That can happen if you put a zero in box 16 of the main 1099-R form. Don't do that.
Even if box 16 is empty empty on your paper copy, you should put the value of box 2a in box 16.....as long as box 2a has a real non-zero value. IF box 2a is empty and marked "Undetermined" in 2b, then you put the Federally-taxable amount of box 1 into box 16 (that is usually just the value of box 1...but not always).
My software has automatically backfilled the proper value into box 16 after I have gone thru the entire 1099-R interview, but I can't know all 1099-R situations. Once Bailey is selected, the software uses the box 16 value to subtract that from NC income.
Of course, I can' know if your 1099-R is really Bailey eligible. Make sur you read the eligibility requirements on the NCDOR webpage if you are uncertain.
Bailey Decision Concerning Federal, State and Local Retirement Benefits | NCDOR
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
