Unable to electronically file because my MA public safety officer pension is tax exempt

[JamesGardner911]

I entered my 1099-R for my MA firefighter pension and when I ran the REVIEW in TurboTax it gives me the following error message.

Form 1: Tax-Exempt Pension should not be entered directly on Form 1 for State Electronic filing.  You should enter the information on the Federal Return, Form 1099-R and/or use the Pensions and Annuities Smart Worksheet to make any tax-exempt adjustments.

If I enter "0" on MA Form 1 Line 3 "Tax-exempt portion of pensions and annuities", Turbo Tax increases my MA state tax liability.

If I enter my pension amount, Turbo Tax continues to give this error message.

Any suggestions?

[JotikaT2]

Try the following steps.

Go back to the Federal section of the program.

1. Select Income & Expenses
2. Select "IRA,401(k), Pension Plan Withdrawals (1099-R)
3. Select "Edit" under the appropriate 1099-R form
4. Proceed to answer through the screens until you see "Select Your State".  (You should see this after enter your details from the 1099-R, and the question asking if you are a public safety officer.
5. Be sure to mark the box for PA here.

The next screen should take you through specific information related to PA.

If you still receive the error, go into the state interview section for PA.

There is also a section you can answer within the Pennsylvania state section where you can indicate the income is not taxable. 

At the arrow, under state tax code, you will select the option "I'm eligible, plan's eligible (no PA tax)".  This will ensure your retirement is not taxed within PA.

[tax31000]

Hi, this is helpful, but the state question never popped up after the public safety officer question. It went directly to... Massachusetts Special Handling About This 1099-R. 

[JohnB5677]

Yes, that is the right place.

It state that Mass does not tax distributions from the categories listed below. You fit into the first category.

Now clear the Massachusetts distribution.

[TPost]

I received the exact same error as stated in the original message. I , however, am a retired teacher and NOT a public safety officer. The “statement” it suggests was filed automatically last year with my state taxes but I receive this error this year.

[devlin3151]

Beginning to think this is a scam to force you to upgrade to another level. 

[devlin3151]

There is obviously a glitch in this software that is not allowing electronic filing. Mass Teacher's Retirement is recognized as being tax-exempt but the transfer from the federal tax forms fills in a line for taxable income which should be $0.00 as best I can tell. But it puts in the fully federal tax amount instead.

[Taxachusetts]

Same problem with a different source of MA tax-exempt retirement income. My Form 1 is correct. TT collected $25, THEN TOLD ME THERE WAS A PROBLEM (not found by the "review" process) and refused to transmit my MA form. I'm trying to get a refund and will mail in my MA return. It's not worth the grief. Have used TT for decades; it has had problems with MA returns several times before.

[devlin3151]

Had TT call me regarding this. After about 45 minutes of going through every step of the process, then my contact getting in touch with other people regarding this, the claim was that it was a Commonwealth of Mass issue for not forwarding the proper info to TT and to try again in a week or two.

[Taxachusetts]

Not a very good answer from Intuit, in my opinion. Their business includes working with the states. After all these decades, they don't know someone powerful in the revenue bureau of each state?  Some of us need our state tax refunds. There is a pandemic going on.

[Taxachusetts]

I just installed an update and was able to file my state taxes!

[devlin3151]

Are you using the online/cloud version of the software?

[Taxachusetts]

No, I’m using the Windows version. 

[JoannaB2]

Yes, you may try to e-file your 2020 1040 income tax return only. Print your MA Iincome tax return and mail it. If you're having problem because of the tax-exempt pension.

Massachusetts doesn't Social Security retirement benefits and income from public pension funds, and  Income from an IRA, 401(k), 403(b) or any other type of retirement savings account is taxed at the state income tax rate of 5%.

[Taxachusetts]

Thanks. Today’s TurboTax Windows update allowed me to transmit my MA return, and it has been accepted by the state.