Turbo Tax is taxing my retirement income for the state of Mississippi. By state law, this is not state taxable income. Is there a box I missed?

[Canon951]

Nothing is in box 16 and I've answered all the questions a dozen times.  Recurring payments etc. 

[Knewman331]

If what these Turbo Tax "experts" are saying is true, then they have had defective software for over the last decade, since all of my returns for the last 10-12 years have included state retirement 1099-Rs with code 2 with the Turbo Tax software indicating and applying it as not taxable in the State of MS.  Their negligence has the potential to create a major liability for a lot of people.  Are there any attorneys out there?  A class action may need to be started.

[scottg29]

Dawn,

I never see this "When you go through the state return, qualified retirement income can be excluded from your taxable state income.   There is a section (Differences or Changes to Federal Income) where you can exclude taxable federal income from your taxable state income.  "  when going though my state return.

Again, when filing the prior 3 years returns with TurboTax (these included state retirement income), they were a breeze, never had any issue.  I did go reopen my 2019 return, and after (forced) program updates, now states I owe state income tax on my retirement.  That is simply not correct.  

I am running the desktop version of TurboTax Deluxe, Windows edition.

Thanks.

[dukes909]

@BillM223 continues to delete my replies so I will keep posting them here until they address this situation:

There are only 2 possibilities for what we are seeing this year with TurboTax asserting state retirees must pay taxes on their benefits in Mississippi prior to age 59.5:

1) Every year, prior to this one, TurboTax has calculated taxes for state retirees benefits in Mississippi INCORRECTLY and this year they suddenly have fixed the bug in their program so that the calculated taxes due are correct. (By the way this also means that every state retiree that did not pay taxes on their benefits prior to this year owes the state of Mississippi back taxes with penalty.)

2) Every year, prior to this one, TurboTax has calculated taxes for state retirees benefits in Mississippi CORRECTLY and this year they suddenly have a bug in their program so that the calculated taxes due are incorrect.

It can only be one of the above.  Which is it TurboTax?

Regards

[Canon951]

Just following up this morning on this. TT, I was hoping someone could give us an update on whether TT plans to address this matter. As posted above, it's either wrong this year or has been wrong all the years past.  I have used TT for years and have been pleased up until this tax year. I was wanting to give you time to address it before I move my taxes to another service. An update would be appreciated for all involved. The State of MS has thousands of retirees that this will affect. It's currently being discussed among retirees now that this is a problem with TT so it's in everyone's best interest to get it resolved. Thanks. 

[Dixiefire53]

I talked to the Mississippi Department of Revenue yesterday.  They said if Turbo Tax pulled income tax on your 1099-R from PERS when your distribution was marked 2 you overpaid your state tax because the state does not tax your PERS income. (No age limit for the state of MS retirement program)  If Turbo Tax overpaid your state individual income tax you will have to file an amended return for each year you overpaid.  

[SteveInMS]

I spent 2 1/2 hours on the phone with a customer service representative from TT on Monday.  She sent a follow up email with a "fix" that doesn't work.  I have lost all faith in Intuit and TurboTax that they know what they are doing.  They need to hire tax professionals who know how to read tax laws.  I agree with the prior comment regarding this problem.  If it's always been this way and we've filed out taxes incorrectly, they have created a massive tax liability for anyone who reported retirement income with the code2.  I wonder how they are going to get out of paying our penalties since they guarantee their product?

I've tried to get a refund for the 2020 software but so far no luck.  Either fix the problem or give us our money back so we can go to another tax program that actually calculates our taxes correctly.

I called TT after I posted this and went through the same thing as on Monday.  No help and this is the email response I got:

Mississippi does not consider early distributions Retirement income. As a result it is treated as taxable. I am unable to find out if they have any exclusions or exceptions, i.e. COVID related. I would suggest calling the MS Department of Revenue.

Thank for calling TurboTax

Steve, CPA

They don't seem to care that Mississippi has always considered it retirement income in the past or else their software has always been faulty until now.

[scottg29]

I do appreciate the response(s)  from TurboTax employees.  However, none of the suggestions appear to be solving the issue.

