How to claim military retirement pay for MD state tax for tax year 2020?

[chezpaix]

I checked the box in personal info that I was retired military. And I think I entered the 1099 info correctly but turbotax deluxe 2020 is not entering the deduction in form 502SU. I can enter the $15000 manually in the form but it should be done through the program. 

[DMarkM1]

Yes you are correct.  In the "Income & Expenses" tab return to the "Retirement" topic and "Edit" the 1099-R. 

After entering the 1099-R information you will come to a page entitled "Where did the distribution come from?"  Be sure to select the box for "Active/reserve military retirement". 

That will deduct either $5000, if age 54 or younger, or $15,000, if age 55 or older, from your MD income.  Here is a link with more information on the deduction.  

[chezpaix]

Many thanks for your prompt and thorough answer and for the link! I had done all you said so I got it right, but TT did not enter the data on the state form. I added it manually. Someone might want to check this. Also, I chose non-qualified plan as it says that included military retirement plans.

Thoughts?

Thank you again!

[chezpaix]

Related question, does part of my military retirement qualify for the Maryland Pension Exclusion? Info on this on the link you sent to first question. I can't seem to get TT to address this.

Thank you

[DMarkM1 · Accepted solution]

Yes, military retirement is a non-qualified retirement. 

Also, yes, if you qualify for the pension exclusion (age 65) your retirement pay is eligible for both exclusions.  See the Section III, "Exclusion" paragraph in this MD comptroller notice.

In TurboTax if you indicate you are age 65 or older in the personal info section it automatically makes the exclusion on your MD form.   

[chezpaix]

Thank you again. And again, TT is not doing this by itself although it is possible to do it manually. My concern is for those who don't know to do this. Thank you again.

[chezpaix]

I do not qualify for the pension exclusion as social security payments must be subtracted from the max allowable exclusion.

[BillM223]

Are you saying that this subtraction is not on form 502SU, or are you saying that it does not appear on line 13 of form 502?

Buried deep in the state instructions is a line that states that if there is only one subtraction for form 502SU, then it is OK to not add that form, but just enter the amount on line 13 on form 502, with the two character code to the left of the amount.

Is this your situation?

@chezpaix

[chezpaix]

The Form 502SU did not self-populate on the Form502SU.

I had to add the form and then manually entered the value when I saw that I had entered the 1099R correctly.

Then the exclusion did appear on the Form 502 in line13 with the letter U.

The other question I had was about the regular pension exclusion which I am eligible for but after deducting social security benefits on the PENSION EXCLUSION COMPUTATION WORKSHEET on line 3 it turns out there is no exclusion for me for it.

[BillM223]

"I do not qualify for the pension exclusion as social security payments must be subtracted from the max allowable exclusion."

Are you saying that your Social Security payments are greater than $31,100 (each)? Then, yes, you are not eligible for the pension exclusion. Please see the Pension Exclusion Worksheet here. 

If this is true, then you should not have added form 502SU.

Or di I not understand your situation?

[chezpaix]

Yes my ssa payments were more than the maximum allowable exclusion so in my case only the $15K deduction is allowable.

Glad we figured that out.

But the military pension deduction had to be entered manually so the TT program is not working exactly right.

Others who have a military pension should switch to forms view and look at form 502 Line 13 for the letter U and the deduction in line 13. If it is not there, they need to override the form.

Thanks for the help!

[spudnick]

I entered my DFAS Military Retirement 1099R and selected Military Retirement, however, the 502SU did NOT give me the "U" code or the $15000 deduction.  I overrode the 502SU to include the "U" Code and $15000 but now Turbo Tax will NOT let me file electronically because of the override.  What's up with that?

[chezpaix]

Thanks for asking but I regret I can't help with this. The ability to file electronically may not have to do with this override unless it gave that as a reason. I am no expert with TT. I hope you figure it out.