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?

[Knewman331]

Irene2805:

Herein lies the flaw:  When I click this box it highlights red not blue (because the distribution code is 2).  Since it highlights it as red it will not accept the X and update the return (unless there is a further work-a-round to bypass the error message it is creating).  I tried this a while back and go this result.

[scottg29]

I checked the box.  I got to the state review, shows the check as an error.  Will not allow me to continue return until I uncheck that box.

[Knewman331]

I went even further and in Forms view and on the F107 Worksheet changed the distribution code from 2 to 7 and checked the box.  It did not show it as an error but continued to list the pension as MS taxable income.  I was hoping to leave the code as 2 on the federal side and just change it to 7 for the MS return.  It still considered it taxable.  The only way to remove it as income in MS is to change the distribution code from 2 to 7 on the Federal side/return.  This is not acceptable to me as it is not a correct representation of my 1099-R.  There is definitely a glitch in the Turbo Tax software.

[DaveF1006]

Did you perform these steps initially in the interview mode?

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

[scottg29]

Dave,

This continues to be a canned response.  Again, I keep responding the same thing back.

I NEVER get to this point in the interview.

"6.  Answer the next questions until you get to the Where Is This Distribution From? screen"

Thanks.

[AmyC]

Your code 2 can throw the program when you are below retirement age. This worked for others in your situation.

Tell the federal it is a regular pension (you probably already did):

When you went through the federal entry screen of the  1099-R, it asked questions and commented that with code 2 there was no extra penalty. It asked if you were a safety officer, what did you do with the money - cashed it, any periodic payments, yes- regular payments from this retirement account, payment start year, 2020 or before selection, describe the taxable amount, yes, box 2a is taxable amount.

Tell the state it meets the service requirements: Move to MS return:   Proceed to the screen with the title Enter Any Other Income or Losses. Enter Service requirement pension adjustment and the amount of the distribution as a negative number. 

@scottg29

[scentophile]

This did not work either. It actually doubled my MS tax! I’m about to change the distribution code from 2 to 7 even though my husband is below retirement age. It’s the only thing that has worked properly out of this whole thread. Any other last minute ideas before I file??

[SteveInMS]

We bought H&R Block tax software and I’ve requested a refund from Turbo Tax since they can’t fix the problem and none of the “fixes” work with the desktop version of the software. 

[ReneeM7122]

To get the State exemption, you will first have to enter the necessary information in your Federal Income tax return and then in the State income tax return.

Here are the steps to enter your exempt State retirement income:

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 State Employees (or applicable choice) and enter the information requested:
8. Click on Continue
9. Click on From a Qualified Plan
10. Continue answering the questions

On the State return portion: 

1. At the Changes to Federal Income page, scroll down to Received retirement income, click Start (or Update)
2. At the Retirement Distributions Summary page, click on Edit State
3. If no additional information is required, click on Continue
4. Click on Done

@SteveInMS

@scentophile

[Knewman331]

This response has been given over and over again and it does not work. We have moved on, bought H&R Block software and are getting a refund or filing a credit card dispute for the Turbo Tax software.  We’ve already completed and filed our taxes with H&R Block software. Turbo Tax has lost a long standing customer. 

[scentophile]

Amy can you clarify this statement? not sure I understand what you mean. 

“Your code 2 can throw the program when you are below retirement age. This worked for others in your situation.”

[KrisD15]

@AmyC mentions code 2 from the 1099-R I believe, but she goes on to explain what to do: 

"Tell the state it meets the service requirements: Move to MS return:   Proceed to the screen with the title Enter Any Other Income or Losses. Enter Service requirement pension adjustment and the amount of the distribution as a negative number."

[MS-Tammy]

Thanks for the information on how to correct this issue with retirement income and the state of MS tax return.  Breathing a sign of relief right now.

[Mellie1]

I just spoke to Linda at PERS and she said the same thing about TT.  She said that to make it correct, I have to file manually.  She said that they do not even send a 1099-R to the state tax office. So, I'm wondering if changing the distribution code to a 7 on the state form affects the federal form.  If it does, would it cause a red flag and be picked up for an audit with the federal?

[AmyC]

A code 7 is a regular pension distribution, you don't want to change it. You can keep the code 2  and efile your return with these steps. Tell the state it meets the service requirements:

1. Move to MS return:   
2. Proceed to the screen with the title Enter Any Other Income or Losses.
3. Enter Service requirement pension adjustment and the amount of the distribution as a negative number."