NJ Pension Exclusion

[Jim from NJ]

I did a complete manual review of my NJ taxes and it appears that there is an error in the TurboTax software regarding Pension Exclusion. Yes, the software does properly calculate the pension exclusion BUT it does NOT enter the amount of the exclusion on Line 28A.  Therefore the tax calculation results in too large of a taxable amount if you are entitled to the exclusion. Is someone from TurboTax reading this and how do I get it corrected?

[JohnW152]

There are no known issues with this exclusion, so let’s make sure that you actually qualify.

There are two requirements to exclude all or part of the pension income that you reported on line 20a of your 2021 New Jersey Resident Return, Form NJ-1040:  

• You (and/or your spouse if you’re filing jointly) were age 62 or older, or blind/disabled as defined by Social Security guidelines, on the last day of the tax year; and 
• Your income on line 27 of Form NJ-1040 is $150,000 or less, with a full-year income requirement for part-year residents.

When only one spouse is 62 or older or disabled, you’re only allowed to enter only the pension income of that spouse.  You can’t exclude the pension income of the spouse who’s younger than 62 and not disabled.

Please see Line 28a – Pension/Retirement Exclusion in the 2021 Instructions for the NJ-1040 for more information.

If you meet the guidelines for the exclusion, please reply back.

[Jim from NJ]

I agree with everything that you say and TurboTax did calculate my exclusion accurately. But the amount from the worksheet is not entered on Line 28A on my NJ 1040.

[rjs]

What worksheet are you referring to? Are you talking about the "Line 28a, Pension Exclusion" box between lines 27 and 28a in forms mode (see the screen shot below)? I don't know of any other worksheet where TurboTax calculates the pension exclusion for line 28a. Are you saying that the correct amount is in the box on the left, above line 28a, but not on line 28a itself?

Are you using TurboTax Online or the CD/Download TurboTax software? If you are using the CD/Download, please make sure you have the latest updates.

[Jim from NJ]

The exclusion amount shows in the box on the left under the word Taxpayer but not in the Line 28A blank in the column on the right. I am using the CD version and update every time that I log in.

[rjs · Accepted solution]

Make sure you don't have an override on line 28a. If the line is blank, there is nothing in the display to show that there's an override. People occasionally create an override accidentally by pressing Ctrl-D without realizing it.

I didn't ask you whether you are using Windows or a Mac. In Windows, in forms mode, right click on the space for the amount on line 28a. If one of the choices in the menu that pops up is "Cancel Override," click on that to remove the override. (If the menu option is just "Override," then there is no override.) Another way to tell if there's an override is to type an amount on the line. If the numbers that you type appear in red, there's an override. If there is no override, you won't be able to type an amount on the line. It should be similar if you're on a Mac, but sometimes there are differences in the user interface, and I'm not familiar with it.

[fanfare]

If your total income Line 27 is over $150,000 you don't get any Pension Exclusion. Line 28a will be zero.

[Jim from NJ]

I realize there is an income limit. The amount of my exclusion is properly calculated and entered into the box left of Line 28A but not on Line 28A. I can manually enter it and my taxes are recalculated. But why isnt it being entered onto the line by TurboTax?

[Jim from NJ]

I could type the numbers on Line 28A and they appear in black.

[fanfare]

I was confused by your post before and still confused now.

On NJ-1040 there is no box to the left on the Line 28a.

[rjs · Accepted solution]

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@fanfare wrote:

On NJ-1040 there is no box to the left on the Line 28a.

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@fanfare  Jim from NJ is looking at Form NJ-1040 in forms mode in TurboTax. In forms mode there are often additional elements inserted in the display that are not on the actual government forms. In this particular case, there is a box between lines 27 and 28a. See the screen shot that I posted above.

[rjs · Accepted solution]

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@Jim from NJ wrote:

I could type the numbers on Line 28A and they appear in black.

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@Jim from NJ 

That's very strange. I have no idea how that can be. But did you check to see if there's an override? When you right-click on line 28a does the pop-up menu include "Override" or "Cancel Override"? If it says "Cancel Override," click that and see if canceling the override corrects the problem.

If it's not an override, I'm lost. Here are a few other avenues you could pursue.

1. Delete the entire New Jersey return and do it over again.
2. Maybe @JohnW152 has some other suggestions.
3. Call TurboTax support.

[fanfare]

I see that.

I suspect doing the return over again will correct such an error.

As others like to point out, you should avoid  Forms Mode because it can lead inadvertently  to incorrect results on your tax return.

[Jim from NJ]

Thank you all for your help. Problem solved. There was an OVER-RIDE on Line 28A. I have no idea how it got there but there it was. You all got me an additional $1,000 refund!

[KSpoke]

Both my wife & I were over 62 at the end of 2021 and our income was less than $150,000. In completing NJ Tax Worksheet D manually, I calculated an exclusion of $6,000 less than TurboTax. It appears that TurboTax included a $6,000 Special Exclusion for joint filers who will never receive Social Security or Railroad Retirement benefits on top of the exclusion amount. Also, the NJ Tax Department disagreed with TurboTax's calculation and brought the total exclusion down to only $6,000. Has anyone else experienced this?