You are correct in that when you enter the 1099R in the federal interview the income does show as NE taxable income and your running refund total reflects the NE tax increase. However, you now need to go the NE state interview to exclude the military retirement pay from NE taxable income.
- Go to your NE state return
- "Update" the "Adjustments" section
- Click through to the "Adjustments Decreasing Federal Income" page
- Locate the box for Military Retirement Pay Exclusion
- Enter the amount of your military retirement pay from box 1 of your 1099R
@dwaine1980
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