Police Pension and Medical Deduction.

[MAJ]

Here's one I never heard of {I am sure there are 100's).

I was told a retired policemen who pays for medical benefits though the pension is allowed to deduct up to $2,000 from the Gross taxable pension amount {instead of claiming on Schedule A}.

Has anyone ever heard of this and if so can you provide any details.
He states he's been doing it for years.

Thanks

[nalawson]

yes

I have one client with that situation. It was new last year. If you are a retired public safety officer, you can elect to exclude from income distributions made from your eligible retirement plan that are used to pay the premiums for accident or health insurance or long-term care insurance. The premiums can be for coverage for you, your spouse, or dependents. The distribution must be made directly from the plan to the insurance provider. You can exclude from income the smaller of the amount of the insurance premiums or $3000.00. You can only make this election for amounts that would otherwise be included in your income. The amount shown in box 2a of Form 1099-R does not reflect the exclusion. Report your total dist on line 16a and the taxable amount on line 16b. Enter "PSO" next to line 16b.

My tax software has a box to check for this under the 1099-R form and will enter the "pso" for me.

[taxea]

Is this an IRS rule or a state rule? taxea

[Jesse]

http://www.irs.gov/formspubs/article/0,,id=177965,00.html

For distributions beginning in 2007, you can elect to exclude from income distributions from an eligible retirement plan that is a governmental plan if you are an eligible retired public safety officer. The distribution must be transferred directly to an insurance provider to pay premiums for accident or health insurance or qualified long-term care insurance for you, your spouse, or your dependents.

The maximum annual exclusion is $3,000. You cannot deduct these premiums as medical expenses or, if you are self-employed, health insurance costs. For more information, see Insurance Premiums for Public Safety Officers in Publication 575.

[Gene V]

A little more information:

An eligible retirement plan is a govern-
mental plan that is:
• A qualified trust,
• A section 403(a) plan,
• A section 403(b) annuity, or
• A section 457(b) plan.

This is all in the 1040 instruction

[MAJ]

Police Pension and Medical Deduction

Thanks for the great information - Appreciated.

I'm new to the website and glad I came across the site. The response to the numerous questions I've read so far are timely and with lots of content.

Thanks..