PA does not include 1099-R income as taxable income. Why is Turbo Tax adding that in?

I entered my 1099-R data in the federal portion of Turbo Tax. No problems. The PA State Tax program subsequently  includes 2 of the 4 1099-R entries as taxable income for PA. Why?
  • I have the same issue with conversion of traditional IRA to Roth IRA; turbotax is coding the amount of the conversion reported on 1099-R as PA taxable income and I would like to deterrmine why?  PA-40 booklet clearly states on page 13 that you do not pay PA tax on difference between amount distributed from your traditional IRA and your previous contribtuions (1) if you rolled over the entire withdrawal directly from the traditional IRA to the Roth IRA.
  • Some 1099R income can be taxable, roughly if it is from a non-qualified plan.  However, I have 1099R income from a qualified plan; it is not taxable; on the 1099R no PA income is shown; yet Turbotax does exactly what you say, and puts the Federal Income in the PA taxable field.  Turbo tax is just plain wrong.  But there doesn't seem to be any way to get Turbo Tax corrected, thus making Turbo Tax useless.  I guess I am hoping that Turbo Tax pays attention to the Live Community and will get the word.

    There are other problems also with the detailed questions asked about type of income.  I select one type, and another shows up in the box.  I go back later, and the answer in the box has changed.

    There is no option for 401K plans, or supplemental pension plans.

    Turbo tax software is unstable, incomplete, incorrect and unusable at this time.
For each 1099-R that you fill out in the Federal Tax section, TurboTax should present you with a screen in the State Tax section that's called "What Kind of Retirement Income Do you Have from Pennsylvania?"  

I believe that you can get what you want by choosing a State Type Code of "I'm eligible; plan's eligible (no PA tax)".  This will then cause TurboTax to treat the income as non-taxable for state purposes.

Hope this helps.
  • Thank you for the answers directly above.  Unfortunatley nothing appears to work right in PA.  The code in box 7 of the 1099-R is "02" not "G."  This works as intended for federal tax purposes, since the conversion is treated as a distribtuion from a retirement plan ("early distribution (except Roth), exception applies").   Turbotax then codes the distribtuion in such a way for state tax purposes as to make it 100% taxable as income.  I took the advice of Audobon and changed the state code to "I'm eligible, plan's eligible (no PA tax)," and everything seemed to work.  Turbotax automatically calculated and inserted a basis amount equal to the conversion, resulting in no tax for the conversion.  I revisited the category under state tax and turbotax had changed the code from the one above to "United Mine Workers Pension."  I have gone back in and changed it again and then it changes it back to "United Mine Workers Pension."   I cannot file a state return identifying the income as a united mine workers pension so I am stumped.   I may just change the code to "no entry" and see if I can insert the basis manually -- or god forbid file my taxes by paper so I can explain what this distribtuion accurately.  Turbotax simply cannot handle a ROTH covnersion in PA as best i can tell.
  • I am having the same problem.  1099-R amounts with a 7 Code (Normal Distribution) entered into the Federal portion of Turbo Tax are transferred to the Pennsylvania State portion of Turbo Tax as" taxable."  That is incorrect.  It should definitely be classified as "non-taxable."   I have used Turbo Tax for the previous 4 years, and it worked fine.  it appears to be a software problem.  Turbo Tax is not working properly, and they do not appear to be trying to correct the problem.  How do you get a refund!
  • My 1099-R income comes from 2 IRA accounts and 5 qualifed pension accounts. Only two  iterms (1 IRA and 1 pension) were exempted from PA tax. Why isn't this Turbo Tax transfer program working? The same problem occurred on my 2009 Return until a fix was made to the software. Please give this problem your immediate attention.
  • In my particular case, it appears that the software is not  carrying the filing jointly info over properly and it looks like the spouse 1099R info is being declared as a taxable income for me, but we are filing jointly and both should be treated the same way as non- taxable income.  This looks like a software bug.  There appears to be no way to check the personal filing data associated separately with the state tax.  It only appears once as a blanket coverage for both.  It does not appear to be transferring over properly?  We have used turbo tax in the past and this info was transferred properly and the 1099R income was handled as nontaxable for both of us on a joint return.  We are unable to complete our PA tax form and we certainly hope that Turbo Tax is looking at this info and will fix this before our filing deadline.  It may be the only solution to his is to download and file a paper form from the State which reduces the usefulness of Turbo Tax and causes me to question using it in the future.
  • I am having exactly the same problem as Roth SS - I have a conversion from a traditional IRA (non-deductible) to a Roth IRA ($44,000 invested, $58,000 the amont converted, netting a taxable income of $14,000), and there seems to be no correct way to code this for the Pennsylvania form so that it appears correctly - it seems ot be all or nothing, whihc is clearly not correct.  

    It appears to be a software problem - what is the answer?
  • I am having the same problem with Turbo Tax having me pay PA state taxes on my retirement income.  I am retired and the plan is defined as eligible.  There is nothing in the PA section that asks about the retirement income.  Everything pertaining to this is enterred in the Federal Secton.  This appears to be a Turbo Tax software problem.  I can't file until this problem is fixed.
  • I am having the OPPOSITE problem. The 1099-R is coded #7 in block 7 and it's a taxable distribution from a paid-up Life Insurance Policy. On the Federal Return, it is handled correctly and it is added to interest on the Federal.

    For PA, if life insurance payouts on 1099-R are taxable for Federal, they are taxable for PA. But, TurboTax refuses to put anything other than zero in the PA taxable field. Maybe I could trade my software to someone who needs TurboTax to make their 1099-R not taxable. (:
  • Just go efile with PA state and enter income as Pension - no tax.  TT forget it
Hi Elk,

Thanks for bringing up your concerns. For a retirement distribution, first input the amount in the federal part of the program and indicate the appropriate code on Box 7. If this is a normal distribution, you will have the chance - once you are doing your PA return - to input your basis of the distribution. If you are a resident of PA, your contributions to the retirement plan were afte-tax dollars so your basis will be close to the amount distributed. Usually, 1099-R forms indicate how much of the distribution is taxable, but if you don't have that information, please contact your plan administrator to determine this amount.

I hope that helps!
    Hi RothSS,

    Thanks for participating of this forum. In regard to your rollover concern, when you input your 1099-R in the federal return, select the appropriate code in Box 7. If you had a direct rollover from a traditional IRA to a Roth IRA, your code should be "G." If all the information is entered properly, when you go to the PA return, your screen corresponding to your retirement distribution transaction will indicate that is a non-taxable event.

    I hope that helps!
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