1099-R Information Posting Incorrectly on Hawaii State Tax Return

[hillsidenut]

The amount in box 5 on the 1099-R is posting on line 13 (Pensions taxed federally but not taxed by Hawaii) of the N-11 Hawaii State Tax Form.  The amount in box 5 represents the non-taxable portion of the annuity distribution.  The AGI that is brought over to the State return from the Federal return does not include the non-taxable amount from the 1099-R, so by posting the amount on line 13, it reduces the AGI unnecessarily on the State return.  Am I doing something wrong in Turbo Tax or is Turbo Tax in error.

[BillM223 · Accepted solution]

"The amount in box 5 represents the non-taxable portion of the annuity distribution. " Yes, the box 5 amount represents your "basis" in the pension, that is, after-tax contributions you made to the retirement plan while working. 

When you went through your Hawaii interview in TurboTax, did you see a screen with the heading, "Exclusion Amount"? This screen is asking for the nontaxable (in Hawaii) part of your distribution. What did you enter here? The entire distribution or just the part that was taxable on the federal return? Or something else?

My test shows the number I entered for the exclusion (which was the taxable amount on the federal return) on line 13 of Form N-11. 

There are likely several ways we can enter this, so I wanted to see what you actually did on the 1099-R interview and in the Hawaii interview.

[hillsidenut]

Thank you for your reply.  The exclusion question on the Hawaii interview is where I made the mistake.  I entered the non-taxable amount there but I should have entered zero.  It was asking how much of the taxable amount in box 2a, not the gross distribution amount in box 1, should be excluded.  The correct answer is zero.