Is there a bug in the NC state software? I entered a payment from the Retired Military and designated it a Bailey payment in the Federal return but it is not in state.

@davelecker 

Do not override...jus tget it entered correctly and there is no need for an overrride.

Did you also enter the box 2a $$ amount as the NC Distribution amount, on the page where you designated it as being Bailey Eligible?  (Back in the Federal section....That is where the Bailey selection is made as a part of that 1099-R entry....on a follow-up page after the main 1099-R form)

That box 2a value needs to be in there so that the NC forms know how much to deduct from NC income.

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A second possible error, if you designate it as Bailey eligible, Do Not also enter the same amount as being Military Retirment $$ in the NC interview.   The Military Retirment designation is only for folks who were not Bailey eligible.

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to my knowledge, NC hasn't yet issued guidance on whether Bailey eligible Military retirements should start just using the Military Retirment instead...or not.

Yes I entered the total amount in the state section with the state code of NC.  I did not fill in the box which identifies the payor state code since the 1099 had all the state boxes empty.  I think the problem is that State TurboTax confuses the pension totals with the Bailey amount.  If I override the worksheet and put in the correct Bailey amount, that generates an error because it adds my Bailey amount to the Social Security amount and that exceeds the total pension amount ( there are two pension of the three that are not Bailey eligible).  I even tried deleting and reentering the Bailey pension and that did not work.  The override calculates the correct income tax but throws an error and will not let the form be electronically submitted.  I think that unless I can bypass the problem I will have to print and manually submit the state taxes forms.

No...there's no bug that I can find...somewhere along the line you aren't entering something right during the interview phase

Here's an example of how the NC "Retirment Benefits Deduction" worksheet should look like in Forms Mode....(tht was an OPM 1099-R form ,and not a DFAS form..but same idea)

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...and remember....a DFAS Military retirement 1099-R cannot be designated as deduction for both the Bailey, and also Military retirement deduction.  Just one or the other.