NJ state Turbotax is including my 401K contributions in my income. How do I deduct them as they are deductible in NJ?

First, please read "Retirement Income Understanding Income Tax" from the State of New Jersey.

 

Then, make sure that you have entered your state of residence as NJ before you enter the 1099-R. 

 

Then, in the screens after you enter the 1099-R, because you live in NJ, there is a screen asking you information about this distribution. This is where TurboTax can determine if your 1099-R is tax exempt.

 

 

According to NJ website, you are mistaken.

 

NJ says:

"your contributions to your 401(k) Plan were not included as income"