Working on the Iowa retirement income that is not reportable to Iowa doesn't populate the 1040 for Pensions or IRA Distributions any body else have this problem?

[JamesG1]

In TurboTax, in the Iowa state income tax return, at the screen Iowa Retirement Income, I am able to report the Iowa Retirement Income Exclusion.

Learn more states:

Retirement Income Exclusion

If you or your spouse receive a pension, an annuity, a self-employed retirement plan, deferred compensation, IRA distribution, or other retirement plan benefits, you may generally exclude from Iowa income tax all of the retirement income that is taxable on your federal return. The Roth conversion income, included in net income, is eligible for this exclusion.

To take this exclusion the pensioner or retirement income recipient must meet one of the following conditions:

• a. 55 years of age or older on December 31, 2025, this is handled automatically by the program or
  b. disabled, or
  c. a surviving spouse or a survivor having an insurable interest in an individual who has qualified for the exclusion in 2025 on the basis of age or disability. A survivor other than the surviving spouse is considered to have an "insurable interest" if the survivor is a son, daughter, mother, or father of the annuitant or pensioner.
  d. for tax years beginning on or after January 1, 2024 a surviving spouse may exclude amounts received from a deceased spouse's pension regardless if the deceased spouse was 55 years of age or older or disable if the pension was from employment in a protection occupation, or as a sheriff, deputy sheriff, firefighter, or police.

Note: Only enter amounts here that should be excluded from the Iowa income tax return. The program is automatically exempting retirement income for Iowa purposes if the age or disability requirements are met. You only need to make an entry here if your retirement income is taxable to a different state other than Iowa or you meet the exception outlined in "d" above.

Also, pensions received from DFAS that represent military retirement pay will appear in this field. These are excluded on a separate line of IA 1040, Schedule 1.

[barbnich]

This is copied from Iowa 1040 Expanded Instructions for Schedule 1, Line 7, regarding the modification to subtract retirement income from federal taxable income:

Note:  Distributions from the following plans are not eligible for the retirement income exclusion:

(1) Nonqualified deferred compensation plans  
(2) Nonqualified annuities - Most nonqualified annuity distributions will report a code of “D” in box 7 on federal form 1099-R

The program includes all 1099-R distributions, regardless of whether they are IRA Code 7 (qualified) distributions, or whether they are non-IRA Code D (non-qualified) distributions.  

I'm thinking the non-qualified distributions should not be included.  I used override to change the amount, but the program has changed it back again.  In the end, it makes no difference to my return, as the Iowa taxable income is a negative regardless of whether or not the non-qualified annuity income is included on Schedule 1, Line 7.

Am I missing something?

Barb

[BillM223]

Please see my response on your other post at this Community location.

@barbnich