topic RSA retirement systems is Alabama tax excemt in Retirement tax questions

RSA retirement systems is Alabama tax excemt

fd34max — Thu, 06 Jun 2019 09:28:20 GMT

It's true that many retirement distributions are exempt f...

IsabellaG — Thu, 06 Jun 2019 09:28:21 GMT

It's true that many retirement distributions are exempt from tax in Alabama. If you enter your 1099-R correctly in the federal section, it won't be transferred as taxable income to your Alabama return. There's no box to check or any information to add. If you find that you are being taxed on your pension, please respond with more information about your 1099-R including the distribution codes in box 7, and I can give you more specific directions.

Re: It's true that many retirement distributions are exempt f...

tuvi — Thu, 30 Jan 2020 20:16:00 GMT

Distribution Code 7

Re: RSA retirement systems is Alabama tax excemt

BillM223 — Thu, 30 Jan 2020 20:29:36 GMT

Alabama considers income from the State of Alabama Employees' Retirement System to be excludable from tax, but you have to manually indicate that the plan qualifies to be excluded.

Then enter the Alabama state interview and proceed to the screen entitled "About Your Retirement Distributions". The table will have one entry for each 1099-R that you have entered into the federal return.

For each pension, click on Edit in order to indicate whether the plan is taxable in Alabama or not.

When you click on the first pension, you will be presented with a new screen. The screen is asking if your pension is any one of these types. Note "the State of Alabama Employees' Retirement System", which was the point of the discussion above.

If your pension plan is any of these types, then answer "yes" at the bottom of the page. You will be returned to the previous screen with the Alabama income set to zero for this item, i.e., not taxable.

Re: It's true that many retirement distributions are exempt f...

Terrapinswimmer — Mon, 13 Apr 2020 22:18:01 GMT

I have code 7 and it is still showing on my Alabama return

Re: It's true that many retirement distributions are exempt f...

LeonardS — Mon, 13 Apr 2020 22:37:33 GMT

"Alabama considers income from the State of Alabama Employees' Retirement System to be excludable from tax, but you have to manually indicate that the plan qualifies to be excluded.

For each pension, click on Edit in order to indicate whether the plan is taxable in Alabama or not.

Re: It's true that many retirement distributions are exempt f...

ramsemm — Sun, 12 Jul 2020 12:01:33 GMT

Hi,

I have distribution code 1 on my 1099-R from the Retirement Systems of Alabama, and it is still showing up as taxable income for me as well. I read your comment about needing the manually specify that it is exempt, but I am not quite sure how to do that. Can you please explain?

Thank you!

Re: It's true that many retirement distributions are exempt f...

CatStr — Sat, 20 Mar 2021 20:43:33 GMT

I entered in Box 7: "7-normal distribution", just as on the paper 1099-R

The 2nd dropdown reads "No entry", and I see no code that addresses exempt income for Alabama.

Manually, I went to the TurboTax form view and added an "X" under # column. This appears to have changed the calculation.

Re: It's true that many retirement distributions are exempt f...

andersonh3152 — Sun, 13 Mar 2022 20:56:27 GMT

As I put in My 1099 R from the State of Alabama Retirement System by Alabama taxes go way up. Can you tell me how to correct this?

Re: It's true that many retirement distributions are exempt f...

DanaB27 — Mon, 14 Mar 2022 12:27:15 GMT

It depends if retirement is one of the incomes that are exempt from Alabama income taxation (see list below).

You can review and edit your entries during the state interview on the "About Your Retirement Distributions" screen when you click "edit" you can confirm that your distribution was from a plan that isn't taxed by Alabama.

Income Exempt from Alabama Income Taxation

United States Civil Service Retirement System benefits.
State of Alabama Teachers Retirement System benefits.
State of Alabama Employees Retirement System benefits.
State of Alabama Judicial Retirement System benefits.
Military retirement pay.
Tennessee Valley Authority Pension System benefits.
United States Government Retirement Fund benefits.
Payments from a Defined Benefit Retirement Plan in accordance with IRC 414(j).
Federal Railroad Retirement benefits.
Federal Social Security benefits.
State income tax refunds.
Unemployment compensation.
Welfare benefits.
Disability retirement payments (and other benefits) paid by the Veterans Administration.
Workman’s compensation benefits, insurance damages, etc., for injury or sickness.
Child support.
Gifts, money, or other property you inherit or that was willed to you.
Dividends on veteran’s life insurance.
Life insurance proceeds received because of a person’s death.
Interest on obligations of the State of Alabama or any county, city, or municipality of Alabama.
Interest on obligations of the United States or any of its possessions.
Amounts you received from insurance because you lost the use of your home due to fire or other casualty to the extent the amounts were more than the cost of your normal expenses while living in your home.
Military allowances paid to active duty military, National Guard, and active reserves for quarters, subsistence, uniforms, and travel.
Subsistence allowance received by law enforcement and correction officers of the State of Alabama.
All retirement compensation received by an eligible fire fighter or a designated beneficiary from any Alabama fire fighting agency.
All retirement compensation received by an eligible peace officer or a designated beneficiary from any Alabama police retirement system.
Death benefits received by a designated beneficiary of a peace officer or fireman killed in the line of duty.
Income earned while serving as a foreign missionary after first serving 24 months as a missionary in a foreign country.
Compensation received from the United States for active service as a member of the Armed Forces in a combat zone designated by the President of the United States.
An amount up to twenty-five thousand dollars ($25,000) received as severance, unemployment compensation or termination pay, or as income from a supplemental income plan, or both, by an employee who, as a result of administrative downsizing, is terminated, laid-off, fired, or displaced from his or her employment. Additional information can be found on the Exempt Severance Pay page.
Beginning January 1, 1998, all tuition benefits received from the Alabama Prepaid Affordable College Tuition (PACT) program.
Alabama 529 Savings Plan.
Beginning in 2018, foreign income to the extent such income is exempt from federal income tax pursuant to section 26 USC 911.

(Alabama Department of Revenue)

@andersonh3152

Retirement on Federal taxable, but amount is showing up on State. How do I correct?

Annie2626 — Fri, 23 Feb 2024 20:53:06 GMT

Retirement taxable on Federal return but not State. How do I correct and remove amount on state!

Re: It's true that many retirement distributions are exempt f...

Annie2626 — Fri, 23 Feb 2024 20:53:44 GMT

distribution code 7

Re: Retirement on Federal taxable, but amount is showing up on State. How do I correct?

DaveF1006 — Fri, 23 Feb 2024 22:28:57 GMT

To clarify, what state?