We've seen response(s) from these TurboTax experts,  DaveF1006, ReneeM7122, DawnC, BillM233 .

I would like someone from TurboTax to read each response in this thread, see the frustration from your customers.  Then tell us straight up, either, we are going to look into this or it is a non issue and we are dropping it.  I like TurboTax, been using it for 22+ years or more, and I want to stick around for a resolution.  People  in this thread are saying other tax software is working fine.  TurboTax, just tell us something.

Thanks.

[dukes909]

Scott, I will tell you my experience.  I talked with a TurboTax expert one week ago tomorrow for 2.5 HOURS trying to resolve this.  When she couldn’t (!), she said she would escalate it to another tier, and asked me to be sure to complete the survey I would receive rating her help.  To date no one has called me back, and I have received no survey (probably just as well).  It is evident she deleted my call so she won’t be penalized with a poor review.  Maybe they will come through but they have also deleted several of my posts (Hello @BillM223 !). Good luck with them, I have moved on to competent tax professionals.

[dukes909]

For everyone still following this thread, please check out the reply I received over in this other thread:

https://ttlc.intuit.com/community/retirement/discussion/re-is-turbotax-taking-out-state-taxes-in-mis...

Basically TurboTax is now saying they were wrong before.  Would @BillM223 like to weigh in ?

[DaveF1006]

Here is the best and only way to exclude your Mississippi income from your 1099R so that it is reported properly. 

On the  Federal Income Tax  portion:

1. In the search or find box, type in 1099-R
2. Click on Jump to 1099-R
3. Scroll down to Retirement Plans and Social Security
4. At IRA,401(k), Pension Plan Withdrawals (1099-R), click Start (or Update)
5. Enter your 1099-R or if you have entered it, click on Edit then Continue
6. Answer the next questions until you get to the Where Is This Distribution From? screen
7. Select the source Mississippi Employees and enter the information requested:
8. Click on Continue
9. Click on From a Qualified Plan
10. Continue answering the questions

[Knewman331]

What part of this do you not understand?  Have you even bothered to read other people’s’ responses on here?  None of those questions or options are available or asked in TurboTax Deluxe 2020 during the entering of the 1099-R information!

[DaveF1006]

I have just tested this in my Turbo Tax Deluxe Desktop program.  I entered a 1099-R for retirement income. While it is true the same questions did not appear as I listed earlier, the income from the1099-R never appeared as taxable income in my Mississippi return.  In fact, it appeared as federal income in the federal 1040 BUT NOT in the Mississippi form 80-105. it seemed like the program automatically detected it was retirement income and not include it.

Here is what I want you to do. 

1. Go to the forms mode in your Turbo Tax Deluxe
2. Look at the federal 1040 line 11
3. Now look at line 13 of your Mississippi 80-105 return.
4. Are the amounts the same or do they differ by the amount of your pension?
5. If the amounts are the same, you may need to delete your 1099-R and the Mississippi state return just to refresh the program.
6. Also, you may need to update your Turbo Tax software. Hopefully you have a recent product as some of the CD's sold in the retail stores aren't that reliable.  I don't know if that is your specific issue but a suggestion never-the-less.

[scottg29]

Dave,

I just tried this, and still get same results.  Yes, my software did have an update, still nothing changes.  My Mississippi Pension is being taxed.  I did get a retail store CD, how do I know if I'm getting all the updates?  If the CD isn't reliable, what is?  

As stated by many in this thread, I've used TurboTax for many years, been retired for 4 years, never had this issue in the previous 3 years with a Mississippi State Government retirement income.

[Irene2805]

I cannot duplicate your issue -- for me TurboTax is not including retirement income in the taxable income on the MS return.

Here is a workaround to try:

1. Go into Forms Mode by clicking on the Forms icon in the top right of the blue bar. 
2. In the Forms in My Return list on the left, under Mississippi click the F107 Worksheet (MS Income/Withholding Worksheet). [The form will appear on the right side of the screen.]
3. On the worksheet, scroll to the Federal Forms 1099-R section.
4. Mark the box that the 109-R is not applicable to the MS return,  [See screenshot below.]
5. To return to the interview, click on the Step-By-Step icon in the top right of the blue bar.  

@scottg29