New York pension exclusion

[CadL]

I am a New York state retiree, so my pension is fully excluded in NY.

In past years using Turbo, the questions that were asked on the pension screen (NYSLRS retiree, qualified plan)  prompted Turbo to carry it to NY as fully excluded.

The same questions are on 2020 Turbo, but it does not carry to the NY return and I notice a box on NY to input the amount of excluded pension, which I filled in (all of it).

On the return preview, NY subtractions show both the full pension exclusion AND $20K for a "regular" pension exclusion. I had to manually delete the $20K exclusion for the return to be correct.

Any suggestions from anyone on how I could have input this differently to alleviate this error?

Geez, ya gotta be well-versed in tax law to complete your own taxes!

Thank you!

[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.

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.

[LSG1]

@GloriaLthank you, but you suggestion does not help.

I have the same problem. We enter the correct amount in the Where Is This Distribution from? screen. I put that the pension is a New York State and Local Retirement System (NYSLRS) and it takes both the full pension amount plus the $20,000 exclusion from the state taxes. The only way to fix this is the say it is a US Government pension, and then it takes the full amount, but does not take the $20,000. I actually had this same problem in 2019. The quesionaire is wrong, but then then the finalized Tax form is correct. If I just let it go, I'd be getting back way too much of a refund.

[CadL]

Thank you.

I did all that before and NY still added the $20K as excludable.

I think the key is checking "no" to "did you receive periodic payments" on the Federal screen (even though I did receive my pension every month). I think that checking the "yes" answer prompts a $20K exclusion like a 401(k) pensioner would receive.

I wanted to check 2019 return in Turbo Tax to see what was checked, but I cannot open 2019 file ... dialog box indicates that file is open on this computer but it's not. Error 190.

[LSG1]

@CadLfor me, it doesn't matter if I check no, or yes to the regular payments. It still takes both the full exclusion plus the $20,000 when the NY state and  local retirement system is checked. The only way for me to have it not include the $20,000 is to either check US government  or Certain public authorities and then it only excludes the full pension and not the $20,000.

[callmejoe]

@LSG1  this worked. thanks!

I've been using TT for about 10 years and there always seems to be quirks like this.  Sends me researching tax code which I don't like to do. it's the whole reason I use TT in the first place, so I don't have to worry about tax code.

maybe time to move to another tax software program after all these years??

[LSG1]

@callmejoeGlad it worked.

I used Taxcut by H&R Block one year, and it messed up my NY/NJ income so bad that I wound up getting billed by NY for taxes that I had sent to NJ, so I had to pay and then get refunded by NJ - a year after I filed my taxes....it was such a hassle.  Moving to another program does not guarantee better results.

[tdkguitar]

Yeah... Following these steps didn't work. I ended up entering my Box 2a amount on my 1099-R where it asks for pension amounts in the NY State section and that wiped my NY State tax due out. This used to be automatic in previous years in TT. WTH, Intuit? Methinks there be a bug in the link between the federal and state software.

[DianeW777]

If you are referring to New York (NY) State Pension, this is handled in the NY State portion of the tax return interview. 

1. When you reach the Changes to Federal Income screen >: Scroll to Wages and Retirement Adjustments
2. Select Received retirement income > Start
3. Answer the questions on each screen
4. On the screen titled Governmental Pension Exclusion enter the taxable amount to exclude for the NY return
5. The next screen will show you the Pension Deduction Summary
6. See the image below for assistance.

 

[LSG1]

@DianeW777those are the screens in the Turbotax Deluxe 2020 program. The program does not allow you to just jump to screens now. It is much more buggy than ever. If I go to Show Topic List and click on Wage and Retirement Adjustments and finally get to Retirement Distributions Summary, and click on Edit for the pension, The screen says: Retirement Information - We don't need any further information about the retirement distribution from NYC Employee' Retirement System.

It does not allow you to answer any further questions. If you click Back, you just go back and you're stuck.

[tdkguitar]

OK, so I did all that. Shouldn't that have been transferred from my federal return? It always was before. Now my question is about the "New York deductions for other pensions" in the summary. Why do I have an additional $20K on this line?

[DianeW777]

@LSG1 If you answer the questions in the federal return in TurboTax Desktop about the New York (NY) state pension (see image below) then you will see the same image in this version in the NY state interview that is pictured above.

Be sure you add NY as the state in the 1099-R entry for your pension.

[tdkguitar]

@DianeW777 , shouldn't that have been transferred from my federal return? It always was before. Now my question is about the "New York deductions for other pensions" in the summary. Why do I have an additional $20K on this line?

[tdkguitar]

@DianeW777 , here may be the issue... Going back to my federal entries about this pension, the instructions for boxes 14-16 state "If box 16 has the word 'Exempt' in it, leave it blank here." The NY 1099-R states, specifically: Box 14: "EXEMPT", Box 15: payer's state number, Box 16: "NY". What I see in my data for this federal sections is that TT federal plugged in my box 2a amount into box 16. Perhaps the instructions could be a little better worded, since they don't match the 1099-R language.

[DianeW777]

Your exact steps my differ from mine, although I can explain my steps.

In my test, I left the state distribution as zero in the federal interview, continued to answer the questions to get to the NYS pension selection where I also entered zero for the New York Distribution  Amount.. At this point the NY state return shows the distribution as taxable on the IT-201. I did not have an adjustment on line 26.

If I go into the 'Received retirement income' to enter the full amount as nontaxable, then the adjustment is placed on Form IT-201, line 26,  removing the income from the return. 

I would have expected to have zero flow to the NY state return, except that they want to see the adjustment on their return.