Police Officer Retired and Insurance Exclusion

[thomtax]

I have one individual that qualifies for this. He gets a seperate letter from the plan advising him of the amount. In Drake there is a seperate page for entering this and it puts the PSO on the form.

[Roland Slugg]

What do I need to look for on the 1099R or other sources for amended returns to reflect a possible exclusion and refund?

Sandy, I don't believe the information you need will be shown on the 1099R form. Ask your client to show you his monthly statements that detail the earnings and deductions. The best one to see would be the last one he received for the calendar year. That statement should show if, and if so, how much, was deducted for health or LT care insurance premiums. Be careful. Some payers may deduct the premium but NOT include it in the taxable distribution total on form 1099R, so be sure to compare the year's last statement to the 1099R.

The maximum excludable amount is $3,000 or the amount actually paid, if less.

[Gene V]

Pso

Sandy,
I have a client that qualified for the PSO, in 2012 and 2013. I didn't know about the exclusion until he told me about the deduction ( he got this from his pension plan administrator). I call her and verified the information.
Nothing on the 1099 that shows this--I think the deposit advice or check stub of the December pension benefit payment should have the year-to-date deduction for insurance premiums.

Gene

[S T]

For those that are informed on Police/Public Safety Officer - from Pub 575 - have you used this exclusion on returns or filed amended returns - if so, what do I need to look for on the 1099R or other sources for amended returns to reflect apossible exclusion and refund

Insurance Premiums for Retired Public Safety Officers
If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), 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 $3,000. You can only make this election for amounts that would otherwise be included in your income. The amount excluded from your income cannot be used to claim a medical expense deduction.

An eligible retirement plan is a governmental plan that is:

•a qualified trust,

•a section 403(a) plan,

•a section 403(b) annuity, or

•a section 457(b) plan.


If you make this election, reduce the otherwise taxable amount of your pension or annuity by the amount excluded. The amount shown in box 2a of Form 1099-R does not reflect this exclusion. Report your total distributions on Form 1040, line 16a; Form 1040A, line 12a; or Form 1040NR, line 17a. Report the taxable amount on Form 1040, line 16b; Form 1040A, line 12b; or Form 1040NR, line 17b. Enter “PSO” next to the appropriate line on which you report the taxable amount.

If you are retired on disability and reporting your disability pension on line 7 of Form 1040 or Form 1040A, or line 8 of Form 1040NR, include only the taxable amount on that line and enter “PSO” and the amount excluded on the dotted line next to the applicable line.

Thanks

Sandy