I don't know how much of my RMD qualifies for the
pension and annuity income exclusion.
How do I find out?
I am a bit confused with this exclusion. The 2019 TurboTax Premier Program claims all of our joint Social Security Benefits as an Exclusion on our Colorado Return and will not allow me to adjust it to $24,000. Our combined SS Benefit is over $31,000. Is all of our combined SS Benefit excluded from taxable income on our state return because we are over 65?
In Colorado, Social Security benefits that are not taxed by the federal government are not added back to adjusted gross income for state income tax purposes.
Those 65 and over can exclude up to $24,000 of Social Security benefits and qualified retirement income.
So it's quite possible none of your Social Security benefits are taxable in Colorado.
I'm not a CPA and this is my first time using TurboTax. I'm using the 2019 Premier version. As I understand the Colorado Pension & Annuity Exclusion, each individual can exempt up to $24,000 per year on his/her Colorado State return for retirement income such as IRA distributions and Social Security benefits. For married couples, each can exempt up to $24,000, for a total of $48,000 per couple.
So my layperson answer to your question, Alan1220, is that I believe that your combined SS benefit is excluded from taxable state income in Colorado.
I wonder if there's a bug in the program, however. I personally received around $45,000 and my spouse received $14,000. I entered this clearly (indicating everything by name). TurboTax is giving us a $48,000 exemption, and that doesn't seem right to me.
Am I right, or is TurboTax?
You have received the maximum amount of pension and annuity subtraction available in 2019. Your combined social security benefits are not excluded from your Colorado state income. Only social security retirement benefits included in federal taxable income qualify for the pension and annuity subtraction. According to the Colorado revenue page, the amount of subtraction is computed separately for each spouse. If a taxpayer’s qualifying pension and annuity income exceed the maximum allowable amount, the excess income cannot be subtracted either by that taxpayer or their spouse, even if the amount of the spouse’s pension and annuity income is less than the maximum allowable subtraction amount.
Re: "I wonder if there's a bug in the program, however. I personally received around $45,000 and my spouse received $14,000. I entered this clearly (indicating everything by name). TurboTax is giving us a $48,000 exemption, and that doesn't seem right to me.
Am I right, or is TurboTax?"
As a follow-up to the above question, this was a user error (mine) in that I was not supposed to enter my and my husband's Social Security income on the "Other Pension and Annuity Income Exclusions" window. I think the user interface could be clearer here, to avoid this possible mistake, by stating clearly that previously entered Social Security income had already been taken into account.
Anyway, as stated previously, for married couples, each can exempt up to $24,000, for a total of $48,000 per couple. But if one party has, say, $14,000 to exclude and the other party has $45,000, you cannot simply combine them to the maximum of $48,000 per couple. Instead, your combined exemption is $14,000 + $24,000, or $38,000.
That is correct as each spouse's subtraction amount is figured separately.