PA tax on Non-qualified annuity

[mp59]

Every year, the TT software has classfied earnings income from my non-qualified annuity as income the same as federal regulations. I believe this to be correct treatment. This year it does not. Is this an item yet to be updated in Turbo Tax or is this a major change in PA tax rules?

[DianeW777 · Accepted solution]

Based on the PA-40 instructions the following describes the tax treatment for an annuity.

• Nonqualified Annuities:  An annuity that a service provider buys on his own, rather than through a qualified employer sponsored plan or individual retirement arrangement, is a non-qualified annuity. Amounts received under nonqualified annuities are not taxable as compensation. They constitute taxable interest to the extent they are includible in gross income for Federal tax purposes.

Be sure you have included the state amount when entering your Form 1099-R.