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In most cases (I don't know what kind of pension you have), you do the following:
1. Make sure that you have indicated that your state of residence is Kentucky.
2. When you add the 1099-R for the pension distribution, make sure to continue through the interview. Typically, the very next screen asks what the source of the distribution is. This is likely how TurboTax handles the federal government pension exclusion.
Come back if that does not work for you.
I went through entering the 1099R information again. There is nothing in there for a state exemption that I see. I went through every window. The exemption would not apply to federal taxes. It only applies to state. On the 1099R form after box 16 there is a box that says "State Taxable Percentage". I don't see anyway to enter that in the system. Is there some toggle I'm missing?
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