Am I eligible for a Pension Income Deduction on my Maine state return? I live in Maine, am retired, and am collecting a pension from my teaching career in CT.

[vpietrowicz]

My 1099-R from CT Teachers' Retirement Board withholds FEDERAL taxes but no state taxes.

[ReneV4 · Accepted solution]

Yes. You are eligible for a pension income deduction. 

Maine allows a deduction for most types of retirement income, including out-of-state teacher pensions. 

It doesn’t matter that the CT Teachers' Retirement Board isn't withholding Maine taxes because you are a Maine resident and the pension income is included in your Federal Adjusted Gross Income (AGI).

Maine has significantly increased this benefit:

• You can deduct up to $48,216 per person ($48,216 minus (Your Social Security benefits received) = Your available Pension Deduction
• Maine doesn't tax Social Security, but they use your Social Security benefits to "reduce" the available pension deduction

How to enter this in TurboTax

1. Go to Wages & Income and enter your Form 1099-R from the CT Teachers' Retirement Board exactly as it appears
2. When completing your Maine State return, look for the section titled "Subtractions from Income" or "Pension Income Deduction"
3. Check "Yes" to the question: "Did you receive retirement or pension income?"
4. Confirm the 1099-R from CT Teachers is an "Eligible Pension" 
5. Type in the portion of your pension that was included in your Federal income