The IRS changed Form 1040 this year. Line 1h is now the correct place for a disability pension when you are under the minimum retirement age. The IRS instructions for Form 1040 make this clear. Apparently the IRS neglected to update the instructions on the back of Form 1099-R to reflect the changes in Form 1040. On the new Form 1040 there is no line for "Wages, salaries, tips, etc."
Having zero taxable income on Form 1040 line 15 does not prevent electronic filing. What is the exact message that you get from TurboTax telling you that you can't file electronically? Please quote the entire message, word for word. When do you get that message? In Smart Check? When you try to e-file? Somewhere else?
Having the pension on line 1h is not what makes your taxable income zero. All the income on lines 1a through line 8, including line 1h, is added into your total income on line 9. Your taxable income on line 15 is being reduced to zero by adjustments or deductions, including your standard deduction.
Where exactly did you find what you quoted as the "IRS explanation of form 1099-R box 7"? I don't see that wording on Form 1099-R. The instructions that say "Check the box under Rollover or Disability that says 'Check here to report as wages on Form 1040'" sound like instructions for some tax software, not IRS instructions. But TurboTax has no such check box.
TurboTax for 2022 handles distribution code 3 a little differently than in past years. After you enter your 1099-R, as you proceed through the questions, it asks you what the youngest retirement age is for your pension plan. If your age is below the youngest retirement age it puts the pension income on line 1h.
