Hello- I have a 1099-R for military retirement.My understanding is Iowa does not tax this pay, but when I enter the amounts I suddenly owe taxes both fed and state..??

[SteamTrain]

Don't worry about IA now...just get everything in for the Federal part.

I don't have IA software this year, but in prior years, the $$ from the Military 1099-R were removed during the IA interview...in the IA "Adjustments" section.

Get yoru Federal section fully filled in first....then, if the IA interview proceeds like it did in past years, there will be an Adjustment section in the IA interview that has a header:

"Iowa Taxable Retirment Income

........

...did you retire after 31 December 1994, or did you retire from the military ?"

You answer yes

_____________________

then another one with  ".......1994 or are you retired from the military?"

you answer YES again.

___________________________

Then the next page lets you enter the $$ amount from box 1 of your Military 1099-R  (or box 2a if it is slightly lower for some reason.) ....and that amount gets removed from IA income.