How do you include the Bailey decision deduction my State tax

You have to indicate that the 1099-R is for Bailey settlement retirement benefits when you enter it in the Federal interview.  After you enter the 1099-R, TurboTax will ask you ''Where is this distribution from?''.  As long as you select the 'Bailey settlement' radio button, TurboTax will apply the deduction to your NC state return automatically.  

This applies to federal or North Carolina government pensions if you qualified before August 12, 1989.   Your defined benefit distributions qualify if you had five or more years of creditable service as of August 12, 1989 from one of the following:

 - Federal Employees' or US Civil Service retirement system

 - North Carolina Teachers' or State Employees' retirement system

 - North Carolina Local Governmental Employees' retirement system

 - North Carolina Consolidated Judicial retirement system

You also qualify if you made contributions to the North Carolina 401(k) or 457 plan before August 12, 1989.

@aj1nbj2 

AND.....note that the NC distribution amount must be the same $$ amount tah is in box 2a of your 1099-R form.

It uses that value to know how much to deduct from the federal total.

...so if you enter a zero there, or leave it blank, then zero will be deducted from Fed income to arrive at  the revised NC income amount.