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I retired from the state of Maryland in 2014 and received…

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I retired from the state...
I retired from the state of Maryland in 2014 and received both a W2 and a 1099R. Im trying to figure out what figure do I put in form 502SU under r for taxes for that year. In the year 2015 I just received a 1099R because I was fully retired that year. In block 17, pick-up contributions $40,196.73 do I enter that on my 502SU? Talked two times to Annapolis and they don't understand what to do?
Submitted: 1 year ago.Category: Finance
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Answered in 7 hours by:
10/18/2016
Financial Professional: taxmanrog, Certified Public Accountant (CPA) replied 1 year ago
taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 1,106
Experience: Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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Welcome to Just Answer! Thank you for giving me the opportunity to assist you! I will do my best to help!

Your pickup contribution is comprised of income upon which Federal income tax was deferred, but the State tax was paid every year. This results in a timing difference. Since you have already paid state taxes on the pickup amount, you have to subtract it from your pension received, otherwise you will pay state tax on it twice.

To avoid this duplication, you are to report the amount in Box 17 on Line r of the Form 502SU. This allows you to deduct the amounts that you have already paid tax on. You are allowed to subtract the smaller of the pickup amount in Box 17, or the taxable pension amount in Box 2 of the Form 1099-R. You will deduct this amount each year until the Pickup amount is totally used. In that year, "EP USED" will appear in Box 17.

I hope this answers your questions! If you have any more, please let me know and I will be happy to answer.

Thanks! Have a great week!

Roger

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