Follow these steps.
1. When you enter the 1099-R, it will ask you to select a state.
2. Assuming box 7 is code 3 for disability
The Learn More button tells you:
New Jersey Special Handling of Pension Distributions
TurboTax New Jersey uses the following pension codes:
M - Military pension or survivor's benefit
D - Disability benefits received for total and permanent disability (under age 65 only - if age 65 or above, use the Three-year or General rule)
T - Three-year rule pension benefits
G - General rule pension benefits
You can deduct disability benefits received if you were totally and permanently disabled and you are under age 65.
2.You must go through answering all the questions in federal.
3.When you get to NJ, be sure to mark Disabled Filer Information under Other Situations.
4.Then select the box that says Check if Disabled.
NJ should not be taxing any military pension or disability.
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