Yes, 1099-R income is generally taxed by states; however, some states have an exclusion for all or part of retirement benefits. Be sure to review your state return to see if this is available.
Information flows from the federal return to the state return. TurboTax's software is programmed to follow all the federal and state tax laws. If your retirement income is not taxable in your state, then it will not be taxed on your state return.
To enter your retirement income, Go to Federal> Wages and Income>Retirement Plans and Social Security>IRA 401 k) Pension Plan Withdrawals to enter your 1099R.
So in theory that would be why I would owe on my state return if I didn’t take out state taxes for it but only federal ? Could the same be applied for why I owe more on my local school taxes ?
Yes, possibly.
Can you comment with your state? There have been many changes that have occurred with the Cares Act and the states either conforming or not.
As each state is different, providing us with your particular state can help us give you more guidance.
Thank you for that.
You would need to make sure you had state withholdings for Ohio as well. If you did not, that would be a part of the reason you owe taxes this year.
Ohio does not have any specific provisions for retirement income not being taxed. They do offer a nonrefundable credit if you meet all of the requirements below.
As to the reason why you owe taxes in Ohio on your retirement income this year when you haven't in the past, the best thing to do at this point is to compare your 2020 return so far to what was actually filed in 2019. This may help narrow down where the difference is.
In TurboTax, you can view your tax summary for your 2020 tax return by doing the following:
After you review the above items, simply select "Back" in the black panel to get back to the interview forms.
[Edited 03/06/2021 | 11:51 AM PST]
Thank you I do appreciate your help I’ll look into that.
But I do have the question of could it be my total gross amount between my w-2 n 1099r combined is where they are getting the extra state tax ? What I got from my 1099r is lol not over half of my w-2 income n what I owe is bout 1/3 of the total amount for state
Yes, the reason you owe state tax this year is that you didn't have any state tax taken out of your 1099-R income. Since retirement income is taxed by OH, and you only had federal tax withheld, you will owe the state tax on the 1099-R income. If you have not yet reached the age of retirement in OH, you can't take the credit for retirement income, so you owe the state tax on the full amount that you included with your federal return. Now, if you are already at the age of retirement, you can take the OH credit, but it doesn't sound like you are. And the credit won't be as much as the tax even if you do qualify to take it.
What is your school district name and code? Some districts tax retirement income and some do not (they only tax earned income). But if you are in a district that includes retirement income, then that will definitely cause you to owe school tax also. Guide to Ohio’s School District Income Tax
For those of you reading this who may be in other states: A few states that have retirement income exemptions also have an amount that your total income cannot exceed. So, if you go even $1 (actually, 51 cents) over this "cliff," you lose the entire deduction. That can catch some folks by surprise, and make a huge difference if all or most of their income is from retirement.