PSO - Line 16

[mrbill]

Police Officer retired 7/1/10 after 35 years. He contributed 95K towards his pension. For 2010 he received 30K in pension, which retirement board ruled non-taxable. Additionally a deduction of $2,100 was taken for retirement health insurance. With 0 in taxable retirement income, can he claim (deduct $2,100) on line 16

[solomon]

Police Officer retired 7/1/10 after 35 years. He contributed 95K towards his pension. For 2010 he received 30K in pension, which retirement board ruled non-taxable. Additionally a deduction of $2,100 was taken for retirement health insurance. With 0 in taxable retirement income, can he claim (deduct $2,100) on line 16

That would be doubling dipping to show a negative 2100 on Line 16 would it not? In other words, it has already been excluded from taxable income as I understand the post.

[Gary2]

What was the basis for the retirement board ruling it non-taxable?

[S T]

Ohh I had one years ago

Check and make sure that taxpayer has documentation from the reitrement board with IRS cites. I would think it it would be shown in Box 1 and then would be the Simplified Method in box 2a of the 1099R, taxable amount allowing for portion of contribution pro-rated over a period of time.

I had a client (retired Calif Police Dept) about 10 years ago, and "someone " stated that"deferred comp" income was not taxable. I would not complete the return non taxing theat amount, another preparer completed. It was "deferred comp" not the regular retirement pension. I right now can not think of any pension retirement that is "non-taxable, and certainly "deferred comp" would not be excluded .

IRS came after them with a "huge" tax bill and penalties and interest. All was taxable, based on the "deferred comp:" Regular pension/retirement of course was taxable and reported correctly.

At any rate, if health insurance is included in the equation, it would also be no deduction if not included in the taxable amount.

Sandy

[Corduroy Frog]

Declare Not Taxable

I don't know the governing board of a particular industry can simply "declare" something non-taxable. I hope they have a private letter ruling, or have followed Code/Regs/Decisions, etc.

It would be paramount to the NEA declaring teacher salaries non-taxable, or the UAW declaring GM wages non-taxable.

[Burke]

In olden times, retirees used to be able to invoke the 3-yr rule --- not taxable until you had recovered your investment first. That's gone. Now a portion is taxable each year based on the simplified general rule for pensions. Maybe not state-taxable in your state? Need to check. Did he retire on disability? Do you have a 1099R and what does it show?
If it simply left Box 2 blank, then you have to compute the taxable portion. If the pension is taxable, then you will have a deduction for the health insurance premiums withdrawn from his pension and paid directly to the insurance company.

[mrbill]

Thanks for your help. The health Insurance was deducted, and therefore will not appear as a minus number on line 16. The 1099 clearly states 0 taxable income, and there is an accompnying letter from the retirement board explaining that it is non-taxable. Not a disability retirement.