I am a new York state resident and my state pension should not be taxed on my state return and yet Turbo Tax shows it as taxed. Any thoughts?

New York does not tax Social Security pensions. However, all other pensions including private pensions are excluded from taxation up to $20,000.  In other words, if your pension is $40,000 then $20,000 of it is taxable.

NYS does not tax NYS pensions of retirees.  Every year, I have a problem with the Turbotax form. This year also.

First did the 1099-R have a NY State distribution amount shown on the form and you entered that amount into TurboTax?  That of course is the source of the income showing in the NY interview. 

Next, be sure that when you entered the 1099-R for the NY pension you selected a NY source for the distribution in the follow on questions.  You should get the opportunity to put a "zero" in the NY distribution box in a follow on question there. 

If not, then go to the state interview and continue the NY return.  When you get to the "Changes to Federal Income " page, update/start the "Received Retirement Income" topic.  On the next page "Edit" the 1099-R and you will have the opportunity to exclude the pension income.  

I could not find the opportunity to exclude the pension income.  NY 2020 is excluding NY Government Income and is incorrectly also deducting the 20k Other Pension deduction.

"If not, then go to the state interview and continue the NY return.  When you get to the "Changes to Federal Income " page, update/start the "Received Retirement Income" topic.  On the next page "Edit" the 1099-R and you will have the opportunity to exclude the pension income. " 

I just discovered the same error.  For some reason this year, Turbo Tax seems to be deducting another $20,000 from the New York State Employee pension amount, none of which should be taxed.  The $20,000 reduction applies to other pensions or withdrawals from Section 457 Deferred Compensation, at least I think so.  I've used Turbo Tax for years, and this is the first time I've encountered this error.  Anyone know how to fix this?

HI Greg, this is now working for me.  Unfortunately I do not know what of the many things I tried solved this problem.   It is a bug in turbotax and the indicator to tell it to not deduct the $20k exclusion is not getting reset.   I tried deleting and reentering the 1099-R and even starting a new return without success.  Around January 14 it started working, maybe as a result of the automatic updates to the software or a combination of the above.  I am not sure how much you would need to to do to create a new return.  I would try updating your software closing turbotax and checking again.  And if the update doesn't fix it,  I would try starting with a new return. I hope this works and I hope that intuit finds and fixes this bug.  

One last note, I am using turbotax delux on my windows computer.

I deleted and reentered by 1099-R.  Still incorrect with the $20,000 exclusion.  Huge glitch by Turbo Tax this year.

It depends.  Did you make any entries in your state return regarding your pension? Try these steps.

1. Log into Turbo Tax
2. Select the State Taxes tab on the left side of your screen.
3. As you navigate through the screens, you will see a screen that says changes to federal income.
4. Look under the heading Wage and Retirement Adjustments
5. The first entry below that will say Received Retirement income.  
6. You will make entries in this section that will determine the full taxability of your NY pension.

Hi Greg, I thought of one more thing I tried. I do not have a lot of confidence that this will work.  I noted that my 1099R from NYSTRS did not have any boxes for the State it just had the Federal boxes.  So after deleting the 1099R I reentered it leaving all of the TurboTax state boxes blank.

Technically this could also be a bug in memory not being refreshed.  You may want to try deleting the 1099, closing down TurboTax and maybe even rebooting before reentering the 1099.  Again, I do not have a lot of confidence that any of this would work.  But while you are waiting for a response from Intuit it might be worth a try.

Greg, I am too having the same issue with TurboTax 2020 and the NYS retirement income.  I've never had this problem before. I also have deleted my file and started a new tax return and completed all the program updates, and to no avail, it still does not work.  Hugely disappointed in TurboTax this year.  This needs to be fixed.  I am a Mac user if it makes any difference.

that didn't work for me. :(

To ensure that your NYS pension is not being taxed on your NYS tax return you first need to be sure your pension in entered in the federal section properly.

