Part of my question was whether Turbo Tax recognized this issue. In other words, the federal government is taxing me, but will Turbo Tax recognize this is not taxable income in Illinois. I was bothered by the answer you cited which said " for some reason, kept IRA RMDs in taxable income. So I'll now file a paper return." If this is true it makes me question the reliability of turbo tax which up until now I have found to be reliable.
If you entered your 1099-R correctly on your federal return, your RMD will carry to your Illinois Form IL-1040 as part of your Total Income (line 4), but not as part of your Illinois base income (line 9). You won't be taxed on your RMD. TurboTax handles this correctly, as long as you enter your information correctly.
No. Illinois is among the states that exempt all types of retirement income from state income taxes