I got a message from Turbo tax that due to an error in your software i am not getting the $20,000 pension exclusion. how can this be corrected?

Forum|Forum|5 years ago
March 6, 2021
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i am not getting the New York state pension exclusion of $20,000 due to an error in Turbo Tax software. How can this be corrected?

TurboTax Premier Online

LenaH

The adjustment to exclude $20,000 from your NYS income is done under Wage and retirement adjustments. This is found on the NYS screen Changes to Federal Income.

You can follow these steps in TurboTax to exclude $20,000 of your retirement income:

Open your return.
Click on State in the left hand column.
Click Edit next to your resident return.
Click Update or Start next to Adjustments to federal income on the screen You Just Finished Your New York Return.
Scroll down to Wage and retirement adjustments.
Click Start next to Received retirement income.
Continue to the screen Governmental Pension Exclusion.
Enter $20,000 for the question, Did you receive a pension or other distribution from a NY State or local government pension plan or federal government pension plan?
The next screen will show your pension deduction summary. Only $20,000 should be deducted from your pension.

Per NYS, taxpayers over age 59 1/2 can deduct up to $20,000 of certain federal, NY state or local government pensions and certain IRAs on their New York return. If married filing jointly, each spouse may deduct up to $20,000.

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Dan175

I'm experiencing an issue with this as well. I live in NY and my pension income for 2024 due to being a beneficiary of a deceased person was over 20,000.

Turbo tax is automatically including the 20,000 deduction on my return for NY.

The catch is my current age is under 59 so I wasn't 59 and a half at any point last year. So TurboTax should not be giving me that deduction per the info on the NYS DTF web site.

Is there a way I can tell Turbotax not to take the deduction while still reporting the income?

AnnetteB6

Even though you had not turned 59 and a half during 2024, if you were receiving that pension distribution as a beneficiary of someone who passed away, you are still eligible to exclude up to $20,000 based on the age of the person who would have received the pension.

When you go through your New York state return, there will be some questions to answer regarding the decedent's date of birth, total pension, pension excluded on the decedent's return, and your percentage of the total distribution (in the case of multiple beneficiaries receiving payments).

Be sure to visit that section of the state return. It can be found by going to the screen titled, Changes to Federal Income. Then, scroll to Wage and Retirement Adjustments and click Start or Update at the top of that section beside Received Retirement Income.

For reference, here is a link to the New York Form IT-201 Instruction Booklet. Take a look at the left hand column of page 10 under Beneficiaries to learn more.

@Dan175

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