incorrect NYS pension exclusion

[pinokeeo]

I understand that my pension was a tax deduction for my employer.I think that because I am getting it monthly .Unless this is a tax break am I the one that pays tax on this?

[CatinaT1]

Yes, you pay the tax on this.

[cpuzben]

Please help, I already submitted the NYS and it gave the exclusion of 20,000 which I dont think I am entitled too. This is not a gov or NYS pension.  Now the submission is pending with only two days left to file. How can I amend and fix it.  Incidentally I also did a test on Turbo Tax and when I entered NO to not review it automatically put the exclusion as well. I had to go in and say yes to review then take the 20,000 out.  

Are all seniors over a specific age entitled to this exclusion?  Its bizarre this is happening. 

[Critter-3]

First take a deep breath ... then there is nothing you can do until the return has been accepted or rejected.   If rejected you can review the return and file again.   If accepted you must wait for the state to fully process the return and only then can you amend it if needed ... you have 3 years to amend so again take a deep breath.  

[Mamselle]

In New York, all seniors over the age of 59 1/2 are entitled to the $20,000 pension exclusion.  Government and NYS pensions are not taxed at all in New York state.  See: https://www.tax.ny.gov/pit/file/information_for_seniors.htm

[LenaH · Accepted solution]

The adjustment to exclude $20,000 from your NYS income is done under Wage and retirement adjustments. This is found on the NYS screen Changes to Federal Income. 

You can follow these steps in TurboTax to exclude $20,000 of your retirement income:

1. Open your return.
2. Click on State in the left hand column.
3. Click Edit next to your resident return.
4. Click Update or Start next to Adjustments to federal income on the screen You Just Finished Your New York Return.
5. Scroll down to Wage and retirement adjustments.
6. Click Start next to Received retirement income. 
7. Continue to the screen Governmental Pension Exclusion.
8. Enter $20,000 for the question, Did you receive a pension or other distribution from a NY State or local government pension plan or federal government pension plan? 
9. The next screen will show your pension deduction summary. Only $20,000 should be deducted from your pension. 

Per NYS, taxpayers over age 59 1/2 can deduct up to $20,000 of certain federal, NY state or local government pensions and certain IRAs on their New York return. If married filing jointly, each spouse may deduct up to $20,000.

@Mamselle

[cpuzben]

Thank You @AmyC  @LenaH  @Mamselle  @Critter-3  after reading the instructions again I realized I read it wrong.  I think its all good now.  Thank You for explaining it really helped 

[cpuzben]

Thank You @Mamselle 

[AmyC]

An IRA qualifies for the $20,000 exclusion according to Common questions and answers about pension subtraction | NY DOR states on page 2:

• TIAA/CREF Supplemental Retirement Annuities (SRA);

• 403B plans;

• Group Supplemental Retirement Annuities (GSRA);

•IRAs; or • Roth IRAs.

These distributions would qualify for the $20,000 pension and annuity income exclusion under Tax Law section 612(c)(3-a).

You can amend tax returns, if needed.

@cpuzben

[cpuzben]

Thank You for answering as this helped to re read.  Now I saw the key word.  All good now

[Sunshine101210]

I am doing our taxes for my husband and I. He is a retired NYPD police officer and his pension shouldn’t be taxed by NY, yet turbo tax is saying we owe thousands of dollars to NYS because of his pension. How do I fix this? 

[DaveF1006]

@Sunshine101210 Please follow the suggestions offered by SandraM her her awesome Turbo Tax post.

"Here are the steps to enter your exempt New York State employee pension:

On the  Federal Income Tax  portion:

1. Go to federal>income and expenses
2. Scroll down to Retirement Plans and Social Security
3. At IRA,401(k), Pension Plan Withdrawals (1099-R), click Start (or Update)
4. Enter your 1099-R or if you have entered it, click on Edit then Continue
5. Answer the next questions until you get to the Where Is This Distribution From? screen
6. Select the source New York State Employees and enter the information requested:
7. Click on Continue
8. Click on From a Qualified Plan
9. Continue answering the questions

On the New York State return portion: 

1. At the Changes to Federal Income page, scroll down to Received retirement income, click Start (or Update)
2. At the Retirement Distributions Summary page, click on Edit New York State
3. If no additional information is required, click on Continue
4. Click on Done

Review the Pension Deduction Summary for the deduction once you are able to access the forms."

[fkelly12054]

Thank you Mamselle.  It's March 2023 and I'm having the same problem with Turbotax not deducting my State Pension payments from my State taxes properly.  I will read through the rest of the posts in this thread but it appears that I have at least a partial solution.  My State taxes just went down by $7000 by claiming that my pension came from the US Govt.  It's nuts that they don't have this fixed after 2 years+.

[Marlenehorne]

New York State Tier 1 Pension holders do not have to pay NYS taxes on their NYS pensions and social security benefits so why is turbotax telling me I owe NYS taxes for 2022 taxes?

[fkelly12054]

TurboTax is telling you that because they haven't fixed a bug in their program(s) for 3 years now.  The so-called fix is detailed earlier in this discussion thread and involved going back to your Federal returns and towards the end of the 1099 form for State pension income telling TurboTax that the income comes from the U.S. Government.  Then go back to your State return and things should calculate okay.  I guess.