PA State Tax and retirement income

[macdaddy100111]

Hi

Ive been using Turbo Tax deluxe to do my elderly Pennsylvania  parents tax return for 3 years. This past year my father went thru a paydown and reshuffling of his assets (qualified IRAs)  prior to a medicaid appliction so his nursing home care could be paid for. 

I have numerous 1099s some of which are straitforward...but some im not sure about. One of his IRAs was paid out directly to my mother (into her bank account) and that was taxable as far as i know (not sure)..its asking me for the "basis of retirement income". Is this on the 1099 somewhere?  .The  1099 was code 7D total distribution checked ..there was a taxable amount in 2a smaller than the gross and a different bigger  value in box 5

There was also another qualified IRA that was rolled over into  annuities (Elco) with another company (60 day rollover) that my mother recieves....we recieved a form 5498 from the new company (for which we also have a 1099) and this was shown as a qualified rollover on the federal return, but the state tax part of Turbo tax asked me to classify it...and I wasnt sure ....as a  qualified IRA there was no tax liability, but as a rollover ...there was massive tax liability.  Some help please. . the second 1099 i was talking about (the rollover)  had both taxable amount not determined  and total distribution checked...Distribution code 7....Code  IRA/Sep box checked

My father died in June 2022...so i had to redo both the federal and state with taxpayer names reversed so i could file the state return for 2022.

[ErnieS0]

Retirement income is generally not taxable in Pennsylvania if the retiree met the again and years of service requirement.

Pennsylvania does not allow an IRA deduction so an IRA distribution would not be taxable in PA if your father always lived and worked in PA. Withdrawals are generally not taxable after a taxpayer reaches retirement age and retires. If the IRA came in from another state that allowed an IRA deduction, then some or all of it would be taxable.

Code 7D likely means the entire amount is not taxable.

An annuity outside an employer-sponsored program or a commonly recognized retirement program would be partially taxable. The IRA rollover amount was previously taxed and would be your basis of retirement income.

See How do I know if the amount on my 1099R (1099-R) is taxable on my PA Personal Income Tax Return?

[macdaddy100111]

Buy how would these assets 1099Rs be classified under the state codes or "What kind of retirement income do you have from Pennsylvania?" there are like 18 different choices. 

1. The rollover 1099R was from a qualified IRA   Box 1 and 2a identical  Box 7 code 7 IRA checked, taxable amount not determined and total distribution are checked (the company receiving the funds published a Form 5498  Box  IRA checked RMD checked in box 11)

2. A direct pay out 1099R from a non qualified non IRA annuity there was taxable amount above the basis.  Box 7 Code 7 D  and total distribution checked

3. The new annuities created with the money from the first rolled over asset above..our eldercare lawyer says the new payments to mom are taxable. Code 7 IRA Box Checked

How to enter these as asset types?

[AmyC]

It sounds like you only need to enter the annuity (1 choice) and IRA information  (2 choices and they are age based). Pensions are handled by the program.

1. The Summary will show all of your retirement income. 
2. Look at the order of the income on the screen.
3. Identify the first income that is not pension, note IRA or annuity
4. Identify the second, and so on until all are identified.
5. Click the back button to the screen before the questions.
6. Move forward and answer each screen with your identified answer.