I am a resident of Massachusetts working on our Personal 2023 State Tax Return. In 2023, we had a former employer qualified 401K program that was being discontinued. We elected to roll it over into a Rollover IRA. The former 401K program issued a check that we deposited into a qualified Rollover IRA. We got a 1099-R from the former program. On the 1099-R, the following boxes were filled in (all others are blank or unchecked): Gross Distribution (xx,xxx.xx), Taxable Amount (0.00), Total Distribution (checked), Federal Income Tax Withheld (0.00), Distribution Code (G), State Tax Withheld (0.00), State/Payer's state no (MA-XXXXXXXXX), all other boxes are blank or unchecked.
Everything in the Federal Taxes section was inputed correctly. When working on the State Taxes area, the following questions/inputs occurred: Is the Retirement Distribution an excludable distribution in Massachusetts - this was answered "No", the responses guide you to select No if it's a rollover to another retirement account; the next screen shows the former program name, Type is blank and amount is "0"; the next screen is entitled Pension Adjustment - Federally Taxable - It says, "we need to know if your $0 pension income that was reported as fully taxable on your federal return needs to be adjusted (reduced) only for Massachusetts." There is a box below that entitled "Non-Taxable Massachusetts Pensions", there is a "0" in that box; the next screen is entitled "Retirement Reduction Results" and states "Based on the information entered into your federal return you qualify for a retirement contribution reduction of $2,000 on your Massachusetts return."
When I reviewed the return generated for Mass State taxes it shows the $2,000 deduction. I want to make sure this is being handled properly by the TurboTax software. This section is a bit confusing and in talking with a friend who is a tax accountant, he and I both didn't understand why we qualify for this deduction. Is this being handled properly by the TurboTax software?
Thank you very much
