2024 and Prior Year Pennsylvania State TurboTax Improperly Taxing Non-Qualified Retirement Annuity

Forum|Forum|1 year ago
January 26, 2025
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This issue wasn't caught until I was doing my 2024 PA Taxes.

I receive a 1099-R for a non-qualified annuity. The account was opened with post-tax dollars. I receive payments from the account monthly and when reported the 1099-R show the Gross Distribution (My initial contribution plus the interest received within the year (very small amount compared to the gross distribution. Box 5 show my initial contribution against the gross distribution for the year. The taxable amount for the state and federal is the Gross Distribution minus my contribution. The distribution code is 7D. The federal portion of Turbo Tax recognizes that I should only be taxed on the interests, but I come to find out that the PA State Turbo tax is calculating tax on the Gross Distribution.

Please help me remedy this issue. I didn't catch this until now and it has probably affected my prior year's taxes. Thanks!

MAK70

When you get to the Pennsylvania state section of TurboTax, you will have a question "What kind of retirement income do you have from Pennsylvania?" State Type Code= Non-qualified deferred comp. plan. You will then see the Tell Us About Your Retirement Income - you will be able to enter your basis here which will calculate the correct Pennsylvania compensation for you. See below for reference.