Iowa pension exclusion?

[emugge]

turbotax seems to be taking the Iowa pension exclusion twice - both on Line 21 of IA1040 & also by reducing the Taxable Pension on Line 9 by the exclusion. Also, turbotax seems to be using the "Federal Taxable Amount" from 1099-R Box 2a  instead of the "State taxable amount" from Box 14. Is this correct?

[SteamTrain · Accepted solution]

1) Yes, the amount That the IA tax return uses is the total amount in all box 2a's of all the forms 1099-R that you entered in the Federal section.  (Or the federally taxable amount of box 1 if box 2a is empty).  ....(and an exception in #3 below)

Box 14 is not normally used... it should normally be empty...except that an Iowa public pension system retirement, IPERS does use it : Example at:   https://www.ipers.org/sites/default/files/media/1099R_explanation.pdf   (will deal with that later.)

2) Now, just entering your 1099-R's in the Federal section should put the total of all 1099-R box 2a's into line 9 of the IA-1040. (exception follows in #3), and up-to $6000/spouse on line 21  (each spouse must have at least one 1099-R and be  age 55 or older by the end of 2018.)  So line 9 should not be reduced by the line 21 pension exclusion $$...unless an error was made in your entries...or by a strange coincidence involving #3 below.

...and the exclusion cannot exceed the total 1099-R $$ distributed to each spouse...so if one spouse only took $4000 from an IRA, and had no other 1099-R $$, then they would only get a $4000 exclusion...for that individual.

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3)  Line 9 can be lower than the total of all form 1099-R  box 2a's ....if any of the 1099-R forms was from a Military Retirement, or from a IOWA Govt pension  (IPERS).  But that is handled during the IA interview about "Adjustments"....as follows:

3a)  IF you answered Yes to the question about retiring after 1994, and YES the the question about you being a military Retiree.....or a retired IA govt employee (IPERS) after Dec of 1994).

then you are presented with a box to indicate the portion of the Military, or IPERS $$ that is NOT IA taxable.

3b) for a military retiree...it is all of box 2a of that DFAS 1099-R...and that $$ amount gets removed from line 9 of the IA 1040.

3c) for an IPERS retiree, it is the difference of box 2a and box 14 of the IPERS 1099-R form. SO if box 2a is 24,000, and box 14 is 20,000 , then you would put $4,000 in that entry field, and it reduces line 9 of the form 1040 by $4,000

3d) and if anything remains on line 9 of the IA 1040, then up-to 6000 from line 21 still applies to be removed

So if you are in this #3 situation, you do have to be careful about how you use this adjustment during the IA interview....in the IA "Adjustments" section

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So a reduction of 6,000 in line 9 of the IA 1040 and line 21...is just remotely possible..if in step 3c the difference between box 14 and 2a of the 1099-R just happens to b the same $6000 (for a single person)...or if  military 1099-R box 2a, just happens to be $6000