As TaxACT cannot determine whether your pension income is subject to the McFadden or Maples lawsuits, you will need to manually adjust the taxable amount of your pension income during the State Q&A.

According to the Arkansas publication Subject 206 Pensions and Annuities:

If you received retirement benefits in the form of pension or annuity payments, the amount you received may be fully taxable, partially taxable, or nontaxable.

If you are retired and receiving retirement benefits from an employer-sponsored pension plan, you are eligible for a $6,000 retirement income exclusion. Deduct the $6,000 exclusion from the taxable amount listed on your 1099-R.

However, if you participated in the McFadden v. Weiss or Maples v. Weiss Lawsuits, the amount of cost recovery you can deduct may have changed. If you had zero (0) basis in your retirement after the lawsuit, for Arkansas tax purposes your taxable amount is the same as your gross distribution regardless of what your 1099-R reports. Deduct the $6,000 exemption from your gross distribution and include this amount on Line 17A or 17B.

If your pension was less than $6,000, you can only use the exclusion to the extent of your pension income. Your spouse receives a separate $6,000 exclusion if he or she also had income from an employer sponsored pension plan.

Traditional IRA distributions received after the age of 59½ or because of death or disability also qualify for the $6,000 exemption.