From research I have done online I thought people over age 59 1/2 who receive a monthly pension income should get a $20,000 pension exclusion off of their taxable income in New York State. However, Turbotax online is not reflecting this exclusion in my NY State return for tax year 2021. Was this exclusion phased our or does it only apply if your pension is from certain sources (i.e. a government pension) or do I need to do something special for it to be applied ?
Yes, you are entitled to a pension exclusion up to $20,000. Make sure when you are asked about the type of pension in the federal interview, you answer that it is none of the above (select for deferred compensation 457 plans). This is if this is a private pension plan otherwise you will need to make an appropriate choice in this section.
Now there is some work you need to do in your NY State return. As you prepare your return, you will reach a screen that says Changes to Federal Income. Now go to Wage and retirement adjustments>Received retirement income>start or review.
Next select edit next to the 1099R seen in the Retirement Distributions Summary. Answer the questions that are asked. once everything is entered, then you should be able to see your deduction in the IT-201.
Please note that if you are using Turbo Tax online, you may not be able to view the IT-201 until you pay for the program. Not a problem because if you go to tax tools>tools>view tax summary, you will see your full income amount listed but your exclusion should appear under New York Subtractions. Also, if you are viewing your IT-201, your pension income exclusion should be recorded on line 29.