Here's the entire income entry and exclusion procedure. If you've entered your income correctly, just skip to the second part.
First, enter your 1099-R military retirement information for your military retirement, exactly as shown on the form:
- Open TurboTax Online
- Select Tax Home in the left pane
- On the Hi, let's keep working on your taxes! screen, select the dropdown on the right side of the Income & Expenses box, then select Start, Continue or Pick up where you left off
- On the Your income and expenses screen select Start or Continue to the right of IRA, 401(k), Pension Plan Withdrawals (1099-R)
- Make all entries as appropriate on the ensuing screens
Then, you'll make the adjustment for the excluded income:
- Select Wages & Income in the left pane
- Scroll down and select the dropdown to the right of Less Common Income
- Scroll down and select Start to the right of Miscellaneous Income, 1099-A, 1099-C
- Scroll down and select Start to the right of Other Reportable Income
- Select Yes on the Any Other Taxable Income? screen
- On the Other Taxable Income screen, enter “IRR 78-161” in the Description box
- Enter the non-taxable amount as a negative (-) number in the box to the right of the appropriate taxpayer's name, then select Continue
- Select the appropriate answer on the Any Other Taxable Income? screen
Line 5 of your 1040 will display Form 1099-R information, and the excludable income will be subtracted out and appear as a negative entry on line 8z of Schedule 1, with the description “IRR 78-161”.
