXXX

Your correspondence of August 11, 2016, has been referred to me for response. Thank you for your inquiry.

By your e-mail you have requested our advice regarding Kansas income tax. Specifically, your e-mail states:

Does Kansas collect income tax on qualified Roth IRA distributions?

In response to your question, please be advised Kansas law requires the use of federal adjusted gross income as the starting point for computing the Kansas income tax. In the absence of a specific modification, items that are subject to federal tax will be subject to Kansas tax. Similarly, those items that are exempt from federal tax will be exempt from Kansas tax.

Kansas law does not include a specific modification that deals with Roth IRAs. As a result, the tax treated accorded a Roth IRA under federal law will flow though to Kansas. If the money you withdraw from your Roth IRA is exempt from federal income tax it will be exempt from Kansas income tax.

I trust this information is of assistance. If I can be of further service, please feel free to contact me.

JW:jw

NOTE: This opinion letter is based solely on the facts provided in your request for advice. If material facts or information were not disclosed this letter is null and void. This letter will be revoked without further action by the Department if the statutes, administrative regulations, published revenue rulings, or court decisions that materially affect this opinion are changed.

Date Composed: 09/16/2016 Date Modified: 09/16/2016

Table 1

| Ruling Number: | P-2016-006 |

Table 2

| Tax Type: | Individual Income Tax |
| Brief Description: | Income Tax Treatment of Roth IRA Distributions |
| Keywords: | |
| Effective Date: | 08/16/2016 |
| Approval Date: | 08/16/2016 |