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?

[MokiDuke]

Folks--BillM223 has the correct fix-- for retirement, you don't get a W2 ofcourse, it's a 1099R, probably a CSA Form 1099R.  On line 7, just change the code from the 2-nondisability or whatever it says, to 7.  It seems to fix everything and your MS taxes wont tax you on your retirement ...

[DR2021]

PERS retirement funds can be subject to federal tax, but they are not taxed by the state of Mississippi for a resident that lived in the state of Mississippi the entire tax year. (Other states may tax this).
Turbotax has been getting this wrong in situations. In the 2021 version there is a small checkbox in the MS 1099-R section labeled "I qualify to exempt this income from Mississippi tax".  I found that has to be checked to properly not tax state employee retirement income for a retiree who lived in state. 

I really dislike that Turbotax is relying on that checkbox to do that. Honestly, this is why we use TurboTax, to not have to dig down into the nitty gritty of all of this, and have the software know to do it for us.

It makes me wonder how many other places there was a small checkbox that I was unaware needed to be checked in some specific situation to correctly calculate my taxes?

This needs to be changed to user questioning in the software as income is entered, as opposed to a small checkbox. Other tax softwares are getting this correct from the start, without having to jump through these hard to notice hoops.

There is a good resources by PERS explaining your 1099-R that explains the MS tax situation on it.
https://www.pers.ms.gov/Content/1099/Understanding_your_IRS_Form_1099R.pdf

[Knewman331]

We gave up on this in 2020. We moved on to H&R Block tax software which handles this issue correctly.  Second year using it and we are completely satisfied. 

[Wizz60]

Turbo Tax did this to to me last year, the software listed my wife’s PERS of Mississippi as taxable income. The State Revenue contacted me and I had to do an amendment. This year 2023, I filed, I couldn’t see the results until after I printed the forms and I realized the program  had done the same thing again, but Turbo Tax got their money!

[Knewman331]

We stopped using TurboTax two years ago because they never addressed this issue. We’ve been using H&R Block software (this is our third year) and it recognizes MS state retirement as non-taxable state income. 

It amazes me that Turbo Tax still has not fixed this glaring problem. There are a bunch of morons at the helm apparently. 

[DR2021]

So its still not intuitive, but there is a way to correct this in Turbotax.

The situation I had was wife's retirement 1099-R, its got box 7 lised as 2, which is the "early retirement". As we know, while PERS retirement income is not taxed by the state of MS, it is still subject to Federal taxes in most cases. Turbotax will apply MS taxes upon the initial fillout of this form, which is a little maddening that this issue hasnt been cleaned up and at least when the initial 1099-R is entered, questions asked to get the taxation correct on it.

However, once you enter the MS state tax part of the program, there is a checkbox under the 1099-R section there for "I qualify to exempt this income from Mississippi tax". When I check that box, the amounts clear up, and the info is then applied correctly.

So, there is a fix, but its not intuitive and certainly not the "Walk you through" process that most people use TurboTax for. I hope next year this process is made a little more seamless.

[wagonerc71]

There is a glitch in the online version and they will not fix it as I just called about it last week. Since the "desktop" version still works (my computer is too old to work with the desktop version) they are not fixing the Louisiana online version (told to me my a very nice agent whom I spoke with) so we are screwed. I am a retired federal employee and the "work around" they tried did not fix it. So here I am trying to figure out how to file my state taxes as the federal one has already been filed. I have used Turbotax for at least 8 years and this was more than disappointing. I will not use them next year!!!!!

[wagonerc71]

Yes it has worked for me before, but they have a glitch in the online version, which they have not fixed and want you to use the desktop version as it works.  I am REALLY upset as can't use the desktop with my aging computer.

[SteveInMS]

We switched to H&R Block’s software 

[MarilynG1]

Did you get this screen in the state interview in TurboTax Online to exempt 1099-R income in Mississippi?

@wagonerc71 

[wagonerc71]

My problem is it is not exempting my federal retirement amount, which (like the MS retirement) is exempt from taxation in the state of Louisiana. There is a "box" where you put in your retirement date and although the prompt shows up "enter your retirement date" there is no shaded square, empty line, or spot to enter it on the form.  I am having to do Louisiana's by paper form so that it also exempts our social security and my federal retirement, a difference due of $460 versus what it should be due $140. I am sure Louisiana would not catch it on our forms and "correct" it. When I try to put in federal retirement part, it says "duplicate" entry. I called and talked to a very nice Turbotax expert who told me that they knew of this glitch several months ago and did not fix it because it is "only in the online version" and you can use the desktop version which is correct. Since I am a MAC user and only in Safari version 10 point something, my computer will not support desktop. I had used desktop versions for over 5 years and then I had to go to online as my computer is too old. Looks like the end of the road for using Turbotax for us.  Big companies don't have to fix mistakes I guess.......

[wagonerc71]

I am looking at eFile and they can do a paper state and I can mail it, but I still have to go through and enter all of the federal information again and their format is a little more obtuse than Turbotax. Thanks goodness Louisiana's tax is not due until mid-May and they require sending in a federal copy anyway. Louisiana has an electronic option to file, but my hubby can't remember his username or password and we submitted a request to reset it over a week ago with no response from the state yet.....