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You are partially correct. Retirees with at least 5 years creditable service as of August 12, 1989 are exempt from state income tax on their military retirement pay, due to the Bailey Decision. All other retirees qualified for the $4,000 (or $8,000) exclusion until 2013, when the provision was eliminated.
If you qualify under Bailey, Turbo Tax will ask you about the Bailey Law for North Carolina in the Federal Taxes section, when entering your retirement income.
After entering the data from your
1099-R for your retired military pay, there will be several follow-up
questions. Look for a page titled "Where is this distribution
from?" The software will automatically have
"None of the above" checked. Check the first item, "Bailey
settlement retirement benefits", then 'Continue'. At this point,
you should see your NC Tax Due drop to reflect the non-taxability of the
1099-R.
@bg.misanthrope I agree that this 2-year old post will not always be applicable
........BUT
HB 103 was passed by the NC house in 2017...then it went to committee.
From the following NC status page, it has not been passed by the senate:
<old link no longer valid>
________________________
OF course, they could always tack that into some other bill I'm not aware of....but another BUT:
The NCDOR is still using the Bailey Settlement, 12 Aug 1989 as the 5-year vesting date in their own literature,
.... and their actual 2017 D-401 PDF instructions for 2017 show the same thing...so I doubt HB-103 has gone thru all the required steps in any other form (yet):
Great! Thank you...
How do I get TurboTax to exclude my military retirement pay from my North Carolina income?
Great information! Thank you!
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