Retirement tax questions
Yes, TurboTax will calculate what portion, if any, of your pension is not subject to MD tax. In other words, TurboTax will exclude $34,300 of pension income provided you are eligible for the exclusion. Complete your federal return first, and especially the part that relates to your pension, before preparing your MD return. When you are ready to prepare your MD return, you will see the below screen (this was from our test return) that relates to the MD pension exclusion.
If you are 65 or older or totally disabled (or your spouse is totally disabled), you may qualify for Maryland's maximum pension exclusion of $34,300 for tax year 2021. If you're eligible, you may be able to subtract some of your taxable pension and retirement annuity income from your federal adjusted gross income.
This subtraction applies only if:
- You were 65 or older or totally disabled, or your spouse was totally disabled, on the last day of the tax year; and
- You included on your federal return income received as a pension, annuity or endowment from an "employee retirement system." Please note that these include qualified defined benefit and defined contribution pension plans, 401(a) plans, 401(k) plans, 403(b) plans, and 457(b) plans.
- A traditional IRA, a Roth IRA, a simplified employee plan (SEP), a Keogh Plan or an ineligible deferred compensation plan does not qualify.
