Please select this hyperlink, for instructions on excluding your North Carolina retirement income. Please follow these exact steps outlined in the link.
1) Go back and edit the 1099-R form in the Federal section.
2) After you enter your 1099-R form, and "Continue" thru the pages that follow it...until you find the selections for:
1) "Bailey settlement.
2) "Faulkenbury settlement...."
3) "Railroad Ret-SS.........."
4) "None of the above"
3) You need to select the "Bailey Settlement..."
Your NC Distribution amount is the same a box 2a of the 1099-R form (or the calculated federally-taxable amount for box 2a, if 2a is empty)....... that $$ will be removed in the NC section depending on what selection you made above.
4) Since you meet the requirement that you had five or more years of creditable service as of August 12,1989. You can choose the Bailey Settlement and all of that particular 1099-R will be exempted from NC taxation.
5) That 5-years employment by the Feds/Military, or NC-State Gov't-related plan, by 12 Aug 1989 is critical.
See if these steps work out for you and if reported correctly, your military retirement pay should automatically be excluded from North Carolina State income.
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