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New Member
posted Jun 4, 2019 11:24:52 PM

How do i know if i have a defined benefit retirement plan to be taxed by the state of Alabama

I know it is taxed federally but what about the State of Alabama

0 5 8183
5 Replies
Expert Alumni
Jun 4, 2019 11:24:53 PM

More than likely your defined benefit retirement plan is not taxable in Alabama. The following are not taxed by Alabama:

Social Security, military, civil service, state/local government and qualified private pensions are exempt.  All out-of-state government pensions are tax-exempt if they are defined benefit plans.

For more information, see page 7 of: http://revenue.alabama.gov/incometax/2016_forms/16f40bk.pdf for a list of types of income you do NOT report in Alabama.


New Member
Mar 23, 2020 10:32:08 AM

it is not tax by state

Expert Alumni
Mar 23, 2020 10:37:36 AM

If your retirement plan is not taxable by the state of Alabama, then the software will not count it as taxable.

New Member
Mar 6, 2021 6:33:00 PM

FOr past 11 years my Alabama private pension has not shown as being taxed on turbotax. Now this year it is included in taxable income. How do I get it to again be not taxed as it is a defined benefit retirement plan.

 

Expert Alumni
Mar 7, 2021 4:42:17 PM

It depends. When you enter the the information in your federal interview, be sure to indicate that this is a qualified plan when it asks what kind of a retirement plan it is. This is the first step.

 

The second step requires you to do the following.

  1. Select state in the left pane of your return if using Turbo Tax Online If using the software, select the state tab.
  2. Once you select Alabama as the state, your information from your federal return will populate in your Alabama State return.
  3. Now you will navigate through the screens until you arrive at a screen that mentions About Your Retirement Distributions.
  4. You should see your retirement distribution listed and select edit.
  5. Next you will see a list of distributions that are qualified to be excluded. If you see your pension listed, there select "yes." One of the options I see is payments from a Defined Benefit Retirement Plan
  6. The next screen will show that it is excluded as income from your Alabama return.