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It depends on where your pension came from. It's not what's in Box 12 that controls how much if any of your pension is taxable in Massachusetts. Massachusetts taxes most pensions, but doesn't tax pension income received from a contributory annuity, pension, endowment or retirement fund of the U.S. Government or the Commonwealth of Massachusetts and its political subdivisions, and Keogh distributions.
You indicate that the pension came from one of those sources after you enter your 1099R. See the screenshot below.
There are some pensions for which MA allows a deduction, such as certain pensions from other states. Those get reported as income, and you claim the deduction for them in the MA return. See the screenshot below. New Hampshire is an example of a state that qualifies.
For more information, see Massachusetts Resident Income Tax Instructions.
Using TurboTax Premier for 2020 taxes. I've entered my OPM annuity amount & indicated that it was exempt in MA, but the amount was not shown as exempt when I looked at MA Form 1. Sure looks like it needs correcting.
ps - I've used TurboTax for about 20 years & it's always computed correctly before.
@thomascarpenter Click this link for info on Non-Taxable Pension in Massachusetts that may resolve your issue.
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