I am a new York state resident and my state pension should not be taxed on my state return and yet Turbo Tax shows it as taxed. Any thoughts?

[PhyllisG · Accepted solution]

New York does not tax Social Security pensions. However, all other pensions including private pensions are excluded from taxation up to $20,000.  In other words, if your pension is $40,000 then $20,000 of it is taxable.

[gs42]

NYS does not tax NYS pensions of retirees.  Every year, I have a problem with the Turbotax form. This year also.

[DMarkM1]

First did the 1099-R have a NY State distribution amount shown on the form and you entered that amount into TurboTax?  That of course is the source of the income showing in the NY interview. 

Next, be sure that when you entered the 1099-R for the NY pension you selected a NY source for the distribution in the follow on questions.  You should get the opportunity to put a "zero" in the NY distribution box in a follow on question there. 

If not, then go to the state interview and continue the NY return.  When you get to the "Changes to Federal Income " page, update/start the "Received Retirement Income" topic.  On the next page "Edit" the 1099-R and you will have the opportunity to exclude the pension income.  

[JoeHay--]

I could not find the opportunity to exclude the pension income.  NY 2020 is excluding NY Government Income and is incorrectly also deducting the 20k Other Pension deduction.

"If not, then go to the state interview and continue the NY return.  When you get to the "Changes to Federal Income " page, update/start the "Received Retirement Income" topic.  On the next page "Edit" the 1099-R and you will have the opportunity to exclude the pension income. " 

[gregnugget]

I just discovered the same error.  For some reason this year, Turbo Tax seems to be deducting another $20,000 from the New York State Employee pension amount, none of which should be taxed.  The $20,000 reduction applies to other pensions or withdrawals from Section 457 Deferred Compensation, at least I think so.  I've used Turbo Tax for years, and this is the first time I've encountered this error.  Anyone know how to fix this?

[JoeHay--]

HI Greg, this is now working for me.  Unfortunately I do not know what of the many things I tried solved this problem.   It is a bug in turbotax and the indicator to tell it to not deduct the $20k exclusion is not getting reset.   I tried deleting and reentering the 1099-R and even starting a new return without success.  Around January 14 it started working, maybe as a result of the automatic updates to the software or a combination of the above.  I am not sure how much you would need to to do to create a new return.  I would try updating your software closing turbotax and checking again.  And if the update doesn't fix it,  I would try starting with a new return. I hope this works and I hope that intuit finds and fixes this bug.  

One last note, I am using turbotax delux on my windows computer.

[gregnugget]

I deleted and reentered by 1099-R.  Still incorrect with the $20,000 exclusion.  Huge glitch by Turbo Tax this year.

[DaveF1006]

It depends.  Did you make any entries in your state return regarding your pension? Try these steps.

1. Log into Turbo Tax
2. Select the State Taxes tab on the left side of your screen.
3. As you navigate through the screens, you will see a screen that says changes to federal income.
4. Look under the heading Wage and Retirement Adjustments
5. The first entry below that will say Received Retirement income.  
6. You will make entries in this section that will determine the full taxability of your NY pension.

[JoeHay--]

Hi Greg, I thought of one more thing I tried. I do not have a lot of confidence that this will work.  I noted that my 1099R from NYSTRS did not have any boxes for the State it just had the Federal boxes.  So after deleting the 1099R I reentered it leaving all of the TurboTax state boxes blank.

Technically this could also be a bug in memory not being refreshed.  You may want to try deleting the 1099, closing down TurboTax and maybe even rebooting before reentering the 1099.  Again, I do not have a lot of confidence that any of this would work.  But while you are waiting for a response from Intuit it might be worth a try.

[jodonne5]

Greg, I am too having the same issue with TurboTax 2020 and the NYS retirement income.  I've never had this problem before. I also have deleted my file and started a new tax return and completed all the program updates, and to no avail, it still does not work.  Hugely disappointed in TurboTax this year.  This needs to be fixed.  I am a Mac user if it makes any difference.

[jodonne5]

that didn't work for me. :(

[GloriaL]

To ensure that your NYS pension is not being taxed on your NYS tax return you first need to be sure your pension in entered in the federal section properly.

To ensure you have this entered properly:

1. Open your TurboTax
2. In the Search box, type in 1099-R
3. Click on Jump to 1099-R
4. You will see your entry for your NYS pension
5. Click on Review
6. Click on Continue until you get to the screen Where Is This Distribution from? screen
7. Select the source New York State & Local Retirement System 
8. Click on Continue
9. Answer the follow up questions.
10. Click on Continue

After reviewing your entries, you should see a subtraction on your NYS tax return for the amount of your NYS pension.

@jodonne5

[jodonne5]

I’ve already done those steps correctly. I’ve been using TurboTax for years and I have not made any errors in entering data correctly.  This is a flaw in TurboTax that needs to be remedied quickly.  Disappointing 

[gregnugget]

I'm a Windows user, so it's across both platforms.  I manually edited the form to remove the $20,000 deduction but I know Turbo Tax will generate an error message when it does the error check.