Dear TurboTax Community,
Is the first $20,000 of pension income still non-taxable even if you are still working and reporting income? I have checked the New York State Taxation and Finance website and it's not completely clear.
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The New York pension and annuity exclusion is based on age and unrelated to whether you continue to work or not. Additionally, any wages you earn to not qualify for the pension exclusion.
If you were age 59½ or older for the entire tax year, you may exclude up to $20,000 of your qualified pension and annuity income from your New York adjusted gross income.
If you became age 59½ during the tax year, the exclusion is allowed only for the amount of pension and annuity income received on or after you became 59½, but not more than $20,000.
Married taxpayers who both receive pension income are each entitled to a maximum pension and annuity income exclusion of $20,000 whether they file jointly or separately. However, you cannot claim any unused portion of your spouse’s exclusion.
Qualified pension and annuity income includes:
- periodic payments for services you performed as an employee before you retired;
- periodic and lump-sum payments from an IRA attributable to compensation for personal services, but not payments derived from contributions made after you retired that are not attributable to compensation for personal services;
- periodic distributions from an annuity contract (IRC section 403(b)) purchased by an employer for an employee, and the employer is a corporation, community chest fund, foundation or public school;|
- periodic payments from an HR-10 (Keogh) plan, but not payments derived from contributions made after you retired;
- lump-sum payments from an HR-10 (Keogh) plan, but only if federal Form 4972, Tax on Lump Sum Distributions, is not used. Do not include that part of your payment that was derived from contributions
made after you retired;
- periodic distributions from deferred compensation plans sponsored by state and local governments and tax-exempt organizations (under IRC section 457); and
- periodic distributions of benefits from a cafeteria plan (IRC section 125) or a qualified cash or deferred profit-sharing or stock bonus plan (IRC section 401(k)), but not distributions derived from contributions made after you retired.