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pathueman
New Member

Why does not Turbo Tax for NC exclude my military retired pay from NC taxable income?

 I am using Turbo Tax Deluxe, bought at Wal-Mart in Fuquay Varina.

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Accepted Solutions
SteamTrain
Level 15

Why does not Turbo Tax for NC exclude my military retired pay from NC taxable income?

Be careful....many currently retiring Military people find out they are not eligible for the NC-exemption of those military pension $$.  A serviceperson retiring in 2010 found they would need more than ~25 years of military service before they could get that exemption.

As long as you had 5 years of service credited before 12 Aug of 1989...then you would qualify for the "Bailey Settlement" .

The procedure is the same in TurboTax every year, so (perhaps) print this out for next year and file it.

____________________________________________________

Go back and edit the 1099-R form in the Federal section.

 After you enter your 1099-R form, and "Continue" thru the pages that follow it...until you find the selections for:

1) "Bailey settlement...."....................<<<<you are selecting this one

2) "Faulkenbury settlement...."

3) "Railroad Ret-SS.........."

4) "None of the above"

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.

(Picture Below)

Again.....Far fewer retired folks have any Pension exemption $$.  BUT...IF you were into your NC-State or Federal/Military pension system, 5 years as of 12 Aug 1989, you can choose the "Bailey Settlement..." and all of that particular 1099-R will be exempted from NC taxation...otherwise you will likely choose "None of the above"


So that 5-years employment by the Feds/Military, or NC-State Gov't-related plan, by 12 Aug 1989 is critical

.......if you weren't employed by the Gov't early enough to meet that deadline...then your Pension distribution is not exempt from NC taxation


*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

View solution in original post

1 Reply
SteamTrain
Level 15

Why does not Turbo Tax for NC exclude my military retired pay from NC taxable income?

Be careful....many currently retiring Military people find out they are not eligible for the NC-exemption of those military pension $$.  A serviceperson retiring in 2010 found they would need more than ~25 years of military service before they could get that exemption.

As long as you had 5 years of service credited before 12 Aug of 1989...then you would qualify for the "Bailey Settlement" .

The procedure is the same in TurboTax every year, so (perhaps) print this out for next year and file it.

____________________________________________________

Go back and edit the 1099-R form in the Federal section.

 After you enter your 1099-R form, and "Continue" thru the pages that follow it...until you find the selections for:

1) "Bailey settlement...."....................<<<<you are selecting this one

2) "Faulkenbury settlement...."

3) "Railroad Ret-SS.........."

4) "None of the above"

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.

(Picture Below)

Again.....Far fewer retired folks have any Pension exemption $$.  BUT...IF you were into your NC-State or Federal/Military pension system, 5 years as of 12 Aug 1989, you can choose the "Bailey Settlement..." and all of that particular 1099-R will be exempted from NC taxation...otherwise you will likely choose "None of the above"


So that 5-years employment by the Feds/Military, or NC-State Gov't-related plan, by 12 Aug 1989 is critical

.......if you weren't employed by the Gov't early enough to meet that deadline...then your Pension distribution is not exempt from NC taxation


*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

View solution in original post

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