Yes, TurboTax does support the choice of the 40% or 15% exclusion; however, you need to enter it manually.
As you navigate through the Nebraska interview, you will come to a screen with the heading: "Adjustments Decreasing Federal Income". The second entry from the bottom is: "Election to Exclude Military Retirement".
When you click on this entry, you will see this box pop up:
Enter the amount of Military Retirement Benefit income that you elected to exclude on your timely filed Form 1040N-MIL, Election to Exclude Military Retirement Benefits from Nebraska Taxable Income.
To figure out this amount, take your eligible total military retirement pay and multiply by the percentage listed on your 1040N-MIL (either 15% or 40%). Enter the result of your calculation in the field for Election to Exclude Military Retirement.
Nebraska now allows an individual who retires from the uniformed services of the U.S. on or after July 18, 2012 to make a one-time election to exclude from Nebraska taxable income a portion of his or her income received as a military retirement benefit that is included in federal AGI for tax years beginning on or after January 1, 2015.
An individual must make the election on or after July 18, 2014 and within two years after his or her retirement from the uniformed services, even if he or she does not begin receiving military retirement benefits immediately upon retirement. The individual may elect:
Option 1: To exclude 40% of his or her military retirement benefit income for seven consecutive taxable years, beginning with the year in which the election is made; or
Option 2: To exclude 15% of his or her military retirement benefit income for all taxable years, beginning with the year in which he or she turns 67 years of age.
Once an election is made, it cannot be changed.
The Election is Time Sensitive
Beginning July 18, 2014, an individual may elect to exclude a portion of his or her military retirement benefit from Nebraska taxable income. Although the election may be made beginning July 18, 2014, the exclusion is not available until tax year 2015.
An individual who retired from the uniformed services before July 18, 2012, or who fails to make the election within two years of his/her retirement date is NOT eligible for the exclusion.
Note: Form 1040N-MIL must be on file with the Nebraska Department of Revenue.
For more information about eligibility and limitations, please go to: Nebraska One-Time Election
Enter the 15% or 40% on the box to the right of this line.
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