Retirement tax questions

In the FEDERAL TAXES section, after you enter the 1099-R, you will see the screen below where you can indicate you want to use the three year option, then the information will be transferred to your New Jersey state tax return.

Three-year rule: You may use this method if you will recover all of your contributions to the plan within 36 months from the date you receive your first payment from the plan, and both you and your employer contributed to the plan. Benefits based on your contributions aren't taxable in New Jersey, but benefits based on your employer's contributions are fully taxable.