NYC Employee Retirement System pension is not reflected as tax exempt on the NYS/NYC return.

[howiereiss]

My NYC pension is not automatically tax exempt for NYS/NYC purposes, even though I selected NYSLRS (New York State and Local Retirement System) as its source. I saw this error early on last year too.  When will coding be fixed?

[ErnieS0]

TurboTax will not automatically exempt the pension after you select a qualifying New York state pension in the Form 1099-R input. Another step is necessary in the New York section.

• Go to the screen Changes to Federal Income
• Select Received retirement income
• Click Done on the screen Retirement Distributions Summary
• Enter the excludible amount of you NY pension(s) on the screen Governmental Pension Exclusion

[howiereiss]

Thank you but the outcome is still incorrect. Using your solution, Using your solution, TT did exclude the taxable portion of my government pension on the NY return.  Line 10 (taxable pension amount ) and line 26 (the NY subtraction amount) are now equal, as they should be, since both my wife's and my pension are exempt from NYS/NYC tax.

However, it also left the $20,000 pension and annuity income exclusion on line 29.  That shouldn't be.  $20k is the maximum pension exclusion for "non NYS/NYC tax exempt government pensions".

In past years, just checking the box (either NYSLRS or NYS or City Education) exempted the pension from NYS/NYC tax. Why does it differ this year? My wife's NYC education pension was automatically exempted, but my NYC pension required the extra step of going to Changes to Federal Income.

I think the programmers should revisit this. My wife and I actually have no NYS/NYC tax liability because both of our pensions are tax exempt, but others are not so lucky.  The $20k exclusion should not be "in addition to" a wholly tax exempt government pension.

[ro96]

same problem!! Hope TT will find a fix.

[GloriaL]

To ensure that your NYS pension is not being taxed on your NYS tax return you first need to be sure your pension in entered in the federal section properly.

To ensure you have this entered properly:

1. Open your TurboTax
2. In the Search box, type in 1099-R
3. Click on Jump to 1099-R
4. You will see your entry for your NYS pension
5. Click on Review
6. Click on Continue until you get to the screen Where Is This Distribution from? screen
7. Select the source New York State & Local Retirement System 
8. Click on Continue
9. Answer the follow up questions.
10. Click on Continue

After reviewing your entries, you should see a subtraction on your NYS tax return for the amount of your NYS pension.

@ro96

[ro96]

Hi

thanks for your reply. I followed your directions but no luck. The NY state software indicates that my pension was not subtracted from my Federal Income, as it was in all previous years. Turbo Tax now indicates that I owe NY State a substantial tax on this income which is Exempt. So what to do?

Thanks again for your help.

Robin

[LenaH]

The adjustment to exclude $20,000 from your NYS income is done under Wage and retirement adjustments. This is found on the NYS screen Changes to Federal Income. 

You can follow these steps in TurboTax to exclude $20,000 of your retirement income:

1. Open your return.
2. Click on State in the left hand column.
3. Click Edit next to your resident return.
4. Click Update or Start next to Adjustments to federal income on the screen You Just Finished Your New York Return.
5. Scroll down to Wage and retirement adjustments.
6. Click Start next to Received retirement income. 
7. Continue to the screen Governmental Pension Exclusion.
8. Enter $20,000 for the question, Did you receive a pension or other distribution from a NY State or local government pension plan or federal government pension plan? 
9. The next screen will show your pension deduction summary. Only $20,000 should be deducted from your pension. 

Per NYS, taxpayers over age 59 1/2 can deduct up to $20,000 of certain federal, NY state or local government pensions and certain IRAs on their New York return. If married filing jointly, each spouse may deduct up to $20,000.

@ro96

[ro96]

Box 14 on my 1099R (State tax withheld) reads EXEMPT. The NY Department of Taxation confirms that

but Turbo Tax assumes that I can only deduct $20K

See this link: https://www.tax.ny.gov/pit/file/information_for_seniors.htm 

[LenaH]

In the TurboTax software, please make sure that you picked the correct classification in the software if your 1099-R is fully exempt. 

Your pension income is not taxable in New York State when it is paid by:

• New York State or local government
• the federal government, including Social Security benefits
• Certain public authorities

I created a married filing joint mock-up return in the TurboTax computer software (not the online version). I went through the on-screen questions for two 1099-R's, one for each spouse. Depending on the classification entered for the 1099-R distribution, it automatically calculated the exemption on the NYS Pension Deduction Summary. One spouse got the full exemption and the other showed a $20,000 deduction. Both took the required minimum distributions (RMD's). 

Please follow these steps and make sure all the required fields are completed:

1. Open your return.
2. Click on Personal Income, under the Personal tab.
3. Click Edit next to the 1099-R you want to correct.
4. Enter the information as shown on your 1099-R. 
5. Answer the questions on the next two screens.
6. Make sure the correct source of your 1099-R is selected. In addition, keep the NYS distribution amount as the full pension distribution. It will be shown as deducted fully on a later screen.
7. Click on From a qualified plan on the screen Was this distribution from a qualified plan?
8. Answer the required minimum distribution questions on the next screen.
9. Finish answering the questions about your 1099-R.
10. Once you are back to your federal 1099-R summary screen, click on State Taxes tab above. 
11. Click on Edit for New York.
12. The next screen should be your pension summary screen and will show your pension fully deducted.

I have attached pictures for further guidance from my mock-up return. 

@ro96

[howiereiss]

That is the correct outcome in your scenario. In my scenario, my wife and I are both retired NYC employees.  TT exempted both our 1099-R incomes, and ALSO EXEMPTED AN ADDITIONAL $20,000.  That's clearly incorrect and requires a programming fix.

In prior years, checking the box for either NYSLRS or NYS&C Education was enough to exempt the income from NYS/C tax. Something changed in the coding. 

[ro96]

I am not in the NYC Employee Retirement system - I am in the New York State Retirement System (NYSLRS) so the exemption applies to me.

[ro96]

this worked for me!!

thanks

[ro96]

Hi

I wrote earlier that your technique worked but it seemed that I was getting an overlarge refund. I looked at the IT 201 and noticed that in addition to the subtractions for the NYSLRS subtraction on line 26, I was getting ANOTHER subtraction on line 29 for Pension and Annuity Income Subtraction. 

This in not correct - the instructions for completing the IT 201 state:

Line 29 – Pension and annuity income exclusion

Did you enter an amount on line 9 or 10 that was not from a NYS or local government pension plan or federal government pension plan? If No, go to line 30.

I think the program needs to be corrected.

Thanks for your support.

[DMS21]

Your scenario does not work for persons who have NYS Employees retirement. The issue is that the software takes the full exclusion for NYS Employees retirement on line 26 but also takes the $20,000 pension exemption on line 29 of NYS IT 201 form which is not correct.  There is an error in the software that Turbo Tax needs to correct.

[DaveF1006]

Here is a scenario that I used to answer another issue regarding NYS pension exclusion. If you are using the software (vs online) this worked. 

1. Delete the 1099-R 
2. Go to file in the upper left corner of your software select remove state return.
3. now reenter your 1099-R.
4. Now when you get to the screen asking where this retirement income is from select NYSLRS and then the distribution amount that is at the bottom and finish out the section.
5. Go to state taxes and select New York again.
6. After the information from your federal return has populated into your state return, switch to the forms mode in your software.
7. Go to the Pen Ann IRA WKS
8. At the top left of the form check the check mark that indicates this qualifies for the Government Exclusion.
9. Now check line 26 and the full amount of your pension is excluded and there should be no additional $20,000 exclusion.