I noticed the software is not doing this correctly as well. It automatically calculates the pension/retirement exclusion, but fails to enter it when checking for the $100k limit. If you go into forms view you can go to where the calculation for the health insurance deductions is and manually enter the amount non taxed to Iowa to get it to calculate correct. In forms view go to Form IA 1040. Scroll down to the schedule 1. There is a place to manually enter "Pensions or other retirement income not taxable to Iowa."
That being said in my opinion they need to fix the software to pick that up. There will be a lot of incorrect returns out there.
