Military Pension NY State Distribution

[whpihl]

When I enter the info from my Military pension 1099-R which has $0 state income tax withheld, no state mentioned, and no state distribution given, TurboTax lists my box 1 amount as my New York state distribution.  When it calculates my NY state tax, it correctly includes this amount in the NY Subtractions so I don't owe state tax on it.  Is this the way it's supposed to do this?  Should I be manually entering the box 1 amount in the NY state distribution block in TurboTax even though there's nothing for this on the 1099-R?

[ReneeM7122]

Yes, TurboTax is handling box1 from your Military pension correctly.   

Although New York does have state personal income tax, it does not tax New York does not Tax Military Retirement Pay.  There is no need to manually enter the Box 1 amount in the NY state distribution block

[whpihl]

Thanks. 

I've discovered another potential issue with the New York State return.  On the Pension/Annuities/IRAs Worksheet, lines 2a and 2b only show my military pension.  They should have the total of my military and NY State pensions (I get both).  Line 26 on the IT-201 form should have the total of the 2 pensions, but takes the info from the Pension/Annuities/IRAs Worksheet so it only has my military pension amount shown.  The NY State pension is added to my IRA withdrawals on line 3 of the Pension/Annuities/IRAs Worksheet.  Line 4b of the Pension/Annuities/IRAs Worksheet has 20,000 entered (the maximum IRA amount not taxed), instead of the amount I withdrew from my IRAs (which was less than $20,000).

FYI - I checked the Pension/Annuities/IRAs Worksheet for my 2019 return, and that was done correctly - there's a definite difference between how the Pension/Annuities/IRAs Worksheet is done for 2020 compared to 2019.

Please check on this for me - thanks.

[BillM223]

Thank you for reporting this; I am working to reproduce it.

[whpihl]

Here's the comparison of what is on the 2019 vs. 2020 New York form IT-201 (page 1-2).  I believe 2019 is correct, and 2020 is incorrect.

New York Form IT-201 (page 1-2)
Line	Description	2019 Return	2020 Return
9	Taxable amount of IRA distributions	11,135	12,623
10	Taxable amount of pensions and annuities (see below)	71,628	65,908
15	Taxable amount of Social Security benefits	38,786	39,455
24	Recomputed federal AGI after adjustments	124,963	120,109
26	Pensions of NY state and local governments and the federal government	65,378	34,288
27	Taxable amount of Social Security benefits	38,786	39,455
29	Pension and annuity income exclusion	17,385	20,000
32	Add lines 25-31	121,549	93,743
33	New York AGI (line 24-line 32)	3,414	26,366
	Line 10 - annuity distribution	6,250	0
	Line 10 - military pension	33,758	34,288
	Line 10 - NY civil service pension	31,620	31,620
	Total for Line 10	71,628	65,908

Note that for 2019, the amount in line 29 is the 6,250 annuity distribution plus the 11,135 IRA distribution.  For 2020, it just put the maximum possible exclusion (not the actual exclusion of 12,623 for the IRA distribution), and it didn't include the 31,620 NY civil service pension amount in line 26 (this was included on line 26 in 2019, which is correct).

Hope this helps - please send this on to whoever can make the correction to the TurboTax New York part of the program.  Thanks.

[BillM223 · Accepted solution]

Please see this TurboTax Help article about the fix that was made in this area. As noted, if you are using the CD/download software, you will need to update it.

[whpihl]

I tried to check for updates and it said my software is up to date, but nothing has changed since last week and the problem is still there - I checked my update status and it said the last update to the New York return software was on 2/18/21.  I was going to try the manual update, but noticed that it isn't for state tax software.  Do you know when the update for New York will be available?

Thanks.

[ReneeM7122]

When entering your Form 1099-R for your Military pension,  you want to make sure that Turbo Tax isn't handling it as taxable income. 

To get the New York state pension deduction, you will first have to enter the necessary information in your Federal Income tax return and then in the New York State income tax return.

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

On the  Federal Income Tax  portion:

1. In the search or find box, type in 1099-R
2. Click on Jump to 1099-R
3. Scroll down to Retirement Plans and Social Security
4. At IRA,401(k), Pension Plan Withdrawals (1099-R), click Start (or Update)
5. Enter your 1099-R or if you have entered it, click on Edit then Continue
6. Answer the next questions until you get to the Where Is This Distribution From? screen
7. Select the source New York State Employees and enter the information requested:
8. Click on Continue
9. Click on From a Qualified Plan
10. 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.

@whpihl

[whpihl]

Thanks - when I checked how I had entered the 1099-R for NYS pension, I found that I had checked the wrong box for where the distribution came from.  When I corrected this, the IT-201 return was correct.