In teh past I ave never had taxes withheld or paid any state taxes. This year the software says I owe $7000+ since none was deducted. Can't be right.
You're right. The state of Illinois doesn't tax most retirement distributions. Go back through your entries in the Federal section for your 1099-R, and make sure that you entered your distribution correctly. Then go to your IL return. See the screen Here's the income that Illinois handles differently, and see the Retirement Income Deduction.
Your retirement income should be subtracted automatically.
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