Thanks but this is not my issue. The reason my pension distribution comes on a W-2 is because it is a non-qualified pension, which is due to the income level I was earning while working for PepsiCo. I had both a qualified and non-qualified pension at retirement. I rolled over the qualified pension, and took an annuity payout for the non-qualified portion. I talked to Fidelity several times about reporting the distribution on a 1099-R instead of a W-2, but they said it is IRS rules to report it on a W-2. I also spoke to an Alabama department of revenue manager, and she confirmed that the non-qualified defined benefit pension distribution is not taxable to Alabama. So the problem is with TurboTax, which for AL does not have a clear way to exclude income that is not taxable in AL. Once again, I ask TT to look at the PA tax software which has a very simple way to identify income that is not taxable in PA.
