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The MO Home Disaster Tax Credit is designed to reimburse you for out of pocket insurance costs after a major disaster. The maximum amount you can claim is $5,000 per taxpayer. If your deductible was $2k, that would be the cap for your credit. This credit reduces your MO tax bill and is not refundable. You can carry it over up to 29 years.   You need to file Form 5926 regarding the disaster and Form MO-TC and list HDC for the credit along with insurance documentation showing your deductible paid.   MO Homestead Disaster Tax Credit states: Eligible Applicants You incurred an insurance deductible during the calendar year 2025 for damage to your primary residence (homestead). The damage was caused by a disaster for which the Governor of Missouri requested a presidential disaster declaration in 2025. See Presidential Disaster Declaration section below. The homestead was used for all tax and legal purposes. You lived at your residence for more than six months prior to the disaster. The insurance company is licensed in the state of Missouri. Procedures to Claim the Credit The individual taxpayer claiming the tax credit shall file a signed affidavit Form 5926 Homestead Disaster Tax Credit Affidavit with their individual income tax return, verifying: Address including county of residence that suffered damage Date the disaster occurred Evidence the insurance deductible was incurred as a result of a claim paid under a homeowner’s or renter’s insurance policy issued by an insurance company licensed in Missouri. The taxpayer should also attach the document provided by the insurance company and Form MO-TC Miscellaneous Income Tax Credits.

If some portion of the distribution went to state tax withholding, this portion can be included on line 5a of Schedule A.  TurboTax will do this automatically upon entering the Form 1099-R if your itemized deductions exceed the standard deduction.  Federal tax withholding is not deductible on your federal tax return, but might be deductible on some state tax returns (Alabama, Missouri and Oregon).

That is correct it does include the 2024 payment made in 2025, except TT is reducing the total deductible state and local payment on Schedule A by an allocated amount calculated using the 2024 refund on the State and Local Income Tax Refund Worksheet, Part I.

You have already identified the issue.  Now you need to "annualize" your income, or accept the "option to do the calculation quarterly by entering income from each quarter".  That will match your one time Q-3 income with the Q-3 payment you made.  If you don't annualize your income and report income and payments by quarter, the IRS, the states, and TurboTax assume your income and tax payments were made pro rata in equal amounts each quarter.  And as you pointed out, the tax payments in Q1 and Q2 weren't enough to cover a portion of the Q-3 one time income. 

In 2026, the codes used will allow the 2025 amount to be tax free since you did include it in your 2025 return even though the payment of the required minimum distribution (RMD) was paid late. It will likely be Code P. See the list of codes for 2025 which will be updated for 2026. What do all the codes in Box 7, Form 1099-R mean? @angela829 

You must remember that NY taxes full income and then allocates the tax. Therefore, the full NY deduction is taken on the full NY income Line 32 NY AGI Line 33 should be calculating your standard or itemized deduction on NY terms. No allocating Line 35 dependent exemption is taken in full Line 36 is the taxable NY income Line 38 - the program will look up the state tax for you TurboTax does the work so you don't have to! You are very smart to be asking questions and understanding how it all works. Great job!