What is the pension and annuity income exclusion on Colorado state tax return? I don't know how this affects me.

Forum|Forum|6 years ago
June 5, 2019
3 replies
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I don't know how much of my RMD qualifies for the

pension and annuity income exclusion.

How do I find out?

TurboTax Deluxe Windows

MaryK1

Employee

Up to $24,000 of your RMD can be subtracted from your Colorado income if it qualifies as annuity/pension. TurboTax calculates the amount in the Colorado state tax section.

If you meet certain qualifications, you can subtract some or all of your pension and annuity income on your Colorado individual income tax return (Form 104). You must be at least 55 years of age unless you receive pension/annuity income as a death benefit. You can claim the subtraction only for pension/annuity income that is included in your federal taxable income in the year you claim the subtraction.

FYI Income 25

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ALAN1220

I am a bit confused with this exclusion. The 2019 TurboTax Premier Program claims all of our joint Social Security Benefits as an Exclusion on our Colorado Return and will not allow me to adjust it to $24,000. Our combined SS Benefit is over $31,000. Is all of our combined SS Benefit excluded from taxable income on our state return because we are over 65?

RosieP

I'm not a CPA and this is my first time using TurboTax. I'm using the 2019 Premier version. As I understand the Colorado Pension & Annuity Exclusion, each individual can exempt up to $24,000 per year on his/her Colorado State return for retirement income such as IRA distributions and Social Security benefits. For married couples, each can exempt up to $24,000, for a total of $48,000 per couple.

So my layperson answer to your question, Alan1220, is that I believe that your combined SS benefit is excluded from taxable state income in Colorado.

I wonder if there's a bug in the program, however. I personally received around $45,000 and my spouse received $14,000. I entered this clearly (indicating everything by name). TurboTax is giving us a $48,000 exemption, and that doesn't seem right to me.

Am I right, or is TurboTax?

JohnB5677

In Colorado, Social Security benefits that are not taxed by the federal government are not added back to adjusted gross income for state income tax purposes.

Those 65 and over can exclude up to $24,000 of Social Security benefits and qualified retirement income.

So it's quite possible none of your Social Security benefits are taxable in Colorado.

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MDRCO

Please clarify and/or guide.

I am following 2021 Step-by-Step guide for Colorado and struggling to understand the Social Security exclusion entries.

I find a "Pension and Annuity Worksheet" that shows significant taxable social security on 3a and an allowable exclusion for myself and my wife on line 6.

But in the Colorado "Pension and Annuity Income" fields, these amounts are not listed. Turbotax entered a pension amount but NOT the taxable social security amount shown on line 6 of the worksheet. Why?

Similarly, on the "Other Pension and Annuity Income Exclusions" (next step of the guided entry), the fields are both showing zero. Why?

What is allowed, where do I enter them, and why doesn't Turbotax Colorado automatically handle this?

Are the amounts shown on the worksheet, line 6 wrong or ????

Very confusing for me!!

MDRCO

Well......

It appears that Turbotax does include the SS exclusion, it just doesn't make it obvious during the step-by-step. I had to progress to a summary page before I figured this out.

All good but the step-by-step guide was less than clear.

mex_man

Yes, that is part of the same problem I had. The step-by-step guided interview is not clear or correct, but it seems to come out in the wash when you enter the qualifying data yourself into the interview answer fields. To be sure, check your eligibility directly with the Colorado government website at https://tax.colorado.gov/retirees .