To ensure you have this entered properly:

1. Open your TurboTax
2. In the Search box, type in 1099-R
3. Click on Jump to 1099-R
4. You will see your entry for your NYS pension
5. Click on Review
6. Click on Continue until you get to the screen Where Is This Distribution from? screen
7. Select the source New York State & Local Retirement System 
8. Click on Continue
9. Answer the follow up questions.
10. Click on Continue

After reviewing your entries, you should see a subtraction on your NYS tax return for the amount of your NYS pension.

@jodonne5

I’ve already done those steps correctly. I’ve been using TurboTax for years and I have not made any errors in entering data correctly.  This is a flaw in TurboTax that needs to be remedied quickly.  Disappointing 

I'm a Windows user, so it's across both platforms.  I manually edited the form to remove the $20,000 deduction but I know Turbo Tax will generate an error message when it does the error check.

It depends if the override you made is in red. If it is, you won't be able to electronically file the return. 

[Edited 02-01-2021|12:20 PST]

The error is adding in an additional $20,000 deduction for pensions.  Pensions from former New York State employees is exempt from state tax.  That's a given.  Turbo Tax recognizes that.  But it's the extra $20,000 that is causing problems.  The $20,000 is for other pensions.  Turbo Tax added new questions this year, like verifying amount of NYS pension and whether you are receiving periodic payments.  New York State employee pensions are monthly.  That's also a given.  The periodic payments are a requirement to get the $20,000 reductions from non-NYS pensions.  Somewhere, wires got crossed this year in the program that I'm hoping gets addressed soon.

Same here.  So far no suggestions have worked but for manually taking it out in the form

I’ll try manually removing it but I would have hoped with all the complaints to TurboTax they would have gotten this resolved 🙄

When entering your Form 1099-R for your NYC pension,  you want to make sure that Turbo Tax isn't handling it as taxable income. Here are steps:

To get the New York state pension deduction, you will first have to enter the necessary information in your Federal Income tax return and then in the New York State income tax return.

Here are the steps to enter your exempt New York State employee pension:

On the  Federal Income Tax  portion:

1. In the search or find box, type in 1099-R
2. Click on Jump to 1099-R
3. Scroll down to Retirement Plans and Social Security
4. At IRA,401(k), Pension Plan Withdrawals (1099-R), click Start (or Update)
5. Enter your 1099-R or if you have entered it, click on Edit then Continue
6. Answer the next questions until you get to the Where Is This Distribution From? screen
7. Select the source New York State Employees and enter the information requested:
8. Click on Continue
9. Click on From a Qualified Plan
10. Continue answering the questions

On the New York State return portion: 

1. At the Changes to Federal Income page, scroll down to Received retirement income, click Start (or Update)
2. At the Retirement Distributions Summary page, click on Edit New York State
3. If no additional information is required, click on Continue
4. Click on Done

Review the Pension Deduction Summary for the deduction.

@gregnugget

I went through these steps, which I repeated several times, and it magically appears to have worked.  That is, the $20,000 deduction was gone.  One thing though that did need to change is the entry on the New York portion where Turbo Tax asks to verify the Government Pension Exclusion.  Turbo Tax populates with the higher, total amount of the pension, not the slightly lower taxable amount.  When corrected, the total New York Taxable amount was zero, not a negative number.  So, I think its fixed for me.  There were no errors reported

Thank you for your help.

Greg, glad it is working for you.  Unfortunately neither one of us could identify what fixed it.

And thanks for the tip about the NY taxable amount.  I'll verify my return next week.

Still not working for me. Just so disappointed in Turbo Tax

So this year it seems turbo tax does not automatically put in the pension amount for New York deductions, what was line 26 on IT-201 (2019) last year. Manually entering that data this year on the IT-201 form, even with leaving the 20K federal deduction it had reviewed with no errors. Turbo Tax you really need to fix this.

I tried every possible solution. It is a flaw in the system