New York tax liability

Forum|Forum|3 years ago
February 1, 2023
2 replies
26 views

My wife and I are both retired. I have a pension from the NYS Police and Fire, it is state tax exempt. We are both collecting Social Security, which supposedly New York does not tax. Neither of us has any other income for 2022. We also withdrew $19,511.00 combined from my deferred comp and my wife's 401k. When I plugged in my numbers in Turbotax it said we have a huge ($3986.00) tax debt to NYS and owe an underpayment penalty. How can this be when most if not all our income is supposedly not taxed by NYS. Did I possibly enter information incorrectly? I was also told that NYS does not tax withdrawals from 457 and 401k plans if the amount is under $20,000. Any advice would be greatly appreciated.

ThomasM125

Level 15

The tax seems excessive.

You can exempt up to $20,000 of pension income if you are 59 1/2 or over in New York. TurboTax should give you that deduction based on your age entered in the personal info section and your form 1099-R pension income entry. To have the New Your State pension be treated as exempt, there are a couple of boxes you need to check after you enter your 1099-R form. You may need to enter "NY" in box 15 to designate the income as being from New York to see the questions. They look like this, relative to income earned as a safety officer and pension from New York government sources: