topic Arizona allows a $2500 deduction for military pensions. How do I take that credit? in State tax filing

Arizona allows a $2500 deduction for military pensions. How do I take that credit?

Scott-in-Arizona — Thu, 06 Jun 2019 16:03:56 GMT

For 2017 I am using the Arizona form 140PY resident form. Been through that form and the full year resident form but have not found any instructions for taking the $2500 credit.

This is an "Other Subtraction Adjustment" on the Arizona...

KittyM — Thu, 06 Jun 2019 16:03:57 GMT

This is an "Other Subtraction Adjustment" on the Arizona form.

Start and Continue through your Arizona Resident or Part-Year Resident Return until you reach the screen "Any Other Subtraction Adjustments?" Say Yes.
Enter the description of your subtraction and the amount, then Continue.

From the instructions for Arizona Form 140PY:

"A. Exclusion for U.S. Government, Arizona State, or Local Government Pensions If you receive pension income from any of the sources listed below, subtract the amount you received or $2,500, whichever is less. Include only the amount you reported as income on your federal return and included on line 23 in the ARIZONA column. If both you and your spouse receive such pension income, each spouse may subtract the amount received or $2,500, whichever is less."

A link to the Instructions is here: https://www.azdor.gov/Portals/0/ADOR-forms/TY2017/INDIV-F/FORMS_INDIVIDUAL_2017_140PY_Booklet.pdf

Re: Arizona allows a $2500 deduction for military pensions. How do I take that credit?

0726 — Tue, 03 Mar 2020 22:41:33 GMT

That deduction was posted to $3500.00 in early. Done during State of the Union address. Can you update Turbo Tax for the AZ return? Pls advise soonest. Peter

Re: Arizona allows a $2500 deduction for military pensions. How do I take that credit?

DMarkM1 — Wed, 04 Mar 2020 13:36:02 GMT

You are correct and TurboTax is up-to-date on this one. First, be sure in "My Info" you have selected you are former military and retired and resident of AZ. Next, when you enter your military retirement 1099-R the follow on question asks what state you are in (AZ) and where did this distribution come from? About 3/4's down the list is "Retired or Retainer Pay from the Uniformed Services..." Select that box and finish the interview questions. Now when you go back into the AZ interview you will see the $3500 deduction about 5 pages in.