Should do a KY schedule P for my KY retirement exemption

It depends.  There are two reasons to file a Schedule P for KY:

1. Your pension amount is over $31,110 (KY excludes all pension below that amount from taxable income, and KY Schedule P is not necessary when this is the case)
2. You have a percentage calculation associated with your pension that determines how much is taxable.  These percentage amounts are generally from teachers and other government employees.  However, if your pension does not have a percentage amount associated with it, Schedule P is also not needed.  Amounts above $31,110 will be taxable.  If there is a percentage amount, then the amount of taxable pension will be calculated with the percentage amount on Schedule P.  (TurboTax will generate these questions when this form might be needed, otherwise all pension is automatically excluded).

[Edited 3/27/2020 to conform to current law]

Thanks for the info--but I have a different situation.  After retiring from the military, I moved to KY and worked from 2010 until 2018, for a total of 10 years ( I bought a year of service).  Turbo tax won't let me put in both a pre 1998 and a post 1998 retirement.  How do I bypass that?

It depends.  First, @gguerin602, I wanted to point out that legislation in 2018 lowered the automatic pension amount from 41,110 to 31,110 and therefore I have edited my content in the above answer to reflect that information.

 

Your situation is a bit different, but the question on the KY Schedule P interview basically asks if the retirement is from before 1998 or since Jan. 1, 1998 or after that point.  And that's where all of the service credits come into play to determine how much of the pension is potentially taxable.  (It's a convoluted calculation).  

 

So, the question is if you received two separate retirement form documents.  If you did, you will treat both as if they were "after" December 31, 1997.  But for the (military) one that had all of the service credits from before 1998, you will apportion by percentage:  100% nontaxable.  The other Form 1099-R will be pro-rated by service percentages (if applicable).

 

The caveat is if there is a specific percentage given to you on the 1099-R (sometimes this is the case).  You must use that percentage for that 1099-R if that's the case.  

 

Comment back if you see something different.