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Why is the entire amount of my federal retirement pension being excluded on my New York state return?

Forum|Forum|7 years ago
June 4, 2019
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I believe that New York state only allow the exclusion of the federal pension amount that represents a return of prior contributions. In addition it allows deduction of up to $20,000 of retirement income. The taxable amount of my federal pension in box 2a should be taxable in New York also.

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Best answer by IsabellaG

The entire amount of your federal retirement is excluded from NY tax. See page 11 of New York Publication 36 and the New York State Department of Taxation and Finance link.

"Qualified pension benefits or distributions received by officers and employees of the United States, New York State, and local governments within New York State, are exempt from New York State, New York City, and Yonkers income taxes."

" This subtraction modification is allowed regardless of the age of the taxpayer or of the form the payment(s) take. 11 Publication 36 (3/15) This subtraction modification is allowed for a pension or distribution amount (to the extent the pension or other distribution was included in your federal adjusted gross income), including a distribution from a pension plan which represents a return of contribution in a year prior to retirement, as an officer, employee, or beneficiary of an officer or an employee of: • The United States, its territories, possessions(or political subdivisions thereof), or any agency, instrumentality of the United States (including the military), or the District of Columbia."

I can see where the wording above can be confusing when it says "including a distribution from a pension plan which represents a return of contribution...." but the fact remains that your federal pension isn't taxable in NY. The link above says it more clearly:

Information for retired persons

Pension and annuity income

Your pension income is not taxable in New York State when it is paid by:

New York State or local government
the federal government, including Social Security benefits
certain public authorities

IsabellaGAnswer

Employee

The entire amount of your federal retirement is excluded from NY tax. See page 11 of New York Publication 36 and the New York State Department of Taxation and Finance link.

"Qualified pension benefits or distributions received by officers and employees of the United States, New York State, and local governments within New York State, are exempt from New York State, New York City, and Yonkers income taxes."

" This subtraction modification is allowed regardless of the age of the taxpayer or of the form the payment(s) take. 11 Publication 36 (3/15) This subtraction modification is allowed for a pension or distribution amount (to the extent the pension or other distribution was included in your federal adjusted gross income), including a distribution from a pension plan which represents a return of contribution in a year prior to retirement, as an officer, employee, or beneficiary of an officer or an employee of: • The United States, its territories, possessions(or political subdivisions thereof), or any agency, instrumentality of the United States (including the military), or the District of Columbia."

I can see where the wording above can be confusing when it says "including a distribution from a pension plan which represents a return of contribution...." but the fact remains that your federal pension isn't taxable in NY. The link above says it more clearly:

Information for retired persons

Pension and annuity income

Your pension income is not taxable in New York State when it is paid by:

New York State or local government
the federal government, including Social Security benefits
certain public authorities

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G

grandpabob

I don't think this is correct. The NY State publication referred to says only income derived from the Optional Retirement Program (see below). The City University sends out a letter which tells which of my various plans qualify. My supplementary retirement plans do not qualify according to their letter. How do I distinguish them in TurboTax?

New York State including, the State and City Universities of New York and the New York State Education Department, who belongs to the Optional Retirement Program. (Note: Optional Retirement Program members may only subtract that portion attributable to employment with the State or City University of New York or the New York State Education Department.)