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Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

 
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AmyC
Expert Alumni

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

To qualify for the lump sum, you must meet these qualifications, according to Lump sum distribution credit:

Line Item Overview: If you take this credit, you cannot take the $50 senior citizen credit on this year's return or on any future return.
To qualify for this credit, all of the following must be true:
 

  • Your modified adjusted gross income less exemptions is less than $100,000;
  • You were 65 or older during the tax year;
  • You must have received a total, lump sum distribution from a qualified pension, retirement or profit-sharing plan; AND
  • You have not previously claimed this credit.

Supporting Documentation: Lump sum distribution credit worksheet and 1099R showing "Total Distribution" box checked

An example of a 1099-R and Lump Sum Distribution Worksheet can be found here.

 

Reference: Retirement Income - Ohio Department of Taxation

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7 Replies
DaveF1006
Expert Alumni

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

To clarify, is this a credit on your state return because the federal government does have the credit. if it is for state, what state?

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Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

The state of Ohio. 

AmyC
Expert Alumni

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

To qualify for the lump sum, you must meet these qualifications, according to Lump sum distribution credit:

Line Item Overview: If you take this credit, you cannot take the $50 senior citizen credit on this year's return or on any future return.
To qualify for this credit, all of the following must be true:
 

  • Your modified adjusted gross income less exemptions is less than $100,000;
  • You were 65 or older during the tax year;
  • You must have received a total, lump sum distribution from a qualified pension, retirement or profit-sharing plan; AND
  • You have not previously claimed this credit.

Supporting Documentation: Lump sum distribution credit worksheet and 1099R showing "Total Distribution" box checked

An example of a 1099-R and Lump Sum Distribution Worksheet can be found here.

 

Reference: Retirement Income - Ohio Department of Taxation

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Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

Thank you AmyC. I don't recall the software stipulating I needed to be 65 or older (I turned 63 in 2023) when it initially said I qualified. 

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

Section C does not state an individual must be 65 or older:

 

"(C) A taxpayer who received a lump-sum distribution from a pension, retirement, or profit-sharing plan in the taxable year and whose modified adjusted gross income for the taxable year, less applicable exemptions under section 5747.025 of the Revised Code, as shown on an individual or
Page 1

joint annual return is less than one hundred thousand dollars, may elect to receive a credit under this division in lieu of the credit allowed under division (B) of this section. A taxpayer making such an election is not entitled to the credit authorized under this division or division (B) of this section in subsequent taxable years. A taxpayer electing the credit under this division shall receive a credit for the taxable year against the taxpayer's aggregate tax liability under section 5747.02 of the Revised Code computed as follows:"

 

Section G states an individual must be 65 or older. 
 
I am confused as to which section I am to use

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

AmyC
Expert Alumni

Why is TurboTax telling me I am not eligible for a Lump sum retirement credit when I did not take the credit in a prior year and it was NOT through IRC 403(b) or IRC 457?

The document you reference is dated 2017 while the government website is updated regularly and is an official government website. You do not want to use old information that has been modified over time.

Please follow this link, Retirement Income - Ohio Department of Taxation, and select #2 and review the current lump sum laws.

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