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?

[DaveF1006]

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]

[gregnugget]

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.

[gregnugget]

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

[jodonne5]

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

[ReneeM7122]

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

[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.

[JoeHay--]

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.

[jodonne5]

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

[jodonne5]

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.

[JoeZ]

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

[gloriah5200]

Yes, the IT_201 shows that Federal Income and Adjustments section will bring in the taxable social security from the federal return and then the NY subtractions section will bring in the same amount to subtract it out for the NY state taxation purposes.

If the software is entering the taxable social security on the line for the federal taxable amount but not entering the subtraction for the line for the NY adjustments, then you may need to enter it so it will subtract it out.

[Edited 02/10/21|12:57 am] 

[jodonne5]

Yes. I can do that. But fact of the matter is I shouldn’t have to. We all pay very good money for this tax program, and since it appears to be an issue for many, TurboTax should be working on a software fix, shouldn’t be hard to do. No one should manually have to adjust anything. And by doing so you likely do not know if it will be electronically accepted. My money will be spent on another program next year. Huge fail and wrongdoing on the part of TT.

I can’t even fathom why anyone would recommend manually correcting a software error from a large software company. Go figure.

[JoeZ]

I did these exact steps five times. Nothing will remove the $20,000 pension exclusion. 

[JoeHay--]

Hi Gloria,

Please confirm that this is a reported defect in the software.  And that it is being worked on.  

If it is not reported, please submit this as a software defect that needs urgent attention.

Thank you 

[JoeZ]

I just got off the phone with Turbo Tax.  They admit there is a glitch in the system and said it should be resolved on Feb. 18, 2021.  Knew it had to be in the system.