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Is my pension distribution taxable in New York?

SOLVEDby TurboTax200Updated 1 week ago

Some pension distributions from certain sources are nontaxable in the state of New York, while others are taxable. If your pension distributions are taxable, you could still qualify to exclude up to $20,000 per year, depending on your age and your situation. 

Nontaxable pensions

Nontaxable pension distributions are those paid by:

  • New York state or local government
  • The federal government, including Social Security benefits
  • Certain public authorities, including the Metropolitan Transportation Authority (MTA), Police 20-Year Retirement Program, and the Long Island Railroad Company (LIRR) 

Taxable pensions

Any pension distributions from sources not listed above are taxable in New York. However, New York provides two tax breaks for those receiving taxable pension distributions:

  1. Pension and annuity exclusion
    • If you were age 59 ½ during the tax year, you can exclude up to $20,000 of pension or annuity income:
      • If you were already 59 ½ at the beginning of the tax year, you qualify for the full exclusion.
      • If you turned 59 ½ during the tax year, you can still exclude up to $20,000, but only on amounts received after you turned 59 ½.
    • Married taxpayers are capped at an exclusion of $20,000 per person, whether filing jointly or separately. One spouse can't claim the other spouse’s unused exclusion. 
  2. Exclusion for inherited pensions
    • If you’re filing jointly with a deceased spouse, you can exclude distributions of up to $20,000, even if you receive your pension and part of your spouse’s pension.
    • Survivors can exclude distributions of up to $20,000, depending on the age of the deceased. However, if you transfer or roll over a pension to your name, the exclusion will be based on your age.
    • Multiple beneficiaries of an inherited pension must split the $20,000 exclusion according to their share of the inheritance.

Here’s how to review your pension info on your New York state return:

Note: If your TurboTax navigation looks different from what’s described here, learn more.

  1. Open (continue) your return in TurboTax.
  2. First, make sure you’ve correctly entered your 1099-R info on your federal return.
  3. Select State from the left menu.
  4. Select Start or Continue next to your New York state return.
  5. Follow the on-screen instructions until you reach Changes to Federal Income. On this screen, select Start next to Received retirement income.
  6. On your Retirement Distributions Summary, select Edit next to the pension you’re reviewing. If no more info is needed for your state return, you’ll see the message We don’t need any further information about the retirement distribution.
  7. If New York needs more info for your pension distributions, answer the questions on the following screens, until you return to your Retirement Distributions Summary. Select Done.
  8. Continue through the screens until you reach your Pension Deduction Summary. Here you’ll see the amount of your pension distribution that’s taxable in New York state. This amount doesn't include your exclusions, but don’t worry–TurboTax will figure that out for you.

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