TurboTax Software Fix Request

[DanaOlson]

Sir/Madam,
In working on my CA State tax return, I ran into a problem in the Pension and Annuity Adjustment section. The TurboTax software entered 'Military Pension Exclusion' in the Description cell and '$20,000' in the Subtraction cell. Not knowing what this was about, I clicked the 'Learn More' link below the Table. It appeared I qualified for the exclusion except my military 1099-R had no block number 16 and it had no block with the letter M in it.

I searched the internet to find more information this Exclusion form the CA legislature perspective. I found that there are two applicable bills, Senate Bill 1 (SB1) and Assembly Bill 53 (AB53). AB53 passed on May 29, 2025 but SB1 died on February 2, 2026 and there is no successor Senate bill. It seem apparent this exclusion will not be approved in time for our 2025. Would you fix this please?.

I use the MS Windows desktop version of TurboTax Deluxe (with CA State).

Reference: trackbill.com

Thank you,
Dana Olson

[RogerD1]

The instructions for CA Schedule CA (540) state:  "Military Retirement Exclusion – For taxable years beginning on or after January 1, 2025, and before January 1, 2030, California law allows an exclusion from gross income for a qualified taxpayer that received retirement pay from the federal government for service in the uniformed services or annuity payments pursuant to a United States Department of Defense Survivor Benefit Plan during the taxable year, not to exceed $20,000."

So it does appear that the ability to exclude this income is limited to Survivor Benefits only.  If this does not apply to your military retirement income, you can use the following steps to not exclude the income from your California return:

1. Go back to the Personal tab, then click Personal Income.
2. Click "I'll choose what I work on"
3. Scroll down to IRA, 401(k) Pension Plan Withdrawals (1099-R) and click on Update.
4. Click the pencil icon to the right of the 1099-R that applies to your military retirement.
5. Keep clicking Continue until you get to the screen "Where Is your distribution from?"
6. Click the "Other distribution" button

This action will make your retirement distribution taxable to California.