My retirement income that I documented covered under the Bailey Act did not transfer as covered to my NC return. I had to pull up the state tax form & change it.

Lippard1 · ‎February 17, 2026

The Bailey Act exempts income from state taxes in NC. I’ve never had this error before using TurboTax.

CatinaT1

In the Federal Interview when you entered your 1099-R there should have been a screen that said:

Where is your distribution from?

Select the source of this distribution and enter any other North Carolina information.

With the options to select:

Bailey settlement retirement benefits
Railroad Retirement or Social Security Benefits
United States Armed Forces retirement benefits
None of the above

It's possible you missed that screen but I'm glad you were able to adjust it on the form.

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SteamTrain

@Lippard1 @CatinaT1

I had that happen too.

IT turns out that you have to at least enter "NC" in the state part of box 15. Other wise, the "B" selection doesn't take hold, even if you've properly selected the Bailey Settlement in the interview, right after the main 1099-R form entry.

Remember that for next year (or write a note in your tax folder), in case they don't change the software's behavior next year..

____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*

mpludw13

Thank you! Adding NC worked!

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My retirement income that I documented covered under the Bailey Act did not transfer as covered to my NC return. I had to pull up the state tax form & change it.