Retired in March 2021 and sold house in California, new residency is South Dakota.I plan to do a Roth conversion up to 22% bracket.Will California have a claim/try to claim on state tax for conversion?No longer a California resident?Any feedback on this?ThanksVC
Most states will apportion your income to claim part for state income taxes. Better to avoid the risk by awaiting until January to do the conversion.
I agree better to wait for 2022. Oh and by the way, If you sold and moved out in 2021 or 2020 go over the list of any items that would still list you as a California Resident. Drivers LicenseCar RegististrationVoter RegistrationBank or Brokerage AccountsCredit Cards - Make sure they all have the correct address on recordEZ Pass or Toll Collection that CA UsesCell PhoneCable TVInternet Access.If your like many you use email to get these bills and pay online. Never see a bill mailed to you.I went through some of this with NY State. NY , CA, NJ are among the most aggressive in going after people that have moved out.
After or pre-tax contributions that you are planning on converting? If there is any after tax contributions the proposed Build Back Better bill will prevent those conversions starting Jan 1, 2022.
I did a significant conversion (traditional IRA to Roth IRA) during the market nosedive of March 2020.I moved cross-country in July 2020 (state A to state B).When doing taxes, I divvied up what I earned while in A vs what I earned while in B. I put the conversion into the A category, and paid state taxes on it to A.Both states have almost identical tax rates, so it made no difference to me who got the state tax payments, but the residency criterion made sense and appeared to be the way both states wanted it done.In your case, waiting until 2022 will make the arithmetic a little easier. But, the lower the value of your account, the greater percentage of it you can convert while staying under your (self-imposed) federal tax limits. So, assuming your account is in equities, if you feel it dips significantly in December, I’d go ahead and pull the trigger.
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