After entering a Roth IRA 1099R, TurboTax calculated state taxes. Roth IRA distributions are not taxed in my state. How can I fix this? I clicked the box indicating Roth.

[riram]

After entering a Roth IRA 1099R, TurboTax calculated state taxes. Roth IRA distributions are not taxed in my state. How can I fix this? I clicked the box indicating Roth.

[Karis_F]

To clarify, what state tax return are you preparing?

You can go to the State Taxes area in TurboTax Online and go through your state's organizer. 

Look for any question or area that might indicate why your Roth IRA distribution is being taxed on your state return if it is not being taxed on your Federal return. 

[riram]

Thanks for your reply. I am preparing a NJ state return. I’m 66 and have had the Roth IRA for over 20 years so all distributions are qualified. Can you give me a bit more direction on where to find the “state organizer” in the program? I’ve already contacted my my plan administrator and they tell me that they can’t change the distribution  code to “Q” from “T” because they don’t track the length of time I’ve had the Roth.

[RobertB4444]

That code T tells the system that the distribution should be taxed because better safe than sorry.  If you have had the account for more than five years - and have documentation to prove it - then changing the code to Q will cause the system to recognize that the distribution is a qualified Roth distribution.  

If you are not certain that your distribution is qualified then you should not do this.  But based on your statements this is a pretty simple fix - the company managing your Roth should issue your 1099-R with a Q on it.  You should see about making certain that they do this going forward.

[riram]

Thanks for your reply, it’s much appreciated. My distribution from my Roth IRA was fully qualified. I’m over 66 and I’ve owned the Roth for well over 20 years. The distribution code in box 7 is “T”. I spoke with my account custodian and they assured me that that was appropriate because they do not track the length of time of account ownership. After doing some more research, I found two sources that claimed that the problem is a glitch in TurboTax re: State of New Jersey returns. Learning this I switched to another program and I filed my taxes with them.