Where are you seeing this amount for your spouse doubled?
I just did a test return for Georgia and created a Form 1099-R with a code of 8J for a $2,500 distribution,
On the Georgia Income and Retirement Worksheets it correctly excluded $5,000 of earned income and the $2,500 of income reported on the 1099-R for a total of $7,500. These amounts flow to the Georgia Schedule 1 Retirement Income Exclusion on Lines 5 for Maximum Earned Income and Line 11 for Taxable IRA Distributions. No doubling of amounts noted on either the Georgia Retirement Worksheets or the Georgia Schedule 1 Retirement Income Exclusion
