topic KY exempts certain government pensions for those retiring prior to Jan 1 1998. In the past TurboTax would ask whether part of a 1099R was from that form of employment but I'm not seeing that now. I'm using the desktop version. in Get your taxes done using TurboTax

KY exempts certain government pensions for those retiring prior to Jan 1 1998. In the past TurboTax would ask whether part of a 1099R was from that form of employment but I'm not seeing that now. I'm using the desktop version.

Catee — Wed, 25 Feb 2026 15:54:58 GMT

Re: KY exempts certain government pensions for those retiring prior to Jan 1 1998. In the past Tu...

JamesG1 — Wed, 25 Feb 2026 16:41:15 GMT

In TurboTax Desktop, in the Kentucky state income tax return, the entry to the Pension Income Exclusion Worksheet was done automatically. I am able to confirm that by selecting FORMS in the upper right hand corner of the screen and selecting Pension Worksheet in the lower left hand corner.

In addition, the Pension Income Exclusion is reported on line 8 on the Kentucky form 740.

Kentucky Schedule P Instructions states:

Types of Income Subject to Exclusion

All pension and retirement income paid under a written retirement plan is eligible for exclusion. This includes pensions, annuities, IRA accounts, 401(k) and similar deferred compensation plans, death benefits, and other similar accounts or plans. As a general rule, if the income is reported on the federal income tax return, Form 1040 or 1040-SR, line 4(b) or 5(b); Form 4972; or is a disability retirement benefit or deferred compensation distribution reported on Form 1040, line 1, then it qualifies for the exclusion.

Re: KY exempts certain government pensions for those retiring prior to Jan 1 1998. In the past Tu...

Catee — Sat, 28 Feb 2026 16:06:57 GMT

I think you misunderstood my question. I wasn’t referring to the general $31,110 exclusion but a separate exclusion that is reported on Schedule P. Notice line 9 on Schedule M specifically states “(enclose Schedule P if more than $31,110 per taxpayer).”

Part I line 1 of KY Schedule P includes the following: “Enter on line (a) or (b) the amount of federal, Kentucky state and local government pension income attributable to service credit earned before January 1, 1998.” There follows a few other items that can be excluded. Below this statement, using either section (a) or section (b), one is able to determine their service credit and therefore exclude a portion of their pension that is above and beyond the $31,110 general exclusion.

I did find how to accomplish this in TurboTax. However, I would never have figured this out if I wasn’t aware of this exclusion. Perhaps TurboTax personnel should make finding state deductions easier.

Here are the steps required in the Kentucky state section of TurboTax:

Select “Update” in the Adjustments section
Skip the “addition to income” sections (I had to skip two)
At the “Any Other Kentucky Subtractions?” section, check the box for “Other Subtractions”
Skip the first screen where a description and amount are requested
Now you are at the “Government Pension Income” section which states the other types that can be excluded. Click the appropriate button(s) for the individual(s) who earned the credit
You will then be guided to enter information pertaining to the retirement date, pension amount, and the number of months of service credit after which TurboTax does the Schedule P calculations
This amount is transferred to line 9 of Schedule M where it is included with the subtractions from taxable income on form 740, line 8.