After you have completed entry of your Form 1099-R there will be a series of screens asking specific questions. One of the screen asks if this money came from employment as a Public Service Officer, answer Yes. The following screen asks if money was taken out for health insurance, answer Yes. The next screen asks how much was paid for the insurance, do not enter more than $3,000. Continue until the section completes.
On your Form 1040 Line 5b, the taxable amount of your pension, will be reduced by the amount of health insurance payments you entered. On the Line for 5b will be the letters PSO entered.
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