A Comprehensive Guide: Entering Military Retirement on TurboTax
Hello there, esteemed military retiree! Are you ready to navigate the world of taxes with ease and ensure you're getting every deduction you deserve? Filing taxes can sometimes feel like deciphering a secret code, but with TurboTax, and this detailed guide, you'll be a pro in no time. Let's get started on entering your military retirement income into TurboTax.
This guide will walk you through each crucial step, from gathering your essential documents to finalizing your return, with special attention paid to the nuances of military retirement income.
The Essentials: What You'll Need Before You Begin
Before you even open TurboTax, it's vital to have your paperwork in order. Think of these as your mission-critical documents:
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Your Form 1099-R from DFAS (Defense Finance and Accounting Service): This is the most important document for reporting your military retirement pay. It details your gross distribution, taxable amount, and any federal or state taxes withheld. You can usually access this via your myPay account.
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Other Income Documents: If you have other sources of income (e.g., W-2s from civilian employment, other pension statements, investment income), have those handy too.
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Previous Year's Tax Return: This can be a helpful reference, especially for carrying over information or recalling deductions you've taken in the past.
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Information on any Non-Taxable Payments: While military retirement pay is generally taxable at the federal level, certain benefits like VA disability compensation are not taxable. Make sure you differentiate these.
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| How To Enter Military Retirement On Turbotax |
Step 1: Initiate Your Tax Return in TurboTax
Alright, let's dive in!
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Launch TurboTax and Select Your Product: Open your TurboTax software or log in to your TurboTax Online account. Choose the product that best suits your needs (e.g., Deluxe, Premier, Self-Employed).
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Start a New Return (or Continue an Existing One): If this is your first time using TurboTax for the current tax year, you'll select "Start a new return." If you've already begun, choose "Continue" to pick up where you left off.
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Personal Information: The first section typically involves entering your personal details, such as your name, Social Security Number, date of birth, and filing status. Double-check this information carefully to avoid errors.
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Sub-heading: Confirming Your Military Status: While not directly for retirement pay entry, TurboTax often asks about your military status early on. Ensure you indicate that you are a military retiree where prompted. This helps the software tailor questions and potentially identify military-specific deductions later.
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Step 2: Navigating to the Retirement Income Section
Tip: Don’t skip the details — they matter.
This is where your Form 1099-R comes into play.
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Federal Section: In TurboTax, you'll generally find income entry within the "Federal" section.
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Wages & Income: Look for a section titled "Wages & Income," "Income & Expenses," or similar.
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Retirement Plans and Social Security: Within "Wages & Income," you'll usually find a category like "Retirement Plans and Social Security," "IRA, 401(k), Pension Plan Withdrawals (1099-R)," or "Pensions & Annuities." This is where you'll enter your military retirement. Click "Start" or "Update."
Step 3: Entering Your Form 1099-R Information
Now, let's input the specifics from your DFAS Form 1099-R.
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Did you get a 1099-R? TurboTax will likely ask this question. Select "Yes."
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How do you want to add your 1099-R? You'll typically have options to:
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Import your tax info: If TurboTax can link with DFAS or your financial institution, this is the easiest route. Follow the prompts for secure import.
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Type it in myself: If import isn't available or you prefer manual entry, choose this option. This is often the most reliable method to ensure all details are captured correctly.
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Who gave you this 1099-R? Enter "DFAS" or "Defense Finance and Accounting Service" as the payer.
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Enter the Boxes from Your 1099-R: Carefully transcribe the information from each box on your 1099-R into the corresponding fields in TurboTax.
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Box 1: Gross Distribution: Enter the total amount you received before any deductions.
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Box 2a: Taxable Amount: This is usually the full amount of your military retirement that is subject to federal income tax. It's crucial to ensure this is correct. If Box 2b (Taxable amount not determined) is checked, or Box 2a is blank, TurboTax will help you calculate the taxable portion.
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Box 4: Federal Income Tax Withheld: Enter the amount of federal income tax that was withheld from your retirement payments.
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Box 7: Distribution Code(s): This box contains codes that explain the type of distribution you received. For military retirement, common codes might include '7' (Normal Distribution) or '4' (Death). Pay close attention to this box, as it helps TurboTax correctly categorize your income. If there's a letter code alongside a number (e.g., 7D), enter both.
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State Information (Boxes 14-19): If your state taxes military retirement, you'll also enter your state withholding and other state-specific details from these boxes.
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Sub-heading: Understanding Distribution Codes: Distribution codes in Box 7 are very important. They tell the IRS and TurboTax why you received the money. While "7" is common for normal retirement, other codes might indicate early distributions, disability payments, or other scenarios. TurboTax will often ask follow-up questions based on this code. Answer these questions accurately.
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Step 4: Addressing State Tax Implications (Crucial for Military Retirees)
This is where the tax treatment of military retirement can vary significantly.
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Federal vs. State Taxation: Remember that while military retirement pay is almost always taxable federally, many states offer full or partial exemptions for military retirement income.
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TurboTax's State Interview: After entering your 1099-R in the federal section, TurboTax will seamlessly transition you to the state tax interview (if you're filing a state return).
