Hawaii, like many states, starts its tax return with Federal AGI and then makes any necessary adjustments. In that situation, the proper way to report income that is taxed by the Feds but *not* the state is to deduct the Federal taxable amount from Federal AGI. That appears to be what you described, and that is correct. (TurboTax should NOT have used 1099-R gross if the net taxable Federal amount is less, since only the latter amount made it to Federal AGI.)
Hawaii, like many states, starts its tax return with Federal AGI and then makes any necessary adjustments. In that situation, the proper way to report income that is taxed by the Feds but *not* the state is to deduct the Federal taxable amount from Federal AGI. That appears to be what you described, and that is correct. (TurboTax should NOT have used 1099-R gross if the net taxable Federal amount is less, since only the latter amount made it to Federal AGI.)
So what you are sayings is that for the Hawaii State income tax, even if pensions are exempt, I must pay income taxes on the portion of my pension that I had already paid taxes on even if the federal return exempts me from paying taxes on my portion of the contributions.
No, you misunderstand. Start with your Federal 1040A: The gross pension is listed first on Line 12a, but only the net pension (after basis exclusion) on Line 12b is included in AGI on Line 21 (bottom of page 1); that becomes Line 7 of your Hawaii resident return (N-11 -- non-resident returns will be similar). The following HI lines add income taxed by HI but not the IRS (Lines 8-10), and subtract income taxed by the IRS but not HI (Lines 13-18). Since only your *net* pension is included in Line 7, *only* that amount is deducted on Line 13 to make your pension 100% tax-free. Since your basis was deducted in reaching Federal AGI, there is no need to deduct it again.
Thank you for your explanation; makes perfect sense to me now.
I am aware of this. When entering retirement income into the TurboTax federal form I failed to check the box that said the income was for a government source (AF retirement). Therefore, The full amount was passed to the Hawaii return as fully taxable. I have already filed both federal and state returns and have paid the state tax. How do I submit a correction. Must I first submit a corrected federal return and then a corrected state return, or can I just correct the state return?
@Willie38 wrote:
I am aware of this. When entering retirement income into the TurboTax federal form I failed to check the box that said the income was for a government source (AF retirement). Therefore, The full amount was passed to the Hawaii return as fully taxable. I have already filed both federal and state returns and have paid the state tax. How do I submit a correction. Must I first submit a corrected federal return and then a corrected state return, or can I just correct the state return?
First, is the pension on Line 13 of your Hawaii return (N-11)? If so it was *deducted* from your Federal AGI and was *not* taxed; thus no amendment is necessary. (Hawaii exempts noncontributory private pensions just like government & military pensions; the IRS taxes both.)
If it's NOT on your N-11 at all (other than as part of Federal AGI), THEN you may have to amend your returns. The way TurboTax is set up, you'll probably have to start "amending" your Federal return so you can change the 1099-R to reflect the correct category; then go to your Hawaii return and amend it (the change in your 1099-R should carry over automatically). At the end, you may be presented with both Federal & Hawaii amended returns; but since ALL amended returns are filed on paper and the 1040X should show no changes, ignore it and just mail in the Hawaii amended return.
EDIT 04/19/21: TurboTax now allows e-filed amendments to Federal returns in many cases; I had to file one myself this year. However, *IF* you follow this method you can still elect a paper amended return, ignore the 1040-X, and mail in the HI return. Or, you can follow ReneeM7122's more recent response and amend your state return separately from Federal; my method, however, should make the state return easier to amend because a lot of what the state program does with pensions comes from answers you gave while entering the 1099-R on the Federal side.
How do I correct a HI state income tax? How do I get the money/check returned that I sent in for money that I owed that was incorrect. I am a retired senior/disabled HI citizen that retired from another state
In TurboTax, you can amend your state return without filing an amendment for your federal. Select your version for instructions:
@mavalentino
@ReneeM7122 wrote:
In TurboTax, you can amend your state return without filing an amendment for your federal. Select your version for instructions:
@mavalentino
That might work as well. However, I suggested starting with the Federal return a year ago because I know (from experience with how my own state Arkansas treats pensions) that a lot of what state programs do with 1099-R income depends on how you answer the questions that follow the 1099-R once you enter it on the Federal side. It may be possible to make the necessary changes to the HI return without touching the Federal return; but sometimes the state program won't do the right thing unless the Federal program's post-1099-R questions are answered correctly. In either case, there should be no need to file any 1040-X TurboTax may generate (electronically or on paper) if the only changes are on the state side.