NY - Pension Exclusion

According to the New York Department of Taxation and Finance article:

"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

In addition, income from pension plans described in section 114 of Title 4 of the U.S. code received while you are a nonresident of New York State is not taxable to New York." 

(For the full article see "Information for retired persons")

To indicate that the 1099-R is not taxable in NY for one of the reasons above, choose the following Pension Type on the 99R screen, as applicable: 

• State Government: S (State drop list must be NY)
• City Government: Z (State drop list must be NY)
• US Government: G
• Military: M

When one of these types is chosen on the 99R screen for an eligible taxpayer, on the NY 201.PG2, the pension amount will flow to line 10 and then a subtraction will be carried to line 26. If the 1099-R is marked as an IRA/SEP/Simple, the subtraction is limited to $20,000 and flows to line 29 instead. 

To find out why the exclusion or subtraction is not producing as expected, review the following:

1. Is the taxpayer's (and spouse if present) date of birth on federal screen 1 entered?
   • The exclusion only calculates automatically if the person receiving the payment is age 60 or older.
2. Is there IRA or Pension Income (lines 9 & 10) on the return?
   • The exclusion on line 29 is limited to the lesser of IRA/pension income or $20,000 for the taxpayer and again for the spouse.
   • If there is no taxable IRA or Pension income on the return, there is no exclusion.
3. Did the taxpayer or spouse turn 59-1/2 this year?
   • Enter the amount of taxable IRA and Pension income received after the taxpayer (and/or spouse) turned 59-1/2 in the Override field on NY screen 2.
4. Was the annuity or pension received by as a beneficiary?
   • On federal screen 1099R enter code 4 in box 7 to indicate the income was received as a beneficiary.
   • Complete the NY > PNSN screen by selecting the Federal Form, and entering the appropriate MFC and the decedent's date of birth. If the decedent would have become 59 1/2, the exclusion will be calculated.
     
5. Is the IRA or Pension income entered on federal screen 3?
   • Federal screen 3 must have a state code of NY. You will need to enter the amounts to exclude in the override field on NY screen 2. The age and income limitations in 1 and 2 above will still be applied.
6. Is there a disability income exclusion on Form IT-221?
   • The sum of the pension exclusion and the disability income exclusion claimed is limited to $20,000 for the taxpayer and $20,000 for the spouse.

Additional information can be found within New York data entry:

• Screen FAQ 
  • Topic G - Pensions, securities, RRB 
  • Topic R - Why is the pension exclusion not calculating for this return
• Screen PNSN
  • Access Screen Help by pressing CTRL + ALT + ?