This is copied from 2025 Iowa 1040 Expanded Instructions for Schedule 1, Line 7, regarding the modification to subtract retirement income from federal taxable income:
Note: Distributions from the following plans are not eligible for the retirement income exclusion:
(1) Nonqualified deferred compensation plans
(2) Nonqualified annuities - Most nonqualified annuity distributions will report a code of “D” in box 7 on federal form 1099-R
The program includes all 1099-R distributions, regardless of whether they are IRA Code 7 (qualified) distributions, or whether they are non-IRA Code D (non-qualified) distributions.
I'm thinking the non-qualified distributions should not be included. I used override to change the amount, but the program has changed it back again. In the end, it makes no difference to my return, as the Iowa taxable income is a negative regardless of whether or not the non-qualified annuity income is included on Schedule 1, Line 7.
Am I missing something?
Barb
