WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 2025 retirement income exclusion

rambo2019 — Fri, 23 Jan 2026 16:24:17 GMT

There appears to be a calculation logic error in the Wisconsin state module for tax year 2025 related to the new retirement income exclusion on Form SB.

Issue Summary: TurboTax is including non‑qualified 1099‑R income in the Wisconsin retirement income exclusion even when the user explicitly indicates that the distribution is not from a qualified retirement plan.

Steps to Reproduce:

Enter a 1099‑R with distribution code 7 in Box 7.
- Payer is a life insurance company.
- Distribution represents whole life insurance dividends (non‑qualified plan).
In the TurboTax interview, when asked: “Is this distribution from a qualified retirement plan?” select No (correct for whole‑life insurance dividends).
Proceed to the Wisconsin return.
- Navigate to Form SB.
- Review the retirement income subtraction line.

Observed Behavior: TurboTax includes the non‑qualified 1099‑R amount in the Wisconsin retirement income exclusion on Form SB, despite the user indicating that the distribution is not from a qualified plan.

Expected Behavior: Under Wisconsin’s 2025 retirement income exclusion rules, only distributions from qualified retirement plans (e.g., 401(k), 403(b), IRA, pension) are eligible. Whole‑life insurance dividends are not qualified retirement income and should not be included in the subtraction.

TurboTax should exclude this income once the user selects “No” to the qualified plan question.

Additional Notes:

Form SB still displays the old exclusion text, suggesting the form update may not be fully synchronized with the updated calculation logic.
The misclassification appears to occur because the state module is treating all code 7 distributions as qualified retirement income, ignoring the user’s override.
This results in an incorrect Wisconsin subtraction and an understated taxable income amount.

Request: Please escalate this to the Wisconsin state‑forms engineering team for correction in the next WI forms update. The issue is fully reproducible and affects accuracy of the state return.

Re: WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 20...

AnnetteB6 — Sat, 07 Feb 2026 21:25:19 GMT

This is currently being addressed by the development team. Once a link to sign up for updates is available, the information will be shared here.

Re: WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 20...

rambo2019 — Sat, 14 Feb 2026 14:26:27 GMT

Hi Annette — thanks again for escalating this.

Just wanted to follow up and confirm that the issue has now been resolved. The Wisconsin state update released on February 13, 2025 corrected the Form SB logic so that non‑qualified 1099‑R distributions (such as whole‑life insurance dividends) are no longer included in the 2025 Wisconsin retirement income exclusion when the user selects “No” to the qualified‑plan question.

I’ve tested the scenario again after the update, and the calculation now works as expected.

Thanks to you and the Wisconsin forms team for getting this fixed.

topic WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 2025 retirement income exclusion in State tax filing

WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 2025 retirement income exclusion

Re: WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 20...

Re: WI Form SB – Non‑qualified 1099‑R (whole life insurance dividends) incorrectly included in 20...