incorrect NYS pension exclusion

[JoeHay--]

Good for me this is now working.  Bad for the forum I do not know what fixed it.  There were automatic updates applied around January 15, 2021  I hade previously tried deleting and reentering the New York State 1099-R and deleting and recreating the entire tax return.   I assumed that one of the automatic fixes fixed the problem.  If it is still not working for some this must be a difficult bug to track and fix.  Hoping for myself that this remains fixed until I file later this year.

[RMB NY]

Thanks for the comment.   

It is unfortunate that Intuit applications people and tech support have not fixed the bug (which was identified last year) , or at a minimum, provided a job aide or guidance to their customer service personnel to help users.  Finding a clunky workaround is fine, but at the price that Intuit charges for the TurboTax software I think we consumers deserve better. This was my first time having to enter data for pension income for myself, and I recognized immediately that the tool was not calculating and applying the exclusions correctly (it only took a few mouse clicks to the NYS Tax & Finance reference material to confirm that).

Adding to the annoyance, I was told that I might have to "upgrade" to  their TurboTax LIVE  (i.e.; pay more $) for the privilege of having my call responded to by someone with more experience and expertise.  That would be bogus as I wasn't seeking "tax advice" I was just trying to point out/resolve an obvious glitch in the software.  I was told to call back in a few weeks to see if they decided do do anything to resolve the bug.

The problem is obviously in the forced-choice selections in the Federal income pages as they pertain to pension and annuity exclusions for NYS government retirees, and obviously the error  gets carried forward in to NYS income tax package.  Bottom line they should just fix the bug or at least give us a timeframe for correcting it. I've been a loyal user of TurboTax for many years, and have used it for doing taxes of other people in my family and recommend it to everyone I know.  This was a big turn- off for me and frankly very poor tech support and customer relations -- so I've decided to use someone else software this year.  Sorry TurboTax.

[brenec]

We are having the  same problem - the only workaround appears to be to enter your NYS pension amount minus $20k in the State interview.  The numbers come out right then, but the income is shown on incorrect lines in the IT-201 state return form.

[LenaH]

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. 

@brenec

[brenec]

Thanks for responding!  The issue at hand is that when the NYS pension income is entered in the Federal section (which is correct - let's say it is $45k as an example) and imported into the NY State portion of the software, it brings that number in as "Taxable NY State Income" and then subtracts it out again because NYS pension plans are not taxable at all in NYS.  That's fine.  The problem is that it also subtracts another $20k from the NYS income (because the pension income must again be entered when NYS pension income is requested in the State interview) which ends up deducting $65k from the overall NYS income instead of $45k which would be correct.  When I checked the IT-201 form that was generated by this set of entries, one can see that the spurious $20k deduction shows up on a line that appears to apply to all non-NYS pensions.  This is why I think the software is in error, and that having an entry in the NYS pension line (which triggers a subtraction of that same amount) also triggers the $20k deduction, resulting in a total deduction that is incorrect.  I'm going to go back and carefully examine my entries based on your advice.  If I can fix the problem, I'll post again.

[brenec]

I should mention that I'm using TurboTax Home & Business (Mac).  The menu items that you mention do not appear as you indicated.  I'm not using the online tool.

[brenec]

I just tried the suggested fix, and it did not work.   Here are some additional specifics (with example numbers):

The $45,000 number was entered in the section for Governmental Pension Exclusion

(Did you receive a pension or other distribution from a New York State or local government pension plan or a federal government plan?)  [*the answer to that questions is "yes", so I entered the total pension amount of $45,000 there*]

Then, when going on to the next section, this is what is shown:

Total federal taxable non-disability mentions and IRA distributions: $45,000

New York deduction for governmental pensions: $45,000

New York deduction for railroad pensions: $0

New York deduction for other pensions: $20,000  ["This is the number that is un-editable*]

-----

Total taxable pensions and IRA distributions:  -$20,000 [*This is what TurboTax comes up with...*]

===========

What next?

[DaveF1006]

It depends. You will need to edit the information in your state return as well. Try this procedure and see if this will work for you.

1. Log into Turbo Tax
2. Select the State Taxes tab on the left side of your screen.
3. As you navigate through the screens, you will see a screen that says changes to federal income.
4. Look under the heading Wage and Retirement Adjustments
5. The first entry below that will say Received Retirement income.  
6. You will make entries in this section that will determine the full taxability of your NY pension.
7. Answer the questions on each screen
8. On the screen titled Governmental Pension Exclusion enter the taxable amount to exclude for the NY return
9. The next screen will show you the Pension Deduction Summary

[brenec]

Thanks again - I will try this.  I'm not using the online version of TurboTax, so I will try mapping these instructions onto the Home & Business version.  I'll report back.

[brenec]

This latest suggestion did not work either.  When I put the amount of the New York State pension received into the "Governmental Pension Exclusion" form, it simply subtracts that amount from the New York State pension amount transferred from the Federal form.  Unfortunately, it also still includes the incorrect $20,000 as an additional pension deduction (which I cannot remove.)  I'm at a loss as to what to do at this point.  It really does appear to be a software bug in the Mac version of the TurboTax Home & Business 2020 package.

