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lemley981
Returning Member

State tax on your pension in Pennsylvania

When i put my pension amount in Turbo tax its creating a Pa state tax, I never had to pay state tax on my pension before. What changed?

8 Replies
DianeW777
Expert Alumni

State tax on your pension in Pennsylvania

Nothing has changed. You are correct, Pennsylvania (PA) does not tax normal pension distributions at retirement. You can file only your federal return as e-file, not the state (unless you have other income to file for PA).

However to fix this in the PA interview you must select in the Form 1099-R the following dropdown selection as shown in the image below.

 

lemley981
Returning Member

State tax on your pension in Pennsylvania

Turbo tax is not giving the option to choose that code? It has in Box 7 a Code 3 which is disability pension which i have been on for 5 years now and never had to pay state taxes? Please help.

lemley981
Returning Member

State tax on your pension in Pennsylvania

That option used to be there.

lemley981
Returning Member

State tax on your pension in Pennsylvania

Its even making me pay state tax on my 401K which i didn't think you paid state on that either. The code there is Code 7 (normal Retirement) There is  no drop down for where no Pa Tax taking out?

lemley981
Returning Member

State tax on your pension in Pennsylvania

Got it! I'm a idiot

erniemanwv
Returning Member

State tax on your pension in Pennsylvania

I did click on I am eligible, plan is eligible (no PA tax) but Turbotax keeps my pension Taxable.  In the Federal return, Box 7 has code 7, and there is no entry for state distribution in boxes 14, 15 and 16.

Turbotax needs to fix something!   The PA return is either faulty, or at best hard to find the correct entry.

ErnieS0
Expert Alumni

State tax on your pension in Pennsylvania

Do you have a qualified or nonqualified plan @erniemanwv? Distributions from nonqualified plans are taxable as interest in Pennsylvania. TurboTax will add this into your income even if you selected "I'm eligible; plan's eligible (no PA tax)."

 

Check your federal 1099-R enter to see whether you said your plan was qualified or nonqualified.

  1. Type "1099-r" in Search in the upper right
  2. Select "Jump to 1099-r"
  3. On Here's your 1099-R info, click Edit
  4. You will see a screen What kind of retirement plan do you have with....?
  5. make sure Qualified plan is checked
erniemanwv
Returning Member

State tax on your pension in Pennsylvania

Thank you. Finally, on the fifth try, Turbotax accepted I am eligible...(no Pa Tax). 

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