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Specific State Questions: Pay very close attention to the questions related to retirement income in your state's section. TurboTax is designed to recognize state-specific exemptions. You might be asked:
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"Is this military retirement income?"
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"Are you a military retiree?"
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"Enter the amount of your military retirement that is exempt."
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Do not skip these questions. If your state has an exemption, answering these correctly will significantly reduce your state tax liability.
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Sub-heading: What if TurboTax Doesn't Automatically Apply the State Exemption? While TurboTax is generally excellent, occasionally, users report issues with state exemptions for military retirement not being automatically applied. If you suspect this is happening, don't just accept the numbers.
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Review Your Entries: Go back and carefully re-read every question related to your retirement income, both federal and state. Sometimes a subtle wording difference can impact how TurboTax categorizes it.
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Search TurboTax Help: Use the search function within TurboTax (often a magnifying glass icon or "Search" bar) and type "military retirement exemption [Your State Name]" to find specific guidance.
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Consult State Tax Laws: A quick search for "military retirement tax exemption [Your State Name]" on your state's Department of Revenue website can confirm the exact rules and eligible amounts.
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If you're still stuck, consider seeking assistance from a TurboTax Live expert or a tax professional specializing in military taxes.
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Step 5: Review and Optimize Your Return
You're almost there! Once all your income is entered, it's time for a thorough review.
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Deductions and Credits: TurboTax will guide you through potential deductions and credits. While military retirement income itself isn't a deduction, you might qualify for other military-specific benefits, or standard deductions and credits applicable to all taxpayers.
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Accuracy Check: TurboTax has built-in error checks. Address any alerts or warnings it flags.
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Preview Your Return: Before filing, always preview your federal and state returns. Look at the income lines, especially your reported retirement income, and ensure it aligns with your 1099-R and any state exemptions.
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Tax Summary: Review the tax summary to see your calculated refund or amount due. Does it seem reasonable based on your income and deductions?
Tip: Reading carefully reduces re-reading.
Step 6: File Your Return
The final step!
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E-file vs. Mail: TurboTax offers the option to e-file your federal and state returns directly. This is generally the fastest and most secure method. Alternatively, you can print and mail your returns.
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Confirmation: Once e-filed, keep an eye out for confirmation emails from TurboTax and the IRS/state tax authority that your return has been accepted.
10 Related FAQ Questions:
How to obtain my Form 1099-R from DFAS?
You can usually obtain your Form 1099-R by logging into your myPay account on the DFAS website. If you don't have a myPay account or are unable to access it, you can request a copy through their self-service phone line or by submitting a written request.
How to tell if my military retirement pay is taxable at the state level?
The taxability of military retirement pay varies significantly by state. Many states offer full or partial exemptions. You'll need to check your specific state's Department of Revenue website or consult a state tax guide to determine the rules for your state of residence.
Reminder: Revisit older posts — they stay useful.
How to report VA disability compensation on TurboTax?
VA disability compensation is not taxable income and generally does not need to be reported on your federal tax return. Therefore, you typically will not enter it into TurboTax.
How to handle a Form 1099-R if Box 2b (Taxable amount not determined) is checked on my military retirement?
If Box 2b is checked, TurboTax will guide you through questions to help calculate the taxable portion of your military retirement. This often happens if you made after-tax contributions to your retirement plan, which is rare for standard military retirement.
How to claim military-specific deductions in TurboTax?
TurboTax generally has sections dedicated to military income and expenses. As you progress through the interview, look for questions related to moving expenses (for PCS), uniform expenses, or other job-related deductions if you are still working. The software will prompt you for relevant information.
How to ensure TurboTax applies my state's military retirement exemption?
After entering your 1099-R in the federal section, proceed to the state tax interview. Carefully answer all questions related to pension and retirement income, specifically looking for options that mention military retirement or veteran benefits. TurboTax should then automatically calculate the exemption.
Tip: Break it down — section by section.
How to correct an error in military retirement income after I've filed?
If you've already filed and realize there's an error in your military retirement income, you will need to file an amended tax return (Form 1040-X for federal). TurboTax can help you prepare an amended return. Do not simply file a new return.
How to get free TurboTax for military members?
Enlisted active duty and reserve military personnel (E-1 through E-9) are eligible to file both their federal and state taxes for FREE using any TurboTax Online product (Free, Deluxe, Premium). This discount is applied when you enter your W-2 and verify your military rank within the program. Note: This typically does not apply to officers, warrant officers, veterans, or retirees for the free online version.
How to contact TurboTax support for military retirement specific questions?
TurboTax offers various support options, including a robust online community forum, live chat, and phone support. For military-specific questions, searching their support articles (e.g., "military retirement 1099-R") or posting in their community forum often yields quick answers. For complex issues, consider their TurboTax Live Assisted or Full Service options, where you can connect with a tax expert.
How to determine if my military retirement income is subject to Required Minimum Distributions (RMDs)?
Generally, military retirement pay itself is not subject to RMD rules like traditional IRAs or 401(k)s. RMDs apply to qualified retirement plans and IRAs once you reach a certain age. Your military retirement is a pension, not typically a separate qualified plan subject to RMDs. If TurboTax prompts you about RMDs for your military retirement, ensure you're correctly identifying it as a standard military pension.
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