Should I input the correct state (KY) in TurboTax if my 1099-R shows an incorrect state (VA)?

[dean4]

The 1099-R shows $0 deducted but has the State/Payer's # incorrectly listed as VA when we lived in KY all year.  Block 14 state distribution shows the entire income received.  We need to pay state taxes to KY on this income, not VA.  the Issuer corrected the error for future years but will not send a corrected copy.

[DanielV01]

You should enter the information as it appears on the document.  Doing so prevents file mismatches that can create e-file return rejects later.  

You are correct that the amount will be reportable to Kentucky and will be included into KY income automatically by TurboTax, provided you were full-year residents of KY.  Good news is that it likely is not going to increase your tax liability to KY, as KY exempts $41,110 of pension income automatically from taxable income.

If you were a part-year KY resident, then you would need to allocate, or designate, the amount of the pension that was drawn after moving into KY.  As long as the pro-rated amount does not exceed the exclusion, you still have no taxable portion of the pension on the KY return, but what was drawn while a VA resident must be reported there subject to Virginia's tax treatment of this type of income.  If this is the case, here is an FAQ to give more informaiton on allocation:  https://ttlc.intuit.com/replies/4777389