dmertz
Level 15

Retirement tax questions

"I  am getting a screen that states you dont owe taxes on this money"

 

It's saying that you don't own additional taxes.  Code 2 in box 7 of the Form 1099-R means that the distribution is not subject to an early-distribution penalty (an additional tax).

 

It's entirely possible that you are not having sufficient taxes withheld from your pension payments to cover the additional tax liability resulting from this income.