Amy is on the right track. I just went through this on the phone with a Turbotax Expert because I had the same issues with Federal wanting to charge me SE tax, and where to deduct it from Federal income on my NYS return as it is a non-taxable pension in NY. The following is based on my notes from the call. I hope this helps.
On the Federal return, you should only select the current tax year where it asks "How often do you get it?" The LOSAP Defined Contribution plan I was in was closed down by our Village and we received our final distribution over 2 years - 2021 and 2022. When I checked off both years, Turbotax wanted to charge me SE tax. By only checking off 2022, it drops the SE tax, as it is supposed to be. If you check off multiple years, the Turbotax software thinks it is recurring earned income. Checking only one year “tricks” the software to realize it is not SE Tax eligible. I still have to pay Federal income taxes on it, but that is all.
To subtract it from your Federal Income on the NYS return in Turbotax, go to
Select Changes to Federal Income
Select Other NY Adjustments to Federal Income
Select Other Changes (Adjustments) to your Federal Income
The next screen is "Enter Other Additions", select continue
Next Screen is "Enter any other Subtractions"
Choose the line: Volunteer Firefighter or Ambulance Worker Length of Service Award, and enter the amount from the Form 1099-Misc Box 3
Hit Continue
This will subtract it from your Taxable income on the NY State Return
I hope this helped my fellow volunteer firefighters.
