Military retirement pay and Maryland deduction

[JB0324]

I'm filling out Turbo tax and the system is not deducting the $5000, the Maryland tax rule, from my military retirement pay. How to fix this on my Maryland state filing?

[DMarkM1]

The military retirement income deduction (5000 or 15,000 if age 55 or older) is automatically subtracted from your MD income based on the entries in your Federal interview.

First be sure you have indicated you are military/retired in the "My Info" section.  Next when entering your 1099R you will get a follow on question asking about the source of the retirement.  Be sure to select it is military retirement pay.

Next, to see the subtraction you can view a summary of your MD return in TurboTax online versions.  

1. Click "Tax Tools" in the left hand menu
2. Click "Tools"
3. Click "View Tax Summary"
4. Click "Preview My 1040" in the left hand menu
5. Click "View MD summary" in the left hand menu

You should see the subtraction in the "Subtraction from income line"

For TurboTax desktop just go to the "Forms view" and look at the MD return line 10a on form 502.

[dcdbiz]

Please help!  I am retired military age 67 and entitled to the $15K subtraction in Maryland Form 502 Line 13:  Code U.  Problem is Form 502 Line 10a. Pension Exclusion is automatically selected by Turbo Tax; it checks that item.  MD Comptroller advised Line 10a. must be blank in my case.   I need to delete the entry in Form 502 Line 10a.  However, Turbo Tax Deluxe desktop is not allowing me to delete the entry in Line 10a.  How to clear Form 502 Line 10a?    Thank you!   

[DMarkM1]

Yes, you are correct, you cannot override that selection. Once you are age 65 or older or totally disabled you automatically are qualified for the MD pension exclusion.  However,  that does not disqualify you from the military retirement pay exclusion of up to $15,000.  Here is link to the applicable MD Law.  You can get both of these.  

TurboTax does take this into account therefore you will need to revisit your entries.

First be sure in "My Info" you have indicated you are "Military" and select "Retired" in the follow on pages.

Next revisit the 1099R entries.  After entering the form information for the military retirement 1099R, be sure to select the "Active or Reserve Military Retirement" option when asked where is this distribution from.  Also check/enter the amount of the distribution in the MD box.  

On the next page select "Non-qualified plan" to identify the military retirement.  This will ensure you get the military retirement exclusion no matter what other retirement exclusion you may be eligible for.

Check your entries for any other 1099Rs you have as well.  

[dcdbiz]

Hi DMark1,

Thank you for the fast expert response!  

I double checked Turbo Tax Forms -- confirmed correct entries, unless missed something:  military retired (age 67), 1099R, and checked "nonqualified" type retirement plan. 

No data entry errors found. 

TT is automatically selecting Form 502 Line 10a Pension Exclusion of $12,375 and Line 13 Code U $15K. Since Turbo Tax is automatically choosing where numbers go, which cannot be overridden, is it therefore correct per Maryland tax instructions?  

The link provided shows MD Income Tax Administrative Release No. 23 - Retirement Income.  If I read it correctly, it artfully says, "... may [MAY] also be eligible to exclude military and other qualifying retirement income as computed under [section] 10-209."   

Is this the language you consider when saying I am entitled to both Subtractions from Income?  MD Form 502 Line 10a. and Line 13 Code U?    If not, please clarify.  

I previously sat down with the MD Comptroller tax staff and asked about taking both subtractions.  In response, they said that I may only take one subtraction, either Form 502 Line 10a. or Line 13 Code U, whichever is most advantageous.  Line 13 Code U $15K was best option in my case.  Consequently, I had to amend MD State 502 for taxyears 19 and 20.  Yes, used Turbo Tax Deluxe desktop in both years, which automatically completed TY19 and TY20 subtractions and inserted numbers in forms. 

What do you recommend going forward? 

Thanks!    

[DMarkM1]

It appears the MD Comptroller representative you spoke with may be confusing your military retirement exclusion  with the "RETIRED CORRECTIONAL OFFICERS, LAW ENFORCEMENT OFFICER, OR FIRE, RESCUE, OR EMERGENCY SERVICES PERSONNEL PENSION EXCLUSION" which you cannot take in conjunction with the MD Pension Exclusion. 

Here you can exclude up to 15,000 of your military retirement and any remaining military retirement amount can be used to figure your MD Pension Exclusion amount as well.  

Here is the MD instructions, I refer you first page 12 with the 13A worksheet and then the specific instructions for lines 10a and 13.

If you amended to give money back to MD in 19 and 20 I would amend to get that money back.  You should go with TurboTax numbers that account for both exclusions.