Alabama tax exempt teacher retirement is being taxed on Turbo tax

Forum|Forum|1 year ago
March 3, 2025
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MAK70

If you indicate that it is tax exempt teacher retirement when you enter your 1099-R, TurboTax will report it properly on your Alabama tax return.

ahedge28Author

No it doesn’t. Turbo tax has had this bug in software for years. I keep reporting it and it is not fixed. I answered the question on the state return about income taxes federally taxed but exempt from state and had to override the space to enter it. It did not change me state tax due. It is taxing me on $50k that I should not be taxed on. It also is not transferring the tax exemption on vehicle tags to my state return. I am using premier. I would change to another tax preparation program but TurboTax has all my returns for several years and I like the transfer of information feature.

BillM223

This is what my test when I enter a 1099-R with Teacher Retirement on it.

In the Alabama interview, I see...

When I click on Yes on the previous screen, I see this...

As you see, I choose the AL Teacher's Retirement System...

Note the red arrow's on the next screen...I am not sure, but it's possible that the warning in red is telling you that if you make any changes on the federal return on the 1099-R, that it undoes what you checked off here in Alabama.

And, as you see, the pension is now zero for Alabama.

This last screen is a shot of the important part of Alabama Form 40, showing that while other income items from the federal return populated the AL return, the $50,000 in Teacher's Retirement did not.

I show you this, so that you can tell me at what point your process broke down. I need to know specifically how far you got and what "no it doesn't" means.

And thank you for saying that you like the transfer of information feature - too often all we hear is what taxpayers don't like.

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