Ohio - military deduction from federal pension calculation does not appear to be accurate?

[dcrago]

I live in Ohio and am retired from both the Air Force and Federal Civil Service.  Ohio does not tax military pensions and allows limited deductions from federal pensions. TurboTax Ohio Adjustment worksheet does not seem to accurately calculate this deduction. The Ohio Tax Instruction booklet lists the calculation and includes an example for “Joe” but even when I use the their example numbers TurboTax displays a different answer than theirs. Please investigate this discrepancy.

From Ohio Tax Instructions:

Line 33 - Uniformed Services Retirement Income

Deduct military retirement income if both of the following are true:

•   The income is included in federal adjusted gross income; AND
•   The income is related to your service in the uniformed services or reserve components thereof, or the National Guard.

The term "uniformed services" includes the Army, Navy, Air Force, Marine Corps, Space Force, Coast Guard, the commissioned corps of the National Oceanic and Atmospheric Administration, and the Public Health Service.

If you served in the military and receive a federal civil service retirement pension, you are eligible for a limited deduction based on the amount of your federal retirement pay that is attributable to your years of military service. You can contact the Office of Personnel Management if you need assistance in determining your military and total service time used in your retirement calculation.

Example: Joe served in the Army for 10 years and then worked for the U.S. National Parks Service for an additional 20 years before retiring, a total of 30 years of federal service time. Joe's total federal pension is $100,000, $90,000 of which is included in his federal adjusted gross income. In calculating his Ohio deduction, Joe should divide 10 years by 30 years, and then multiply the result by $90,000 [90,000 X 10/30]. Thus, Joe can deduct $30,000 or 1/3 of the portion of his retired personnel pay included in federal adjusted gross income.

Additionally, deduct amounts collected under a "survivor benefit" plan by a surviving spouse or former spouse of a deceased member of the "uniformed services." You may be required to provide a copy of the federal 1099-R to verify this deduction.

Note: Amounts deducted on this line cannot be used to calculate the retirement credit or the lump sum retirement credit on the Ohio Schedule of Credits.

TurboTax Uniformed Services Calculation:

2  Federal Pension  90000

3  years of military service  10

4  years of civilian employment 30

5  Federal civil service pension deduction  22500  (30000?)

[DMarkM1]

Yes, your entries indicate a total of 40 years of federal service 10 military and 30 civilian.  Enter 10 and 20 in the boxes to get the 30,000.  

[dcrago]

TurboTax calculates 22500 and not 30000. This error needs to be fixed.

[MaryK4]

I would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

 @dcrago