My Military Retired pay is 100 percent tax free in Kentucky, yet TurboTax says it is taxable, that is incorrect. How do I fix it in TurboTax's automated system?

[jhall20613]

TurboTax will not give me the Kentucky 100 percent tax free credit for my Military Retired Pay. How can I fix it in TurboTax?

[DMarkM1]

Yes, KY has a subtraction for all pension income up to $31,110.  This is automatic and once you complete your KY state interview you will see the subtraction on the last screen.  If your pension 1099R was more than $31,110 then you will be asked a series of questions in the KY "Income" section of the state interview  to determine an additional subtraction percentage of your federal pension.  Since your pension is federal government you may be eligible for an additional subtraction amount based on your years of service. 

Here is a link with more detailed information.