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My misunderstanding is that STCG are taxed at one flat rate which turns out to be an incorrect assumption.
State calculation shows I owe $148 in taxes for 2021. However, Alabama does not tax SS income or State of Florida Retirement System monies — my only two sources of income. I would like to amend my state of Alabama taxes. How do I do this?
In addition, I believe my 2020 state taxes also included my Florida pension as taxable income. I would like to amend my State taxes for 2020 as well. What are the next steps?
The State of Alabama does not tax income from a Defined Benefit retirement plan. The Form 40 Instructions say, "Payments from a “Defined Benefit Retirement Plan” in accordance with IRC 414(j). Contact your retirement plan administrator to determine if your plan qualifies".
I believe that your State of Florida plan is a defined benefit plan (although it doesn't hurt to ask).
If so, then in the Alabama interview, you should see a screen that is titled "About your Retirement Distributions". Click Edit on the line for this pension.
The next screen will be "Alabama Special Handling of this Distribution" (referring to the 1099-R for the Florida plan that you entered on the federal return). To the question on this screen, "Is your distribution from one of the pension plan systems that is not taxed by Alabama?" you should answer YES.
Then you should be brought back to the "About your Retirement Distributions" screen, and the dollar amount on the line for your pension under the column "AL Taxable Pensions/IRAs" should be zero. If so, it won't be taxed on Alabama.
If you did the pension correctly, the pension amount should appear on line 5a on page 2 of the Form 40, and line 5b should be 0 (zero).
Your Social Security benefits are not taxed in Alabama in any case, if you entered them properly on the SSA-1099.
To amend a return, please see this TurboTax Help page. Note that the form to amend a 2021 return is not yet available.
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