If any TurboTax program debuggers are online - here are some details about the version of software affected -

FPS 4.3.5

Help Content 2020.0.3

Interview Service 1.0.25

Per Fed Ind 1040 Formset 2020.11558

Per New York Ind Formset 2020.11042

Personal Program Help 2020.11034

Player 18.1.2

TKE Not available

Topics 54

TPS Engine 5.16.0 (Tsp-Compatibility-Version: 2018.5)

TPS Forms 2020.44.0.3

----------

Application: 2020.r14.034

Build Date: Jan 30, 2021 at 11:49:36 AM

[JohnM55]

I am having the same issue with the CD/Windows version of TurboTaxPremier. It is adding an additional 20,000 exclusion on top of correctly excluding my pension from the NY State and Local Retirement system. The suggestion to indicate the source of the pension as from the "U.S. Goverment Pension"  instead of "NY State and Local Retirement System" appears to be a valid work around and correctly populates the Penn Ann IRA Wks form under my NY return. Selecting "NY State and Local" in the source questionaire results in the incorrect additional 20,000 appearing on Line 4b, while selecting "U.S. Government" leaves 4b blank (while still correctly listing the amount of my NY Pension as excluded. I plan to hold back on filing for a week or so to give TurboTax a chance to fix this, we should not be put in the position of having to game the software for a tax return!! Some additional info if any TurboTax programmers are reading - I checked last year's return and found that the NYIW7801.SCR 02/03/17  form correctly handled my situation, this year's version of NYIW7801.SCR 03/26/20 is generating the error reported by many in this thread (and may be the reason sevedal who filed later than I did last year encountered this same error. Hope this helps!

[brenec]

I agree that it would be nice to have a reliable work-around, but we should not have to "hack" the system to make it work correctly - especially because this is a product we purchased because we value accuracy.  I wonder how many people have already submitted substantially incorrect NYS tax returns as a result of this situation?   I could see how this might lead to a lot of unintended consequences for many trusting TurboTax users (and NYS.)

My goal is not to criticize, but to reveal a pitfall that many people might suffer from.  I encourage Intuit to put some programmers on this ASAP.

[raysim52]

Turbo Tax support for technical issues is the worst!

On my first call to them the person I was talking to requested that I share my screen with another support person. I shared my screens and after about 1.5 hours they placed me on hold and I got a recording which went something like - if I was interested to upgrade to Turbo Tax Live Premier press 1 for yes or press 2 for no. I pressed 2 and my call ended!. I think the reason they placed me on hold was when they told me to go back to the federal wages screen so they can see what was entered and they didn't see an entry for New York deduction for other pensions.

Since my call was ended when I pressed 2, I called support back. I told the support person what just happen on my last call and she requested to that I share my screen with her. She too also said if I wanted to upgrade to live support. About one hour into the call I requested to speak to a supervisor. I was placed on hold and  someone came on identifying himself as a supervisor.  During me telling him what I experienced and that the issue is not a tax question, or a mistake on a entry I made, but it was a problem with the online application. I was telling him that I need to talk to someone who can understand and address a bug or a glitch in the application, it was at this point that my call was disconnected and this supervisor never called me back.

The next morning I decided to give it one more try. I briefed the support person on my frustrating experience with their support, she requested that I share my screen and quickly notice the issue of the $20,000. She identified herself as a tax expert and acknowledged this wasn't an issue with an entry  I made in the Federal section. She brought on a second person who requested that I share a my filing with them, which I did. After reviewing the file they acknowledged there was noting they could do to correct the issue so the opened an investigation on the issue. I am suppose to back from them in three to five days.

I went online to H&R Block and tried their online tax filing application which is like TurboTax where you are not charged until you finish and file. The H&R Block refund from NYS is exactly the same as the refund I was getting with TurboTax. I don't understand why this is. H&R Block has no second NYS pension issue with their application.

The H&R Block online application is not as user friendly as TurboTax but it is less expensive.

[JohnM55]

FYI, I just installed the 2/5 update for TurboTax Premier, the problem  of excess 20,000 exclusion remains if NY State and Local is selected on the interview screen, while selecting US Govt properly excludes only the pension amount (and not an additional 20,000). 

[kennethhlee]

I'm glad I found this posting...  I was starting to wonder what was going on.

I am using Windows TurboTax Premier. I did not have this issue with the 2019 tax year version of the software.  I must have filed before the broken update was released.

To get the exclusion to work correctly, I needed to select US Government (Including Military) instead of New York State and Local Retirement System (NYSLRS). I've keeping multiple versions of the file as I complete my return. This made it relatively painless to restore from the backup where I had not started the NY return yet and updated the response for "Where Is This Distribution From?". Once I did that, the correct values were displayed.

Observation -- In prior years versions, when I went through the input flows to verify that my entries looked good, I noticed that "US Goverment" selection was displayed even though I had selected the NYS option.