The screen where to select "Where is this pension from" is not correctly formatted. The radio buttons aren't aligned with the choices, making me think this is a bug. I tried all the options and It seems like the only way to exclude the pension from NYC taxable income is to select "Not eligible for exclusion for those over 59 1/2" and then in New York manually exclude the income. I've never had to do this before and worry its wrong. Usually turbotax automatically excludes the pension income. How do i fix to show this correctly?
Your retirement benefit is subject to federal income tax (except for previously taxed contributions) but is exempt from New York State income tax.
After you enter your 1099-R form TurboTax will ask you to Select the state and where is this contribution from. Select NY state and City Education.
Your New York State Teachers' Retirement System pension will be a subtraction on your New York State return (IT-201) on line 26.
So this is the screen I see. When I choose the first bullet, which i presume represents "New York State and City Education", Turbotax does not properly treat this as tax exempt for New York. It is treated as taxable. Based on the screen, it is hard to tell which option to choose for "NY State and city education", but i can validate that none of the choices results in the income being treated as tax exempt. (A couple of the choices results in 20k of income being tax exempt, but not the full amount).
What should I do?
It is good that you saw this screen in the federal return (and I agree it could be formatted better). Did you also see the corresponding screen in the New York State interview?
In the NY interview, there is a screen with the title of "Changes to Federal Income". Under the subheading, "Wage and retirement adjustments", please click Start for "Received retirement income ".
This section of the interview gives you the chance to revisit and possibly update your information from the federal 1099-R interview for your pension.
When you have finished this (possibly you don't have to make any changes) and continued, you are asked about the LIRR pension and then you are presented with this screen, "Pension Deduction Summary".
Does your pension show as deductible here under "New York deduction for government pensions"?
@BillM223 - Thanks for the suggestion. I went through these screens in NY. Unfortunately, the pension shows up as "Total federal taxable non-disability pensions and IRA distributions" and shows $0 for "New York deduction for government pensions". I tried changing the federal screen and no matter which option i select, i always get $0 for the NY deduction for government pensions.
I do note that on this screen, when I click "edit" it always says no more questions, and the "State Distribution" field is blank. Then I get the LIRR question and then the summary you mentioned. No matter what I do, It seems like the pension is not being recognized as NY and there is no way to change it.
I am still guessing that the federal screen is the source of the problem. This is not a new pension for me and i have not had this problem in years past. Any other guesses for what to do?
I don't get the same results in either the Online or CD/download product. In all my test, it shows up on this screen as deductible:
"I do note that on this screen, when I click "edit" it always says no more questions, and the "State Distribution" field is blank."
Aha! The "State Distribution" field should not be blank; it should be equal to the Box 16 amount on your 1099-R. Se this:
Did you fill in boxes 14-16 when you entered the 1099-R?