The following diagnostic is generating in Lacerte for any Individual return with 1099-R income that includes a Pennsylvania return:
This return has federal 1099-R income that may be taxable in Pennsylvania. To carry taxable amounts and withholding to Form PA-40, 1099-R information must be entered on the Pennsylvania "Miscellaneous Compensation" screen (detail screen 50.051). (ref. #19622)
Why is this diagnostic generating?
The diagnostic was added due to the following information provided in the instructions for PA-40.
If you withdrew from your retirement or pension plan and received a Form 1099-R, you may have PA-taxable compensation if:
- Your retirement plan is not an eligible Pennsylvania retirement plan; or
- If you have not reached the retirement age or years of service requirements under such eligible Pennsylvania retirement plan.
How do I resolve this diagnostic?
If the 1099-R is taxable to PA, follow these steps to include it as Gross Compensation:
- Go to Screen 50, Income.
- Select Pennsylvania Income from the left navigation panel.
- Enter the income from the 1099-R in the Gross compensation (Ctrl+E) field.