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How do I exempt Army pension retirement income (1099R) for my husband who is 100% disabled on my Maryland State Return? I saw something about a 29,900 exclusion.

 
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Level 18

How do I exempt Army pension retirement income (1099R) for my husband who is 100% disabled on my Maryland State Return? I saw something about a 29,900 exclusion.

There is a $29,900 general exclusion of retirement income in Maryland for the totally disabled - but only from "employee retirement plans" (these include defined benefit and defined contribution pension plans, 401(a) plans, 401(k) plans, 403(b) plans, and 457(b) plans), not IRAs.

An Army pension is a defined benefit plan.

***general exemption for retirement income from qualified plans (not IRAs) for the disabled***

The Maryland pension exclusion is calculated automatically by TurboTax.

In Maryland, there is a general pension exclusion of up to $29,900 if you were 65 or older or totally disabled, or your spouse was totally disabled, on the last day of the tax year. Note, however, that this exclusion is ONLY from an "employee retirement system." Please note that these include defined benefit and defined contribution pension plans, 401(a) plans, 401(k) plans, 403(b) plans, and 457(b) plans.

This exclusion does NOT apply to distributions from a traditional IRA, a Roth IRA, a simplified employee plan (SEP), a Keogh Plan.

First, enter your 1099-R (pension) information correctly on the federal return. Note that you may be asked for information on how much of the income and withholding applies to Maryland. 

Then enter the Maryland interview. You will come to a screen entitled "Here's the income that Maryland handles differently". At the top will be your entry for the Maryland pension exclusion. Note that it is limited to $29,900. If you believe that the amount should be different, click on the Start button to see how TurboTax calculated the exclusion.

Finish your state return.